Financial Planning as A Game
Imagine you are going to play a game with a friend. Let's say it's Monopoly.
You've played lots of times and know all the rules. You're really good.
Your friend has played before, but he didn't bother learning the rules, he always loses terribly.
You tell your friend, "don't worry, I'm going to explain the rules and strategy to you. You can do really well."
Your friend waves off your offer of help and then spends 30 minutes telling you about the history of the various game pieces and how Scottie Dog was chosen over a schnauzer.
You say, "that's well and good but here's how you build your money to win in monopoly."
Your friend interrupts and complains that the game is going to take too long. He wants to start with more than $1,500. The goal is to be rich and he really should not have to start from the beginning.
You say, "we all start at the beginning. The important thing is we keep going and build up quality assets that make us more money."
Your friend says, "what's the point starting with a couple properties? I won't be able to buy a hotel on Boardwalk with that. Even if I do, I'll have to pay taxes. Also, I'm not comfortable playing monopoly in a world where other people are playing checkers."
At this point you realize your friend will not do well playing Monopoly.
You're probably thinking, what does this goofy story have to do with investing?
Well, a lot of people are struggling with finance and investing because they approach it like your friend approaches Monopoly. They would be more successful if they treated finance like a game, rather than real life.
Here's a three-step mental exercise to give you a better chance to make winning financial decisions.
Step 1) Pretend your past is imaginary. It is nothing more than the backstory of the dog in Monopoly.
Step 2) View any problems in your life as not your fault, they are just the cards you were dealt.
Step 3) Ignore any issues in the world that don't impact you. They are just people playing a different game. (If you're playing blackjack in Las Vegas, you don't worry about people playing baccarat in Monte Carlo.)
All you're left with is the game. You take inventory of your pieces. You build the strategy you need to win. You ignore distractions.
If you can do this, you'll be successful. If you struggle to do this, you might want to consider working with a financial planner. Taking the emotions out of finance and focusing on the numbers is what we do every day.
P.S. If ignoring the past and problems of the world sounds heartless, it isn't. It's your path to the most wealth, most happiness and most ability to do good. Bill Gates isn't a better person than you, but his money allows him to do a lot more good in the world.