“We have absolutely no control over what happens to us in life, but what we have paramount control over is how to respond to those events,” said Viktor Frankl, the renowned psychologist, while imprisoned in a German concentration camp.
The context of that statement gives it so much more power, doesn’t it?
Compare his context, for example, to ours right now—following what was likely the most contentious presidential election cycle of (at least) my lifetime. You did your part, right? You did your research, cast your ballot, and your preferred candidate either won or lost, and afterward, you felt a certain way—somewhere ranging from disconsolation to elation. But now what?
Your ability to influence what happens next on the national political scene is, at most, sorely limited. But here’s the empowering reality: while macro events may feel beyond our control, our personal financial decisions shape our daily lives far more directly than any election outcome. Just as a voter exercises their power at the ballot box, we can exercise profound control over our financial destiny through intentional choices each day.
Let’s focus on four foundational ways you can use your money to improve your life—areas where your decisions have an immediate and lasting impact:
GROW your investments and income potential.
You can’t control the markets, but you can control how much you save.
Yes, you can apply yourself to crafting a portfolio designed to maximize your investment returns in accordance with your ability, willingness, and need to assume risk, but the most powerful positive indicator of success in the game of wealth accumulation is our effort to save consistently, not the savings vehicle itself.
So, how are you doing on the saving part of investing? Are you doing your part, or are you chasing and scheming to find the next great investment product?
As for your income and income potential, unless you’re a business owner or compensated based directly on the revenue you generate or manage, you likely have limited influence over how the ownership of your company will decide salary brackets (likely based on industry norms over which you have even less control), cost of living adjustments, and bonuses for 2024—but only you can influence how you invest in yourself, and therefore your career and income potential.
You decide to go back to school and get another degree or certification. You decide which book to pick up next, which podcast to listen to, which coach to hire, which connection to make, and to whom you’ll send a note of thanks for their impact on your career.
PROTECT your family, lifestyle, and property.
You can’t control the weather, other drivers, and random acts of misfortune, but you completely control your risk management approach.
You can assume the risks you can self-insure through things like emergency savings and higher deductibles. You can reduce the risk of physical harm in a car accident by wearing a seatbelt, and you can eliminate the risk of alcohol impairing your ability to drive by calling Uber or Lyft. Lastly, you can transfer the catastrophic risks you can’t assume, reduce, or eliminate with various forms of insurance—like life, health, home, auto, disability income, and long-term care insurance.
GIVE to the people and causes most important to you.
“You can’t be generous when you’re dead,” writes author and former hedge fund manager, Bill Perkins, but you can build a legacy while you’re still alive—and you can retain a surprising amount of control, even after death, with thoughtfully crafted estate planning documents.
Most people don’t label themselves charitable or philanthropic, but we all have people and causes who are important to us, and giving is a practice that is much broader than giving enough to your alma mater that they put your name on a building.
For example, your 529 education savings plans to help fund your children’s college education—those are GIVE accounts. Your estate planning documents are a major part of your giving campaign, but so are the experiences you craft for your family, the funding for which inevitably comes at the expense of one of your other three “buckets.”
Of course, there are the causes we give to financially, but also those we serve physically. As Chris Guillebeau said in a recent post, helping someone in need “works because it gets our eyes off the things that are troubling us. It doesn’t solve everything, but it does make things better.”
And would you believe this? While every major religion has lauded the benefits of generosity and the medical community has confirmed that we receive myriad physiological and psychological benefits from giving, newer research also suggests that those who give more ironically tend to have more. Or, as Dr. Daniel Crosby writes in his excellent new book, The Soul of Wealth, “giving is the path to abundance.”
LIVE confidently with financial freedom.
You may have less control over whether you could be mathematically deemed “financially independent” today, but you absolutely have control over your ability to live confidently with financial freedom.
How? By giving every dollar a purpose. Financial independence is when you have enough income-generating assets to work because you want to, not because you have to—or not at all. But by applying purpose to every dollar that comes in—by deliberately deploying your income in pursuit of those GROW, PROTECT, and GIVE goals that we discussed above—then you can LIVE confidently, knowing you’ve done your part. And that sense of agency or control gives us that illusive financial freedom.