The Importance of Following Your Own Financial Plan

It's not about them, it's about your own journey.

    We’ve all heard it on social media, “you should have ‘x’ saved by the time you’re ‘y’ years old, if you want to retire by age 65. Maybe you’ve heard “the average American that’s [your age] has ‘x’ saved for retirement”. But how much does that really help you, except to induce emotions of anxiety and failure? If you’re following your own plan, than stick to your plan, otherwise it’s just “keeping up with the Joneses”. Anything you add to your savings still counts as progress.

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• You can follow your own financial path without worrying what the “average person your age” is doing in life. You are still making progress if you are saving money and following your plan. Whether you’re able to save $500, $1,000, or even $5.

• Everyone has their own experience, so they are entitled to their own path. The path towards retirement is very similar to road directions: You can argue to take the I-5 or the I-10, but in the end, you still arrive about the same time. While there are some general guidelines, such as taking advantage of an employer match in your 401(k), everyone’s details are different (how much do you want to save monthly, how soon are you looking to retire, etc.)

• If you focus on where you “should” be, then it distracts you from where you currently are. If you have a plan and you’re sticking to it, worrying about someone else’s plan won’t help you. If you hear that “by age 30 you should have $50k saved”, how does that directly help you? Instead, focus on your current situation and what steps you want to take to get there. Progress is Progress.

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      Let me start this by saying: if you already have lots of savings, are well prepared for retirement, or part of the FI/RE movement, this particular article may not be for you.

      During my time working as a financial counselor in the military, and then working in retail banking, people often ask, “where am I supposed to be If I want to retire by this age?”, or “how much should I have saved by the time I’m 30?”. Comparing yourself to others doesn’t matter as much as you think it will. It will likely make you disappointed or anxious, unless you are a super-saver and way ahead of the game. You may start to think that you should be “way ahead” of where you are now, but you might actually be in a good place. Ideally, we should all be ahead of where we are now, because in a perfect world, we all make 7-figure salaries. If your anxiety makes you cut spending too much, you could find yourself eating rice and beans, and not in a good way. 

      If I tell you that you should have $100k in a retirement account right now, would that make you feel better or worse? If your retirement account isn’t close to that, are you going to feel better, or feel even less confident? Let’s change perspectives: If I tell you that you need to save $200 a month to retire by age 70, or $400 a month to retire by age 60, would that make you feel a little better? It gives you a goal but gives some wiggle room, without adding more unnecessary pressure.

     Comparing yourself to others does nothing to help you move improve. It only lets you know what everyone else is doing. If my neighbor is making renovations to their home, is that going to automatically make my home any less valuable? If all my neighbors are buying brand new cars fresh off the assembly line, does that mean my car is now less reliable and will break down faster?

I’ll give you a hint: The answer to both questions is No.

    You’re doing the best you can for you. If you want to do better, that’s great! But if you’re happy with your direction and your path, then don’t feel ashamed because of what other people are doing. Being part of the herd might be good for penguins fighting the cold, but the proverbial lemming might disagree. If you can only save $50 a month, good on you! If you need to temporarily stop saving to pay off a debt, then that’s ok.

Again, PROGRESS IS PROGRESS.