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Life is random. We don’t like to think about that. We want it to be predictable and linear. Instead it is cyclical and random. But we plan in a linear way, saving and compounding on a regular basis…trying to predict our lives linearly. Then life happens and something “unexpected” comes up. For me, what came up was the realization that my job was taking too much out of me and wasn’t worth it any more. But my plan had included continuing in that job, at that pay scale, and savings rate until retirement. What would happen if I jumped off mid-stream?
Disaster. That is what everyone told me. I would be setting myself up for a struggle if I walked away from the pension, and retiree health care that was promised. But that was linear thinking. Staying on the path “promised” that the line would continue. It was the “safe” thing to do. But was it really? No. That path, the one that looked safe, was an illusion. Shortly after I left my job, the division I worked for was sold. My colleagues suddenly were working for someone else. Several eventually lost their job. What I saw as predictable suddenly was hit with a random event that changed everything.
It can be frightening to jump off a path that looks predictable. Often we will only do it if we are forced to…or if the pain of staying on the path becomes greater than facing an unpredictable future. That is part of the illusion too. The future is always unpredictable whether you stay on your current path or head off in a new direction. But our brains likes certainty; so we often perceive the future as a continuation of the present.
Is it Only About Accumulation?
I have spent a lot of time focusing on the future – spending time and money on education, saving for “retirement”, etc. I was taught at a young age that money was for saving, because life was unpredictable. Spending unnecessarily was foolish. Embracing and enjoying the present took work. For many people, they have the opposite issue…they are solely focused on today. Neither of these approaches are ideal. Balance is needed.
One day it came to me, this is the only life I get. Deferring everything for some future possibility wasn’t really living today. I began to question the accumulation method. Do I really have to be miserable for 10 or 15 more years so that I can suddenly shift out of always saving and start spending? What I discovered is that the savers mindset is difficult to shift.
It is this idea of randomness that has led me to rethink the idea of the accumulation concept. The random events that can derail years of planning. Even if a significant event doesn’t happen, the possibility of it is always present. So a cloud hangs over every day, creating worry.
It’s unsettling when there is a lack of money coming in. Yet this is the foundation of the accumulation plan. Save for 30 or 40 years and then spend it down and hope you don’t outlive your money. For me, seeing money be depleted that took so long to accumulate, quickly created a scarcity mentality that I hadn’t expected. I know now that this is common. It is the number one fear in retirement. So, what do we do about this?
Buckets and Barbells
We need mental strategies as much as financial strategies. There are two that have worked well for me. The first one is having money in separate buckets. This can be different accounts or simply a mental accounting. Tagging things for different purposes gives you “permission” to spend it on that purpose and enjoy it.
The other is a barbell strategy. This means having money on one end of the barbell in a super safe-type asset and money on the other end of the barbell that you can use to swing for the fences (or whatever your equivalent is of taking the most risk that you would be comfortable with)…with really nothing in-between.
Cash Flow is King
The missing link for me was to stop thinking in terms of accumulation and start thinking about cash flow. How can I create consistent streams of cash flow that will continue? I used to have my corporate job to provide cash flow. I have since moved to the ideas that Robert Kiyosaki teaches in his books Rich Dad, Poor Dad, and The Cash Flow Quadrant. Business and investments that I control are much more powerful and rewarding. It gives me the opportunity to build on my strengths and have more control over my time and how I work every day.
Having Faith in Yourself And a New Path.
Once you’ve chosen a strategy that works for you, it comes down to having some level of faith that somehow, things will all work out. I could have looked for another job before jumping off the path that I was on. That might have made sense from an outsider’s perspective. But the truth was, I needed a new direction. A direction that I wouldn’t be able to figure out without stepping away for a while. Any situation that you are in is going to color your perspective. Removing myself from all the assumptions that I had made about my life going forward was what I needed. It is an ongoing process. I need to remind myself that the safety of the path was an illusion. That I have stepped off the path before and successfully made a new way.
Who will I be five years from now? I don’t know. So why would it make sense to set a path so firmly when so much can change over time. How do you plan but remain fluid enough to adapt to the shifting landscape?
The Up Side of Random
I encourage you to embrace random. The path isn’t straight and wide. But it is far more interesting. What creates fear is thinking of the random events in life as negative. But random works both ways. The amazing things that have happened since stepping off the predicable path have made me a believer in embracing the adventure.
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