Yesterday, I was reading a largely spot-on article over at Steve Pavlina’s blog with the rather New Age-y title How to Raise Your Financial Vibration. Once the spiritual aspects of the article are stripped away, the basic idea is pretty clear and sensible: if you want to be successful in an area, set clear stepping stone goals along the way that demonstrate some level of success and keep away from people who don’t believe that you can do it.
Here’s an example. Let’s say you’re making $35K as an administrative assistant, but you dream of making $70K by working in middle management. Instead of just dreaming about it, do it. Figure out what education you need to get there, get started on taking little steps right now, and make it happen.
One key part of Pavlina’s article is his suggestion to start thinking about the framework you’ll need to support your lifestyle after you make your desired changes. So, in the above example, you might want to do things like start building connections with the people that would likely be your peers after you get your education, so that you have your foot in the door in the field when the time comes.
That completely makes sense to me. However, Pavlina takes it in a bit of a different direction:
Make a list of other changes you’ll implement as more money begins to flow into your life, such as upgrading your computer, overhauling your wardrobe, taking a nice vacation, or buying more organic produce. Imagine that those things are becoming part of your daily routine. Implement those changes when you can afford to.
Every single life change suggested here involves spending more money. In other words, the view of success that’s presented in the article is having a new computer, having stellar vacations, having sharp clothes, and buying organic foods.
In my eyes, this is a blatant example of putting the cart before the horse, and it’s a trap that so many people fall into as they’re finding their way down the road to success.
Here’s another way to think about it. If your salary doubled tomorrow, what is the first thing you’d do? In Pavlina’s world – and in far too many people’s world – the first response is to head out and start buying stuff.
There’s one big problem with that, though. As soon as you start buying more expensive stuff and settle into a more expensive life pattern, your “standard” expenses go up. You now require more money than you did before to maintain your basic lifestyle.
Before you know it, even with your raise, you’re right back where you were before – barely making ends meet, wondering how on earth you’re ever going to retire, and so on. The only difference is now you have more stuff.
I like to take a different approach.
My Approach to Financial Success
Being rich or successful is never measured in the amount of stuff you have
It’s measured in the amount of security you have and the amount of freedom you have from the worries of day to day life.
Some might argue that the trappings of success are key to making you feel successful For me at least, I rarely feel more successful than when I see my investment balances going up because of my contributions or when I see an opportunity to really make someone else’s life more successful through a helping hand delivered by my knowledge or a connection that I have.
Let’s jump back to the person who just doubled their salary – from $35K to $70K. Let’s look at two different people who did just that.
One person might choose to start living large. They buy a new car. They buy all new clothes. They buy a spectacular new computer. They go on some fabulous trips. They dump a bunch of money into a kitchen remodel and some landscaping. And, before you know it, that person is right back where they were before, barely making ends meet and plotting how to earn even more.
Another person might take a different route. They instead bump up their retirement contributions to 10% of their salary. They buy a few new clothes for the office, but don’t upgrade their wardrobe. Instead, they build a big emergency fund and start investing for the future. A few years down the road, that person has a nice, fat emergency fund and the beginnings of a strong investment portfolio.
Now, suddenly, the business closes up shop. One person is going to panic and go into emergency job search mode, calling around desperate for work, anything to keep their lifestyle chugging along. The other person shrugs their shoulders and decides it’s time to start that small business they’ve always dreamed about.
Who’s more successful: the person with lots of stuff running around in a panic, or the person living their dream?
In short, the trappings of true success aren’t in your closet.
The Key Parts of a Financially Successful Life
1. A strong emergency fund
They have the liquid cash to deal with any crisis that comes along and also enough cash to take advantage of any great opportunities, too.
2. Investments for a big future dream
They’ve also got investments for their future – perhaps for retirement, or perhaps for another dream that they’re planning for. This is their “walk away” money – and that “walk away” date might come sooner than you think.
3. A lot of healthy, strong relationships with a wide variety of people
They know a lot of people from all walks of life – all social strata, all income levels, and a wide variety of professions and interests. They know people at city hall and people on the factory floor, too.
4. A worthwhile body of knowledge
They know their stuff and have valuable knowledge to contribute to many situations.
5. A good work ethic
They know that working hard is the real key to success, and they practice that knowledge, too. Laziness isn’t part of the equation – they’re known for producing, not for just being there with a shiny new suit.
6. A positive attitude
They believe that good things are bound to happen in the future if they keep their nose to the grindstone and work hard at it.
7. A sharing attitude
They’re willing to share what they know and help you when you need it.
If you want to build a framework for success in your life, THOSE are the things you should be chasing. Those are the elements of a truly successful life – and building them doesn’t require you to empty out your bank account and fill your home with a bunch of clutter.