In the past few posts, I’ve reviewed the top ten financial mistakes that I made prior to dedicating myself to becoming financially literate and striving for financial well-being.
Like I’ve said so many times before, I truly believe that the most important first step was to acknowledge that I knew nothing and that I had made mistakes. Once I did that, I was free to move forward towards my goals without fear. You can do the same!
I also think it is important to acknowledge the things that I (mostly inadvertently) did right prior to beginning my financial education. To be sure, this is a smaller list than the list of things that I did wrong. However, by being aware of steps in the right direction, I’m able to double down on these efforts in the journey towards financial independence. Plus, by focusing on the positives, no matter how small, we help frame a positive mindset at the outset of our financial education journey.
Here we go:
- Living on a budget
On its face this may seem counterintuitive since I told you all about how I spent up to my paycheck, dipped into savings, and bought on credit. I did do those things, but this was mostly in the first few years after my wife and I moved to New York City for my training and her PhD program. For the first time, we were being paid instead on paying for school. We were in the big city. So we ate out a ton, ordered food in, went to Yankees games, and bought toys.
But then something changed…we had kids. We had the first one in 2018 and another in 2019. All of a sudden, we needed a 2 bedroom apartment and had all of the expenses that come with children. So we were still spending up to my paycheck, but this time 75% of expenses were rent and childcare related. We basically had 25% of my paycheck to survive in one of the most expensive cities in the world. This forced us to economize and live frugally. We certainly were not poor but we made decisions to not eat out and not order food, limit discretionary spending, and purchase used items. The funny thing was that doing this did not make us any less able to provide a very nice and happy life for our children and ourselves. We still did make some purchases on credit that I wish we had figured out another way to manage, but were doing so now only for necessary expenses – like strollers or fees for my licensing.
Kids taught us to budget out of basic necessity. In retrospect, it gave us the practice and discipline to create and stick to our new budget with our new higher salaries. I like the notion that a budget is not a restrictive tool but rather a guide towards your financial goals. Certainly anyone can begin to become a good budgeter and saver at any point, but practice helped us.
2. Thinking about what we wanted in life
Without thinking about life goals (personally, professionally, as a family, etc.), it can be hard to plan financially. In my mind, the whole purpose of financial well-being is to enhance and facilitate your personal well-being…to allow you to live your life on your terms following your passion and purpose. I think many of you will relate when I tell you that my wife and I were always focused on our short terms goals – go to medical school, get your PhD, etc. We failed to pay enough attention to our long term life goals. We were living and surviving day-to-day, both financially and otherwise.
Organically, we both started to think about and share what we wanted out of life and if the path that we were on was going to help or hinder us from getting there. Again, this can be a scary thing to confront because often we get short-sighted and follow the goals that others think we should have rather than our own. This happens to some degree in just about everyone, and we were not different.
In short, we realized that we were not on the exact path to the future we wanted. We had a lot of discussions regarding our goals, some of which are still evolving. This led to the uncomfortable realization that we needed to not only become less short-sighted in our personal and professional life, but in our financial life. Finances were going to be a key component of reaching our dream life whether we liked it or not.
We had two choices – learn about and take control of our finances or stick our head in the sand and hope for the best.
3. Starting my financial education
This is hands down the best move that I have made or will ever make financially. This decision will be the difference in millions of dollars throughout my life and carries so much more value in intangibles. Once I recognized the need to increase my financial knowledge, I jumped right in. Don’t forget, as I mentioned before, I owned a free copy of The White Coat Investor for about a year before I opened it once, so I can’t give myself too strong of a pat on the back. But, once we went for it, we went for it. While learning certainly confirmed the mistakes that I had made, I finally began to understand the steps that we could take to get on the right path and start working towards our goals. What could be more motivating! I read this first book in a few days and haven’t stopped since.
Creating the inertia to begin your financial education can be difficult. Even once you realize the need to start, actually starting is a different story. It can be intimidating, scary, and daunting. I certainly felt this way. Now that I’m on the other side, I promise you that it is not as scary as it seems. Financial education is a lifelong journey that I am just at the beginning of. It’s a marathon, not a sprint.
There’s no need to feel like you need to learn everything right now or that there’s an invisible timer that if you don’t learn everything before it goes off, it’s too late. The important part is starting, not finishing. I recommend you buy one financial book and then set aside 10 minutes on the same night (not matter what!) to read a chapter. Once you get started, I feel confident that you will experience the same excitement and, dare I say, relief that I felt.
And then keep going. Some books or blogs will speak to you and others won’t. Stick with what aligns with your style and philosophy and you will be more likely to keep with it. You will never regret learning more!
And that’s it. Those are truly the only things that I did right financially before I started out on the path to financial enlightenment. I will never regret that my major focus and effort during this time was on becoming as good of a plastic surgeon, father, and husband as I can be. But, I do wish that I had spent some time and energy on my financial well-being. Doing so would have started my family and me on a better path towards our life goals and long-term personal well-being.
One of the aspects that makes me the most excited about this blog is that we will be going on this journey together. I am not at the finish line, in fact some of you may be further along this path than I am while many will not yet have started. Regardless, we are all in this together to motivate and help each other along the way. I promise to share my successes and failures along the way and can’t wait to learn from all of you as well!
What do you think? What “right moves” have you made financially? Have you started your financial education? (Hint: if you are reading this, you have!) Leave a comment below!