We can't direct the wind, but we can adjust our sails.
It’s amazing how much time in life we spend worrying about things that we can’t control. Things like the weather, decisions we have made in the past, what other people think of us, the traffic, the economy. Understanding what we can and cannot control is a secret to happiness in life, and is also the secret to success with our finances. Imagine the life we would lead if we stopped getting upset about things that are out of our control. I read a great piece today by Tony Isola and he writes ‘Having a realistic approach of what is within our grasp will give us more clarity about the world.’ This is absolutely true about our finances.
Here are a number of examples which show the difference between what we cannot control and what we can control, and therefore what we should be thinking about and focusing on.
We cannot control being made redundant from a job for reasons that had nothing to do with us. We can control having an emergency fund with six months’ living expenses stashed away.
We cannot control the fact that markets have years where they go down. We can control our savings rate to counteract the falls.
We cannot control how individual stocks will perform. We can control the diversification within our portfolio.
We cannot control who is elected president. We can control not letting politics play any part in our investment decisions.
We cannot control what the ‘crisis du jour’ is that pundits are getting hysterical about in the media. We can control our ability to turn off the TV, stop reading the financial news, and do something more productive with our time.
We cannot control the fact that too many so-called “financial advisors” are nothing more than glorified used car salesmen. We can control the financial advisor that we choose.
We cannot control the global economy. We can control our personal economy by working hard, spending within our means, saving well and investing sensibly.
We cannot control interest rates. We can control how much debt we take on.
The list could go on and on, but you get the idea.
A great deal of what I do is helping people focus on the things that they can control in order to help them protect themselves from the things that they cannot.