It’s Journey-Man here again, the late starter! What a strange week this has been. Last week, as a late-starter, I decided to start thinking deeply about my financial life. I want to find out what the outlook is, in terms of savings and investments. Knowledge is power and little did I realise that this would be a scary, introspective, and revealing exercise.
Gathering information or gathering storm?
There is much to be said about looking at yourself in the mirror and realising that the truth of the reflection scares you (a little bit)! I realised there is a degree of shame involved with being a late starter, not having saved or invested sufficiently through my working life. This seems to be one of those problems people can’t (or don’t) really speak about.
Realising (eventually) that I may have made a financial mess is not an easy thing to think about (let alone write about). But I am Journey-Man, there is no sitting still anymore. I may be a late starter but it is now time for action.
This is the second article in my 10-piece series. Hope you read them all! Here’s the first on starting late to save for retirement.
What a momentous week it has been!
I may be a late starter but something awakened in me as I stared my problem in the face and (quietly) declared war! I found a new sense of purpose, renewed hope and a definite sense of relief. Whatever happens from here on in, life is already changing.
I see the mess and I intend to deal with it. Through this series I truly hope that you can take a moment to assess your financial life and find the motivation to sort things out! Once you understand your situation better and look at it holistically you’ll understand that knowledge truly is power.
I am me! This is a personal problem.
There are many online resources seeking to provide financial to-do lists, to encourage a purchase (that may be an investment, an RA, insurance, budgeting tools, training material etc.) Many of these sites tend to be (slightly) biased or to provide relatively shallow advice. I am not looking for a silver-bullet solution for my situation, I am looking for the right solution. I truly believe that there is one. To find my solution (which may be quite different from yours) I need to understand my own situation, my own behaviour patterns, my own attitude to money, my expenditure patterns, my (many) weaknesses and my (many) strengths. I need to understand these personal traits before I start formulating a plan. I suppose it is like working out your body-type before going on a diet and setting up an exercise regime.
This doesn’t have to take too long and shouldn’t be used as an excuse to procrastinate. I firmly believe that this step may well be the key to unlock the treasure chest. Remember that knowledge is power! So take the time to understand yourself.
Take Charge of Your Money did an interesting article on “Your Money or Your Life” that may be of interest as you think about your attitude to money.
So much information, so little attention.
There is so much information available online these days. The financial dilemma faced by the late starter is clearly not the result of a lack of information. It probably has much more to do with having too much information available. It can be difficult, and time consuming, trying to make sense of it all. But finding, and then paying attention, to the right information is key. Knowledge may be power, but too much knowledge can just be confusing. LOL.
Who has the time (or attention span) for all of this?
I did notice, whenever there is a problem, there is a to-do list. Here are a few of the list items I stumbled across as I went in search of information related to the late starter investor (I have included the reference sites at the end of the article for your information): –
- Play catch up
- Understand how much you need
- Don’t take on more risk
- Invest in an RA
- Buy adequate insurance
- Pay down debt
- You and your spouse come first
- Reduce your consumption
- Plan to work longer
- Tap your house as an asset sooner rather than later
- Double down or triple down on your savings now
- Be realistic
- Have a plan
- Get rid of bad debt for good
- Get going
- Take advantage of tax breaks
- Be intentional
- Know your options
- Add years to your nest egg
- Stock up on stocks
- Work longer
- You need a plan
- Invest 15% of your household income into RA’s and pre-tax retirement funds
- Save for your children’s education fund
- Rein in spending
- Invest wisely
- Put off retirement for two years and get intense
- Start an emergency fund
- Pay off all debt using the debt
- Save 3 to 6 months of expenses for emergencies
- Pay off your home early
- Build wealth and give
This is a (very) small sample of the lists and list items I stumbled across as I went in search of guidance. These are all wonderful things to think about but not all easy (or relevant) to do. Finding the right order and priority seems to be a tricky and personal affair.
There is no easy solution
What these lists highlight, is that there are some common BIG issues we will need to work through. issues like debt, savings, spending less and making a plan! Remember, this week we are not trying to settle on solutions. It is good to see the endless to-do lists but for now they are included so that we have an idea of what is out there.
I started looking for the common threads, the common themes in the lists. I started to spend some time and attention reading (really reading) the wealth of readily available material available online.
Once I started paying attention it became very clear that there is no quick solution. This is not an easy problem to have. Having neglected to save for the better part of my career, has a serious consequence. It requires more than a simple to-list or a quick solution.
I listened to a podcast yesterday and one of the scariest things that I heard was ‘You may have to get uncomfortable, you may have to do something radical, you may have to stop eating out!’ – sobering words indeed.
To see radical results, I will need to make radical changes! That is going to cause discomfort and is going to take a higher level of commitment and persistence on my part. As I distilled the information I gathered, some of these things became very clear to me – I am in my unique situation because I have persistently committed to doing things that have not created wealth. To change that I must start again, take out the knife and do the surgery.
Where should I start?
Here is my take-away for the week (and another list!).
- My problem, like yours, is unique
- I need to examine my own circumstances before making plans
- I must pay attention
- This requires quality time reading (not just skimming through) and gathering information
- I will analyse and understand the information I gather. I must make sure it applies to me, where I am now
- This is going to take effort. If I really want to resolve my financial dilemmas I will need to face some harsh facts and commit with persistence to doing a few uncomfortable things and making some radical changes
- Sadly, there is no magic formula (that revelation really hurts!)
Here are some articles on Take Charge of Your Money which are quite useful at this point:
Here are the links to the various sites where we found lists:
- 7 Tips to start saving for retirement with a late start
- How late is too late to start saving for retirement?
- Is it too late to start saving?
- Haunted by a late-start retirement saving
- Behind on Retirement Savings? There’s still hope
- Dave Ramsey’s 7 Baby Steps
Knowledge is power! Do this now!
Can I suggest that you have a good look at where you are and what your personal financial circumstances are? Take an honest look at what you earn, what you spend and your attitude to your finances. Spend some time reading and gathering your own information because we are about to get started and we are about to take some radical action. You need to know where you are now so that as journey together you can change your financial life.
Take the Financial Health test now and see what your starting point is.
Stay excited because there in no turning back. Let’s journey on!
Until next time, keep reading and remember, knowledge is power.
Next up…. No fear.