Mind Your Health and Your WealthPlanning Health Index Investing
I am honored that Fintentional is an event sponsor for the 12th annual MOM RACE for Mental Health Awareness & Suicide Prevention. My wife Amy and I have participated in this 5k since the inaugural event. We feel it is important for people who have been touched by mental illness to connect and show support for one another.
We originally participated in the event as walkers and now complete the event as runners. I remember thinking how hard it looked to run 3 plus miles back when we were walking. Yet now, we run year-round, including during the Michigan winters, and participate in one half-marathon each year. It became clear that the journey from walker to half-marathon runner is similar to the journey of building wealth over time.
Two quotes made me think more about how both mental kindness and toughness are required for running and building wealth. The Mind Over Matter (MOM 5k) tag line is “Mind Your Health. Heal Your Mind. Race MOM.” A recent blog by Alexander Green stated that “Your net worth is essentially a result of the choices you make.” Choosing to train for a run or deciding to build wealth both require strong mental discipline and kindness to stay on track for the long haul.
Time Is Your Friend
Training for a run takes time and does not happen overnight. You need the mental toughness to lace up your shoes and run even on days when you may not feel like it. You also need to mind your health in the event injury or illness crops up during training and make the necessary adjustments. Above all, you have to be kind to yourself when a run doesn’t go as planned or you need to stop or cut back on training due to an injury or family and work commitments.
Just like with running, building wealth takes discipline and time. You will suffer setbacks along the way. You need the mental toughness to put away money in a 401(k) each check and use debt wisely. It may take some time to see positive financial results and you need the mental toughness to stick it out. As with running, you need to be kind to yourself as you encounter setbacks such as unexpected emergencies like a vehicle repair or a splurge at the running store you really didn’t need.
There has to be a reason to start running or consciously deciding to build wealth. Running and building wealth are admirable objectives, but they typically aren’t great goals in isolation. For example, training for a run excessively or working all the time to earn more money while ignoring your loved ones may diminish the feeling of accomplishment upon achieving your running or financial objective.
In the winter, I wear head bands that say “ I Run So I can Eat” and “Live, Laugh, Run.” The head bands pretty much sum up why I run. I want to stay healthy and enjoy a good meal every now and then. I also enjoy being part of a running community with my wife that provides support not only for running, but life in general. If one of us happens to earn a Personal Record (PR) for a race that is a secondary benefit.
Building wealth is much the same way. Setting a specific savings or investment goal may be hard to stick with if there is not a larger objective. For example, it could be the desire to start your own business, change careers or contribute to a cause that you believe in. Or it might be the desire to reduce stress in your life by cutting back on debt and building a safety net to fund unexpected financial emergencies.
Run Your Own Race
My wife Amy and I began running as adults as part of a local couch to 5k program This was a bit of a mental challenge for me since I used to be in decent shape having played high school sports and maintained a high level of fitness into my twenties. It was difficult to mentally start a program that required me to run two minutes then walk one minute initially while others were doing so much more. However, this is where I needed to start based upon my fitness level at the time.
As we’ve progressed as runners, we still need to be mindful of running our own race. Whether it is an informal group run, or a formal race, there will always be runners who are faster than you which is great. You need to be careful not to get swept up in the moment and unwittingly run their pace because you may not have anything left in your tank when it is time to finish your run with some power.
Building wealth is similar to running. You need to accept where you are when you start your wealth building journey. The book Your Money or Your Life by Vicki Robin and Joe Dominguez uses a phrase “no shame no blame.” Just like the couch to 5k program, you need to start wherever you are financially. If this means paying off some credit card debt and keeping a budget before increasing retirement savings, that is ok.
You also need to be careful about comparing yourself to others financially, especially the appearance of being wealthy. You do not need to keep up with the Jones as they say, especially since you don’t know if the Jones are using credit cards and home equity lines of credit to fund their lifestyle. The authors of the Millionaire Next Door, Thomas J. Stanley and William D. Danko share seven common denominators for the affluent based upon their research. The first three speak directly to this point.
- “They live well below their means.”
- “They allocate their time, energy, and money efficiently, in ways conducive to building wealth.”
- “They believe that financial independence is more important than displaying high social status.”
Many runners suffer injuries while training for a race. The injuries range from IT band issues, to sprained ankles and plantar fasciitis. Many injuries are the result of over use, lack of stretching and overall weakness in muscles not used while running. Cross training can help reduce the risk of injury by doing things like kick boxing, yoga and circuit training. The cross training provides balance to the body and helps reduce the risk of injury.
Diversifying an investment portfolio is similar to cross training. The temptation is to concentrate a portfolio in a few high-flying stocks or actively managed mutual funds in the hope of achieving a higher return in the short run. However, just like with the overuse of muscles, a concentration in a few stocks can result in injury to your investment portfolio.
An alternative approach is to use well diversified, market tracking funds that spread your investments across companies globally. The diversified approach to investing allows you to participate in the growth and profits of the world economy while minimizing your dependence on a small subset of companies. Of course, just like with adding cross-training to a running plan, nothing Is guaranteed with investment diversification. You can still injure yourself running even though you cross train and you can still lose money in the stock market even if you diversify. In each case you are attempting to reduce the risk of both injury and loss by choosing to cross train or diversify.
Have A Plan and a Coach
Embarking upon a training regimen to run a half marathon can seem daunting. You have to decide how much to run each week to build up for the race while making sure you allow some recovery time before the big day. It can be a challenge to figure out how many miles to run during the week and how to fit in a long run on the weekend. There are also things like nutrition, cross training and rest to consider.
We have been fortunate to use a running coach for most of our half-marathon training periods. We value having someone put together the training plan, send reminders, and keep us honest. It is also nice have someone coordinate group runs on the weekends at different locations. Last year, we could not find a coach and did it ourselves. We completed the training using our own schedule, but would have gladly hired someone to be our coach had we found the right person.
I realize I am a bit biased here, but having a financial plan and coach (i.e. financial planner) can be extremely beneficial when embarking on a financial journey. Whether you are starting out, or well into your financial life, it can be a bit daunting to figure out where you are financially and what steps to take next. Having a plan helps you focus on the financial areas of most importance when faced with many tasks to complete.
A financial planner provides accountability and encouragement along the way. As time goes on, it might feel like you are stuck or going backwards on occasion. You may also experience life changes such as starting a new job with new pay and benefits to consider. You could be transitioning into retirement trying to figure out how to change your investment portfolio or manage investment related taxes in your new life. Having an experienced planner on your side can help reduce the stress associated with change and make informed decisions going forward.
You may be reading this and wondering what is next? If you haven’t exercised in quite some time, maybe now is the time to start a new training program. Maybe you join a local couch to 5k program or find a local biking or hiking club that motivates you to get out and move again. Just remember to have fun and know why you are doing it. You can check out my blog The Exercise Planning Challenge for additional motivation.
I mentioned the book The Millionaire Next Door earlier in this post. I read the book when it was first published and it has been influential in my thinking. I use behavior based financial assessment tools in my practice from DataPoints, a company founded by Sarah Stanley Fallaw, Ph.D.. As I state elsewhere on my web site, “I truly believe that the best way to help a client is to first truly understand their relationship with money.” I encourage you to take a brief quiz to learn more about your potential for building and maintaining wealth. The results may provide the motivation you need to schedule a financial checkup or begin your financial journey!