An Independence “Check-Up”

The first half of 2011 is now in the books, and last month we celebrated our nation’s Independence Day.

Before we dive into a quick “Independence Check-Up” that I have for you, let’s take a giant step back from the race for a moment and acknowledge just how fortunate we all are to be living in this day and age.  And, most importantly, in the United States.

I think contrast is a wonderful tool that we all use too infrequently.  It crystallizes everything very quickly and helps us all put things in perspective.

After reading World Without End, Ken Follett’s sequel to his epic Pillars of the Earth (which takes place between the 12th and 14th centuries) I couldn’t help but think about how barbaric and dispiriting is was to live back then.

In those days, you had absolutely no control over any aspects of your life.  None!

Dream, plan, and work for a better life for you and your family?  Forget it.

Contrast that with today here in America.  And, with what our Independence Day celebration is all about.

We’re celebrating our ability to exercise our own judgment.  To use our minds to choose what we believe to be best for our own well being (as long as we don’t use force or fraud to deny anyone else the right to pursue the same for themselves).

This basic and profound right did not exist prior to the creation of America.

Instead, individuals were subservient to some form of a dictatorship, or governing body empowered with the right to control your life.

Stop and think about how incredible that is, and the life it allows you to live if you choose.

Your Independence “Check-Up”

So, are you taking full advantage of this freedom?

Take a moment to grade yourself on a scale of 1 to 10 on your level of independence (at this stage in your life) defined as doing:

  • What you want
  • When you want
  • Where you want
  • With whomever you choose

Where do you stack up?

Are you a 10?

Most would acknowledge that they’re not even close.  Even those who are retired.

And, the reason is not lack of possibility.  The problem that I’ve witnessed over the last 22 years coaching hundreds of individuals and couples to a seamless transition to retirement is that most people are just not financially confident enough at this stage in their lives.

And, that lack of confidence translates into a lack of independence.

There’s a direct link between the two.  You can’t experience high levels of one without the other.

If you really stop and think about it, all of those years of diligently saving money for the future are of absolutely no value to you unless you have the confidence to spend it without the constant fear that you’re going to run out some day.

Where to Derive Confidence

For me, confidence comes from “knowing”.  Whenever my confidence gets tested in any area of life, I immediately go into “information acquisition and quantification mode”!

Now there’s a mouthful!  What exactly do I mean?

Well, I can’t stand ambiguity or haziness, so as quickly as I can, I study up on whatever is making me uncertain, and quantify what it means to me personally.

For you, the recipe for financial confidence is knowing your numbers, (i.e. what it costs you to live exactly the way you want, how dependent you are on your Retirement Bucket™, and what rate of return you need to earn on your investments in order to keep your bucket from becoming empty).

Be as specific as you possibly can.  Some rule of thumb touted in a popular magazine, or someone’s opinion will not bring about confidence.

For example, there’s no power in knowing what “the market” did today, or this month, or this year.

The power is in knowing how your investments performed, and more importantly, where that now puts you in relation to your long term financial independence goals.

Are you still on track?  Do you need to earn a better rate of return from here forward?  Or, can you reduce your exposure to future market volatility because of your positive results up until now?

Knowing your numbers allows you to make accurate, calm decisions, separating fact from fiction, and fact from opinion.

In contrast to the overwhelming majority of people who react emotionally and have little confidence, it allows your actions to be solidly based on truth instead of your own or someone else’s opinions.

That’s where your confidence will come from, and, in turn, your increased level of independence!