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Understand Your Financial Purpose

Understand Your Financial Purpose

| February 20, 2019
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A couple weeks ago Blair had the opportunity to interview author Paul Gallagher on our podcast Mind of a Millionaire. On the show, we discussed Paul’s recently published book, The Amazing Me Project.

The fundamental premise of The Amazing Me Project is finding your own purpose and striving toward that purpose through a goal-oriented, strategic and tactical approach. After reading the book, you should have a much more narrowed purpose to your own life. 

You work tirelessly for that big promotion, but for what? Do you want to make more money, and if yes, then why? 

Paul’s book is written with a much bigger picture in mind. The Amazing Me Project offers holistic insight to setting and reaching goals throughout the entirety of your life. Whether it’s family, faith, careers, etc., the book helps you strive to become a better you in all areas. However, this idea can also be applied to your financial lifestyle.

We discussed a lot throughout the interview with Paul, but two topics stuck out the most: purpose and daily goal-setting.

Why do you want to make money?

Understanding your – we’ll call it earnings purpose – may help you strive toward your goals faster and more effectively.

According to The Amazing Me Project, it’s important that you understand why you earn and why you want to increase your earnings. For many of you, there is a specific purpose. You have debt to pay off. You have a family to feed. You have a luxurious lifestyle to uphold.

Understanding the ‘why’ may seem like a rudimentary task, but it’s an important task that sometimes we overlook.

Take a closer look at the debt example. Your earnings purpose is paying off debt. Maybe you have a pile of student loans. You have to work and continuously climb in order to pay off that debt. Once you determine that purpose, you can implement a specific financial strategy to help you strive towards your goal. You can implement specific tactics that may help along the path toward your strategy.

As mention in the podcast, there is a big difference between strategies and tactics, and Paul offers a great analogy in his book – the legend of boiling the ocean:

 

In 1914 the Germans were sinking U.S. ships in the North Atlantic. It was a turkey shoot because the Germans had the U-boat and we didn’t. Somebody asked the American folk philosopher Will Rogers what we ought to do about it. He thought about it a moment and said, “Well, I think you should boil the ocean.” The man was incredulous. “Boil the ocean?” “Yes,” said Rogers. “I think if you heated up the Atlantic ocean, the submarines would rise to the surface and you could capture them.” “But how do you boil an ocean?” the man asked. Rogers responded, “I’ve given you the solution. It’s up to you to work out the details.”– Nikhil Bhojwani; Boiling the Ocean…or Not

 

In this example, Rogers is a strategist, not a tactician. The strategy is boiling the ocean. The tactics will help achieve that goal. Consider taking a similar approach when it comes to striving toward your financial goals.

Look at Finances One Day & Decision at a Time

During our interview with Paul, he mentions writing down six goals every day that he will achieve. Three of those goals are written in bold, which must absolutely be completed. The other three are less time-sensitive.

One benefit of this approach comes from the physical action of writing your goals out. We have discussed this idea before. In a previous interview, Mark Bovair informed Zak of his physical approach to money. Mark tells all clients to write down every expense. Every dime that leaves your pocket – write it down. This creates a physical connection to your finances.

The other benefit that can be derived from Paul’s approach to daily goal-setting, is creating small, achievable goals. Allow yourself small financial victories every day.

Touching back on the debt example mentioned previously – if you want to pay off debt, making small, incremental payments may not seem like much in the moment, but helps tremendously in the long run.

Blair mentioned an example in the podcast: cut out your Starbucks in the morning and invest that money toward paying down debt instead. Paying $3.15 toward a $30,000 debt may seem insignificant, but every penny helps. That $3.15 every day of the work-week accumulates to over $800 annually.

If you have no debt, invest that money and take advantage of the power of exponential growth. Blair and Paul go into detail with exponential and marginal growth during the interview, but the overall idea is making money with your money. 

 

“Compound interest is the eighth Wonder of the World. He who understands it, earns it. He who doesn’t, pays it.”  - Albert Einstein 

 

Going back to the previous example, rather than throwing $3.15 at a latte, put that money into an account that offers interest. By systematically increasing your savings by $3.15 every day, your accounts will begin to grow exponentially toward your big-picture financial goal.

Conclusion

We write about financial goals constantly, but we want to harp on the idea of understanding and simplifying your finances.

By setting specific, achievable, time-oriented goals, you can strive toward a strong financial future with clarity and focus. Figure out your purpose for building cash flow and increasing your earnings. Also, stay mindful of the impact of exponential growth.

For more from our interview with Paul, check out the Mind of a Millionaire podcast.

Let us know what you think: how do you keep yourself on a clear, focused path toward your financial purpose?

 

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

No strategy assures success or protects against loss.

Paul Gallagher and The Amazing Me Project are not affiliated with LPL Financial and Denver Wealth Management.

The information in the links above are being provided strictly as a courtesy. When you link to any of the web sites provided here, you are leaving this web site. We make no representation as to the completeness or accuracy of the information provided at these web sites. Nor is the company liable for any direct or indirect technical or system issues or any consequences arising out of your access to your use of third-party technologies web sites, information and programs made available through this web site. When you access one of these websites, you are leaving our web site and assume total responsibility and risk for your use of the web sites you are linking to.

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