In many ways, my life today is almost identical to how it was a year ago. I’m still married with three children. We live in the same house. We have virtually the same possessions. Sarah and I have the same careers and our children go to the same schools.
What have we really achieved in the past year? We spent quite a bit less than we earn – in effect, we lived off of Sarah’s income and banked my own.
The problem is that this kind of change really doesn’t show up in your life in any tangible way. Our day-to-day life is basically the same as it was a year ago. Our savings and investment account balances haven’t changed that a bit.
The big changes that financial progress brings about in your life – like a new house or a stable retirement – aren’t seen for a very long time.
Honestly, this can feel really disheartening. It’s nice to believe that when you make good financial choices, you’ll begin to see some positive changes in your life. The problem is that most of the changes are subtle – reduced stress, more career freedom, and so on.
How can you keep your eye on the big picture progress that you’ve made when your daily life feels pretty much the same?
Try focusing on the good things in each day. As I mentioned earlier, financial progress often makes day-to-day living easier and better in subtle ways. It’s usually easier to notice the improvements if you focus on the positive things in your life because those subtle changes often accentuate and bring out the good things.
I’ve found that keeping a gratitude journal, in which I list five good things that happened each day, has helped me to focus on the good things that each day contains.
Calculate your net worth regularly, and note the annual change. I calculate my net worth once every three months. It’s easy to do – just add up your assets and subtract your debts from them. The resulting number is your net worth.
It’s particularly useful to compare that net worth calculation to the previous year’s net worth so that you can see the progress you’ve made in the form of a number. I find that number to be very comforting, particularly when I visualize the difference it made in terms of something tangible. We could buy a new car for what we saved last year, plus fly to France and back!
Imagine your future in detail if you keep on this path. For me, this might be the strongest method of all.
Every so often, I forecast ahead and see what our financial situation will look like in, say, ten years. With that in mind, I’ll talk to Sarah about where our life is headed. What kind of life will we build over those ten years knowing that many things are financially possible?
I color in those broad strokes with lots of little detail to bring it all to life in my head, then I use that picture as a focus point to show myself what will happen with our life if we continue down this path. I also reflect on how that picture will start to fade away if we start making negative changes to our spending.
I want that picture. Hand in hand with the daily reflection on gratitude, it helps me realize my life is pretty good right now and it’s only going to get better.