It's a problem that's common among savers and investors. You try your best to sock away enough money so that one day you will no longer have to depend on a paycheck. Say goodbye to the rat race. Travel whenever you get the itch. Dine out at nice restaurants and invite your friends. Go to the beach as often as you like. It's my definition of...
Freedom
Isn't that what financial independence is supposed to look like? Isn't that what we're all striving for? And haven't we all been told from the time we were kids that if we work hard, save diligently, and invest wisely, we will one day reach financial independence?
The problem is that most of us will never catch up with where we're supposed to be, in spite of our best laid plans and good intentions. At first, the gap between where we are and where we should be (financially) is small. We tell ourselves that we have plenty of time to catch up.
But as the years go by, the gap seems to only get bigger. Then one day we start to wonder whether we'll ever catch up. And it's even worse when we don't have a plan in the first place.
Let's take a brief time out for a reality check
What I've just done is what salespeople and marketers call "describing a pain point." It's supposed to get you all spun up so that later, when I offer you a way out, you will jump at it, like a drowning man clings to a life saving ring tossed from a passing boat.
But, sadly, this isn't a marketing ploy. It's an accurate description of how things really are for the average saver/investor today. If you're on track with your plan then you don't need a life raft. But your cohort is shrinking. Count your blessings and hope you don't get seriously ill or lose your job.
For the rest of us, financial stress is just a fact of life. And I'm not talking about the 50% of the population who live below the poverty line, or live paycheck-to-paycheck. Those folks aren't reading this article. I'm addressing those of you who have a steady job, a savings account, and some sort of investment plan for building a nest egg for the future.
Ask yourself this. How confident are you that you will reach the point of financial independence while you're still young enough to enjoy the freedom that comes with it? In my experience working with clients with widely varying levels of wealth and income, the answer is usually "not very confident."
And this comes from clients who have socked away as much as $5 million dollars. It may surprise you to learn that these multi-millionaires are very worried about losing their financial cushion to an unexpected event like a medical crisis, or a financial event like a recession and a severe bear market.
Having lots of money does not make you immune to financial misfortune.
What am I selling and how much will it cost you
I have three answers to this question. (Note that I didn't deny that I'm selling something.)
First, about 80% of the content on this website is free and available to anyone who wants it. I have online skill-building courses, proficiency quizzes, weekly market insights, and articles about how to become a better investor.
I'm a non-profit business and that's the way I choose to get my message out. Why does a non-profit have to charge for services? Because I support local charities with the money I take in. 95% of my profits go to charity work by law. Mostly teaching financial literacy to under-served communities.
Second, I have subscription-based content like newsletters and trading strategies for those who want to dive deeply into the inner workings of making money in the market. This material is not free but it's reasonably priced.
Third, I offer one-to-one coaching and consulting for those who are serious and willing to put in the work.I charge for my time and you get my undivided attention as a client.
Now back to the main thrust of this article
What does "raise the bridge or lower the water" have to do with saving and investing? It goes directly to the heart of the problem of falling behind your plans for reaching the point of financial freedom.
When you're faced with this problem you have two choices: you can either raise the bridge (increase your savings or boost the rate of return you're getting on your investments), or lower the water (cut back on your lifestyle and lower your expectations about your financial future). Very sad, in my opinion.
There are some less painful things you can do to catch up with your financial goals. You can invest in yourself. You can take advantage of the many free classes out there that teach things like budgeting, maximizing your tax refunds, opening up tax-advantaged savings and investment accounts, and so on. These resources are free if you just make an effort to find them.
You can also take advantage of free investment skill training on my website and many others. The more you up your skills, the faster you can grow your savings. It will help you to catch up.
What you should not do
I've had many clients who were whip-smart with numbers and theory, but were lacking in common sense. I'll give you two examples of actual clients who were destined to fail at something they should have mastered.
Case Study 1. An actual rocket scientist who couldn't tie his shoes, financially speaking. This client worked at places like Fermi Lab in Chicago, Lockeed Martin in California (Skunkworks) and NASA. He was so smart that he fell victim to what I call the "Mensa Syndrome." In this syndrome, a person believes that he is so superior intellectually to everyone else in the room that he automatically dismisses their views, regardless of their merits.
As a result of this blind spot, he bounced from one trading strategy to the next, in rapid succession, because he didn't have the patience to stick with any strategy for more than a few months. Don't do this. Find a strategy that you understand and believe in, and stick with it.
Case Study 2. A psychologist by training, this client thought he could figure out the psychology of the market. He could not. The farther behind he got, the more he pressed his bets. He began swinging for the fences because he was convinced that building wealth slowly and conservatively just wouldn't do the trick. Last time I spoke with him he had lost 50% of his portfolio on an ill-timed bet on the gold market.
Final thoughts
I hope you now understand what "raise the bridge or lower the water" means when it comes to your quest for financial freedom.
If you find yourself falling further and further behind your timeline, don't lower the water. Instead, raise the bridge by reading, learning, and acquiring the skills it takes to move faster without resorting to swinging for the fences. Babe Ruth was the home run king, but he was also the strike out king.