The events of our lives are made up of a mixture of elements that are out of our control and elements that we have control over. It’s the relationship between those two elements that has a lot to do with personal finance and career and personal success.
I think my own experience provides a wonderful example of this.
When I was in pure “financial disaster” mode in the mid-2000s, I spent money with reckless abandon.
I didn’t really worry that much about my day-to-day expenses (something I could control) because I believed that my future self would make enough money (something I couldn’t control) that I would be just fine in the long run.
I didn’t really worry about saving for a down payment (something I could control) because I believed that my future self would be able to pay for it (something I couldn’t control).
I didn’t really worry about improving my skill set at work (something I could control) because I believed that my job was more or less a permanent one (something I couldn’t control).
I didn’t really worry about getting rid of my debts quickly (something I could control) because I believed that my magical future self would be able to cover it (something I couldn’t control).
Over and over again, I allowed things that were out of my control to dictate the direction of my life.
Unsurprisingly, this ended in disaster. My wife and I were so buried in debt by 2006 that we actually couldn’t pay our bills. We had nothing saved for a down payment. We had a pile of student loans and a pile of credit card debt.
Today, I take a completely different approach. I recognize now that the actions I choose today not only determine the quality of my day, but have a ton of impact on the options I will have later on.
My actions and choices right now are something that I can control. I can choose to spend money on extra things… or I can choose not to spend. I can choose to spend my spare time working on extra projects or building skills or doing things I’m really passionate about… or I can choose to spend my spare time goofing off or idling.
What I can’t choose is the exact events of my future. I can’t choose whether the fantasy series I’ve been working on for years will ever be a big success and earn a lot of money. I can’t choose whether or not the transmission in my SUV will fail in the next month.
Between those two categories are the things that I have partial control over.
I can’t control whether or not I have a heart attack or a stroke in my 50s or 60s or 70s… but I can certainly reduce the odds by eating well and exercising.
I can’t control whether or not my novel is a big success… but I can certainly improve the odds by actually writing it and doing my best to make it exciting and interesting.
I can’t control whether or not I’ll have my current job forever… but I can certainly improve my chances by continuing to produce a good article every single day, like clockwork.
Over and over again, it’s the same refrain. We can’t control the unknowns in our future. What we can do is reduce the odds of bad things happening, improve the odds of good things happening, and improve our chances of being able to handle whatever life throws our way.
Our ability to do that – reducing the odds of future bad events, improving the odds of future good events, and improving our chances to handle unexpected events – is completely under our control.
This seems like such a simple idea, yet it is clearly a hard thing for many people to grasp and to apply in their lives. I certainly didn’t grasp it for a large portion of my life. I have many friends and loved ones who don’t see this at all.
How could I have explained this idea to myself ten years ago? I would have broken it down into five simple pieces.
First, what choices did you make today? Just think about the times today where you chose to spend money, where you chose among several food options, where you chose to fluff off at work, where you chose to help out a friend, and so on. Think about your choices. Don’t worry about whether they were good or bad, just spend some time working mentally back through your day.
The value of doing this is that you get a chance to think about the decisions you made outside of the heat of the moment. All you’re trying to do is understand your decisions better so that, in the future, you make better choices in the moment.
Second, pull out a few of those decisions that you remember really clearly. Maybe you remember what you had for lunch, or you remember spending money at the bookstore. Perhaps you firmly recall choosing to ignore some emails and instead looking at auction listings on eBay.
The funny part here is that your mind will consistently pull up choices that you’re less sure of. Those are often choices that are tied to whatever parts of your life that you feel troubled by and are the parts that you want to fix.
Next, walk through each of those decisions in detail in your head. Why did you make the choice that you did? You should never feel bad about going through this process, even if you begin to realize that you made your decision for dubious reasons.
I just focus on trying to understand why I made that decision in that moment. What propelled me to choose to watch some Youtube videos instead of working or exercising? Why did I decide to spend $30 on something at the game store?
Obviously, I’m never going to know all of the reasons, but at the same time, “I don’t know” is not a good enough answer. Without some sort of desire, I would have never made that choice. Maybe I was just trying to please someone else. Maybe I was fulfilling some sort of short-term desire inside my head.
After that, I consider the long-term consequences of that choice. Did that decision improve or weaken my health? Did it improve or weaken my work skills? Did it improve or weaken my social standing? Did it improve or weaken my finances?
I compare that option to what things would look like if I had made the opposing choice. For example, if I chose to not get things done at work, that weakens my work status compared to actually getting things done.
Often, that choice needs to be repeated quite a few times to create some genuine real-world consequences, but that doesn’t mean that the consequences don’t exist. Your choice to eat three Big Macs might not result in immediate health consequences, but it does contribute to health consequences in the future.
The conclusion that most people come to after these thought processes is that they made a choice for a short term benefit and a long term cost. The example here is someone who loves burgers eating a giant unhealthy burger slathered with butter and all kinds of junk. The short term benefit is that tasty burger; the long term cost is the health consequences of that meal. Alternately, they may have chose a short term cost for a long term benefit. For example, they chose not to go out with friends so that they could stay home and study, which results in better grades and an improvement in their career path.
So, there’s a final step that people should think about before moving on: is there an alternate choice that could have been made that reduces the long-term drawbacks or reduces the short-term cost? In other words, is there a choice I could have made that does a better job of maximizing the long-term and short-term positives (or at least minimizes the negatives)?
For example, let’s say that I bought a book at the bookstore. What if I had chosen instead to check out that book in the library? Does it make the situation worse? Well, if the library doesn’t have the book, that could be worse… but did I even bother to check? Also, if I don’t read it quickly, I’ll have to return it… but why am I grabbing the book at all if I’m not going to read it in the next few weeks? Maybe I like the environment of the bookstore better than the library… but checking out the book means I save $10.
It’s that process that convinces me to check out books unless I plan on using them for permanent reference or they’re on sale (such as used books or Kindle daily deals). It’s that process that convinces me to make meals at home. It’s that process that convinces me to constantly improve my work habits.
Because, again and again, I find that the choice in the moment is better than I originally thought that it was. I have the power to make a better choice. I just sometimes have to work to see that better choice.
That’s where the magic happens. If you spend some time thinking about your choices in terms of trying to find the best possible balance between short term and long term, you can almost always come up with a better choice than the one you made. That revelation of the better choice will stick in your head. You’ll want to make that awesome better choice, so you’ll look for opportunities to make that choice.
Your life gets better, a simple choice at a time.
Those individual little choices in your life are where you have control. You have the power to make that choices, for better or for worse. You owe it to yourself – and your future self – to spend some time making sure that those choices are the best possible ones.