When should I live?

By Wim de Vos

That, really, is the daily conundrum faced by many millions of people attempting to live life responsibly, given a limited quantum of resources in the form of assets (or debt!) and income. Complicating matters further is the uncertainty as to what the value of these assets and the level of income is likely to be at any given point in future.

Given the option of spending R100 000 now on realising a life-long dream – like skiing in Europe – or saving it for the proverbial rainy day, many would argue that “life is short” and “you only live once”. Therefore “what the heck, let’s so do it”! These arguments are typically used as sound basis for rather capturing the immediately apparent quality of life on offer even if it implies less financial security later. Somehow, the human spirit remains eternally optimistic and doggedly believes that any holes you dig yourself into now will simply dematerialise later, as if by magic. Ours have become a society where grabbing and holding onto a thing or an experience right now often takes preference, especially given the increasingly uncertain “tomorrow” popularised by mainstream media.

The truth is that planning ahead and being intentional about the future bears exponential fruit. A staggering body of empirical evidence supports this fact, be it in the context of individuals, families, companies or even governments. To avoid it is flirting with disaster. A fantastic example is the relative ease with which people will incur debt in order to have something straight away even though the repayments still has to be earned. This mindset is prevalent among all South Africans, particularly among those that can least afford it. I urge all those who deal with clients, employees, school kids and even your own kids to make this message a priority – for the sake of a more certain future.

Clients and the public in general MUST be educated that saving, let alone reducing and not incurring debt is an absolutely critical component of a sustainable, healthy society. Until this basic education gets the profile at school level that it deserves, it will be up to financial practitioners (and wise parents) in an authentic advisory capacity to disseminate such education as effectively, as widely and as brutally as possible.

Does this now mean that all living it up should forever be postponed until a day when your knees are simply no longer able to carry you down an alpine piste? Clearly, there must be an optimal marriage between your lifetime financial budget and your life allocation of youth and good health? I believe the key lies in:

  • not splashing out at the expense of a systematic diligent monthly savings commitment towards the part of your life when you can’t realistically expect to be economically active;
  • being prudent relative to the decision-making you observe around you;
  • consulting a reputable, licensed family office that doesn’t just sell you stuff, but will equip you with an accurate financial dashboard on which to base your decisions – much like flying an aircraft with instrumentation rather than without;
  • sucking the maximum fun out of what you do commit to;
  • deliberately planning and executing those ideals you feel will define who you are and should be, rather than merely acting on impulse;
  • giving towards and enabling the lives of others, instead of defining life merely as what was lived by you personally.

I will argue that in so doing, the next reasonable person out there will live much more, more often and more consistently than when the only game plan for you and your money is simply to hunt the next big moment or acquisition…

By autusco

Friday, October 3rd, 2014

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