By whose financial rules are you playing

“Whenever you find yourself on the side of the majority, it is time to pause and reflect.” Mark Twain

As I reflect on my childhood and compare it to what my children are going through, it’s easy to see so many differences. Clearly technology has impacted our lives in such a profound way in the way we communicate, learn, enjoy, and manage our lives.

I still reminesce about the days of young when we’d be more outside than inside and be playing with physical games instead of digital ones. One game that always stood out to me growing up was “The Game Called Life.” It’s described as the “classic board game that breaks down an entire lifespan into a series of choices and chance.” You got to raise a family, deal with job changes, and even play the stock market to speculate with your money…good times!

In real life (especially related to our finances), the stakes are much higher and understanding the rules of the game of finance are vital to your success.

What rules are you playing by? If you’re not using your own, you’re likely following someone elses, and it may not be for your benefit.

If you’re not careful, you may be dealing with individuals and institutions who:
● Want your money
● Want it systematically
● Want to hold onto it as long as possible
● Want to return it little by little

One clear example of this is with qualified plans (e.g. 401k). Money from our paychecks automatically are directed to financial institutions so they get it first before we do. This happens over long periods of time accumulating money with the promise of tax savings (what direction do you think taxes are going?) while dealing with a lifetime of fees and is typically tied to the volatility of the market.

Consistent saving of money is a good thing but by using this approach we reduce the control of our money since there is a penalty + taxes to access the money before 59 1/2. Lastly, when we’re in retirement and desire to use our money, we’re told we can only access 3-4% per year to ensure it lasts long enough. Also, we don’t want to pay the taxes, so we keep most of it in the account even longer.

Does this sound like a sound strategy? Would you rather have more control and access to your money throughout your lifetime (not just in retirement) while reducing the risk associated with market volatility and future tax rates? To do so, you need to learn a new set of rules which puts the control back into your hands as opposed to leaving it to others to benefit.