Beating Your Pace

I love spending time outdoors in the spring. In fact, it’s a constant push and pull this time of year as I balance the need to write and the desire to get out there and walk and jog.

One of my favorite things to do is go on a three mile walk/jog out of my front door. I have a loop that I take that takes me right back to my front door at the three mile mark. That walk/jog is a (mostly) daily occurrence.

At the start of spring, I’m slow. I usually walk the whole distance at a reasonably brisk pace and I record the time. That’s my benchmark at the start.

My goal the next day is to shave a little bit of time off of that initial pace. Even a few seconds is a success. Usually, I’ll just walk like I normally do, but I’ll almost always come in just a bit faster than the day before, and I feel pretty happy about it.

The next day, I want to shave off even a little more. This usually just requires me to be conscious about my pace for just a part of the walk. I’ll follow that up on subsequent days with walks where I have to focus a little bit more and then a little bit more than that.

Each day thereafter, the goal is to shave a little bit of time off of that loop. Gradually, I have to start walking faster and faster. I have to start jogging pieces of the route, slowly adding more and more jogging to the mix. Eventually, some running is required.

Over the weeks and months as that pace gets faster, I start feeling better. I can play soccer with my kids for longer without getting out of breath (compared to our first kick at the end of winter). I simply feel more energetic, day in and day out.

I keep that in mind each day when I start that loop. If I can match or beat my pace from the day before, then those good feelings will continue. If I can’t… then I know that things aren’t heading in the right direction any more.

That pace number is just a simple, shorthand way to prove to myself that I’m putting real effort into staying in shape, that I’m putting real effort into extending my life and feeling better each day. Watching that pace number go down throughout the spring, summer, and fall is really empowering, not just because of the number going down, but because of how I can connect it to my life.

Of course, it doesn’t take too much of a logical leap to realize that the pace number and the impact it has on my life parallels some aspects of personal finance really well.

The number that immediately comes to mind is my own net worth. In fact, I can rewrite that summary paragraph about my pace using net worth…

Net worth is just a simple, shorthand way to prove to myself that I’m putting real effort into staying in financial shape, that I’m putting real effort into moving toward financial independence and keeping financial stress out of my life. Watching that net worth go up each month is really empowering, not just because of the number going up, but because of how I can connect it to my life.

My net worth is my financial pace, in other words.

A quick note if you’re unfamiliar with what net worth is: net worth simply means the total value of all of your assets – your home, your cars, your savings, any valuable possessions you own, your retirement accounts, and so on – minus the total value of all of your debts – your mortgage, your car loans, your credit cards, your student loans, and so on. Ideally, your net worth goes up each month as compared to the previous month.

In other words, if my net worth is higher this month than it was last month, I feel as though my finances are heading in the right direction and I feel good about the state of my financial life.

In fact, I often carry it a bit further. I’ll calculate how much my net worth has changed over the past month and I’ll check to see if that number is heading upwards.

So, let’s say, at the end of January, my net worth is $100,000. At the end of February, my net worth is $101,000. At the end of March, my net worth is $102,100. Between January and February, my net worth went up by $1,000, but between February and March, my net worth went up by $1,100. My change in net worth went up from $1,000 to $1,100, in other words.

There are lots of different methods for keeping track of your “personal finance pace,” depending on what your personal finance goals are:

Your debt level works as a great personal finance pace. A month is successful if it ends with your debt level going down. You can also track how much it went down that month and strive to have it go down more than the month before.

Your emergency fund level can be very useful if you’re struggling to get some emergency savings in your bank account. An emergency fund is an incredibly valuable first step in a financial turnaround, but it can be very tough to achieve if you’re just making ends meet.

Your retirement savings is another great metric for tracking your personal finance pace. A month is successful if it ends with your retirement savings balance higher than the month before.

You can maintain almost exactly the same type of pace measurement when you’re looking at any form of savings for the future, whether it’s retirement savings or something like down payment savings instead.

As the pace becomes more difficult, you’ll find that, just like in athletic training, you have to try new methods to make it possible to continue to improve your pace. You’ll try new income earning tactics. You’ll try new frugality tactics. In the end, those tactics all serve the same goal – helping you move ever more rapidly toward your financial goals.

For me, keeping track of my “personal finance pace” is just as exciting and rewarding as keeping track of my exercise pace, but that doesn’t mean that it’s not challenging and difficult at times, as any good goal should be.

Sometimes I don’t hit the monthly pace that I desire. When that happens, the key is to not look at it as some kind of personal failure. Instead, I try to view it as evidence that there is trouble afoot and that I need to figure out exactly why things aren’t progressing like they should. Why didn’t my net worth grow like I expected? The answer to that question almost always provides financial guidance for me.

Sometimes I don’t feel as inspired as I do at other times. Much like that morning walk or jog, there are times when I just don’t feel inspired or motivated toward the things I need to do to make myself successful. When that happens, I try three different approaches.

First, I simply will myself to make the good choice. I might grumble and mumble about it, but I get out there and start walking. Similarly, I might grumble and mumble about it, but I will eventually make a meal at home instead of just going out, and I won’t go online and buy $100 worth of stuff on my credit card. That’s discipline at work and, in the end, discipline is the real key to any sort of personal improvement.

Second, I spend time thinking about what my life will be like in the future both with and without keeping pace. What will my life become if I stick with the pace I’ve established? It’ll look pretty good. What will my life become if I don’t stick with that pace? It might be good, but not as good as my life would be if I stuck with that pace. I find that the more detail I get into with this kind of thinking, the more clear the benefits of keeping pace actually are.

Third, I put artificial motivators in place for the short term. In other words, I’ll use some sort of “lure” to encourage good behavior. For example, I might say that if I don’t spend any extra money this week and eat my meals at home, I’ll spend Saturday afternoon doing purely fun things that I personally enjoy. Given that my time schedule doesn’t give me a lot of free time, I find that time lures are incredibly powerful for me.

For me, thinking of personal finance goals in the same way that I think of a running “pace” is a very useful mental tool. It helps me to see personal finance as something of a race against myself, one where I feel a lot of success from beating my own pace and I also get to reap the rewards of my effort in terms of my day to day life.

Try setting a personal finance pace for yourself, then see if you can beat it the next month, then the month after that. It’s quite rewarding.

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