“A year from now, you will wish you had started today.” –Karen Lamb
Most people who come to my office for the first time think their finances are disastrous or fear they will never retire. They anxiously anticipate going through a complete life overhaul, resorting to eating ramen noodles to fix their financial wrongs.
But the need to do this could not be further from the truth. Many have simply veered off their path. Given everything going on in our lives these days, it’s impossible to keep on top of everything. Think about your past New Year’s resolutions—perhaps to shed a few pounds or get more organized. How many times have you had to repeat them?
For most people seeking financial advice, especially those approaching retirement, many of their large decisions have been made already. The house you live in, the size of your family, your career and lifestyle expectations are determined by this point. They’re unlikely to change and really set the foundation of your financial picture.
Rather than an overhaul, most only need marginal changes to get back on track. Simple examples include starting a college savings plan, increasing contributions to meet the savings goal, or transferring balances to enhance a credit card pay-down strategy. For retirees, it’s reviewing pension and or social security options or optimizing their available assets to decrease the chances of outliving those assets.
Changes at the margin can be difficult. Often, they require a high level of analytics, a change in mindset and endurance to stay the course. However, we can all make marginal changes to improve a situation. What’s most important is to realize that marginal changes add up over time, and the cumulative result can be significant. For the math geeks out there, it looks like compounding. Going from good to great often happens at the margin, but it is not easy; it can’t be done with a few clicks of the mouse. It requires coaching to get back on the road and constant monitoring and adjustment to stay on it—and continue improving.
The moral of the story? Consider the marginal changes involved in what you want to change versus trying to set a high expectation, only to fail a few months later. When it comes to your finances, minor adjustments can get you from good to great.