Few of us would argue that the government shutdown and this year’s debt ceiling debacle are issues of importance, but over the course of your lifetime, which do you think has a bigger impact—the decisions the government makes or your own personal decisions?
We tend to spend more time bemoaning the action and inaction of those with less of a direct influence in our lives—especially legislators and Presidents—than those who most directly impact our lives: US.
You are an entity. You and your spouse (if you’re married) and your children (if you’re a parent) are certainly beholden in part to other entities, like companies, cities, states and countries, but you also enjoy a great deal of sovereignty. You decide where to live, what to eat, whom to befriend and marry, how to derive an income and how to spend it.
Please allow me to disabuse you of a few “It’s their fault!” self-deception anthems especially common in the realm of personal finance:
- The arc of your career is not your boss or company’s responsibility. Good bosses and companies create environments in which good employees can flourish. Bad bosses and companies inspire good employees to join better companies or create new businesses. Bad employees play lots of video games. At work.
- Regardless of your levels of income or net worth, your financial success or failure will be predicated primarily on the effectiveness of your cash-flow management system. This is most commonly and disdainfully referred to as a budget. I recommend YNAB to college students and millionaires alike. You can never be too rich or poor to budget.
- Your long-term success in investing is not the responsibility of your financial advisor or investment manager (although they can help or hurt). There are innumerable (good and bad) variations on the portfolio creation and management theme, but if all you ever did was establish a reasonably diversified, indexed, balanced portfolio (call it the “minimum effective dose”), you’ll likely outpace most of your peers and many professional investment managers.
- Your ability to retire comfortably will be impacted by many factors—especially the three you just read—but none more so than your willingness to make regular contributions equal or greater to 10% of your annual income.
Although politicians and pundits may attempt to convince us otherwise, the long-term trajectory of our lives are more a consequence of impulsion than compulsion—UNLESS we give someone or something else that control. If you rely more on outside influences than those within your control, you have ceded too much.
If we worry more about that which we can’t control (governmental bumbling, short-term volatility, the outcome of the World Series) than acting on that which we can, we do so only to our detriment. And maybe—just maybe—the reason we gripe so much about that which is holding us back is that we fear the consequences of being held accountable for our own decisions, our own lives.
[tweetable]Control what you can, and worry far less about that which you can’t.[/tweetable]