YOU HAVE WHAT YOU

FINANCE

YOU HAVE WHAT YOU NEED NOW WHAT DO YOU WANT?

By Matthew Broom

WHEN ALL YOUR NEEDS ARE MET, WHAT’S LEFT ARE YOUR WANTS. PRIORITIZING THOSE WANTS AND DECIDING WHAT YOU NEED TO DO TO ACHIEVE THEM CAN NOW BECOME YOUR FOCUS.

I'd venture to say everyone – okay, almost everyone – reading this article has their basic needs met. If you’re a career firefighter, you have a job that pays the bills, and if that’s not enough, you probably work a part-time gig. I've never met a homeless firefighter, so you likely own or rent a home, apartment, condo, or couch. And if you work a 24/48 schedule as I did, you eat pretty well at least every third day. There may be some single firefighters who subsist on ramen noodles on their off days, but hey, they’re still getting fed. The point is most firefighters are having their basic needs met. I've had family members lose a home to foreclosure, and I've had another family member survive on food stamps, but even in the worst of times, their basic physiological needs were met. They had food and they found another place to live.

When our basic needs are met, it can make sense to focus on wants, but not in a selfish, short-term, or instantly gratifying way. Everyone wants a brand-new truck and a big house, and we'd be lying if we said we didn't. But are those things a priority? Probably not.

PRIORITIZE YOUR LONG-TERM GOALS.

Short-term wants lure us away from prioritizing our long-term goals.

For example, I just sold my old truck for a new (to me) commuter. I bought a 2011 Toyota Camry. Would I rather have had a 2021 Camry? Sure. But it wasn't a priority. I wanted a reliable vehicle that would last a long time and wouldn't break the bank. That is what I prioritized.

Every want has a trade-off. If I had bought a new car, I wouldn't have been able to invest as much. If I couldn't invest as much, I would be delaying my family's financial independence. And trading independence for a fancy new car just isn’t worth it.

It’s important to establish what you really want out of life. Write down your goals. Once you take a look at what you want, the next logical question is what you need to do to attain it. And if you really ask the question earnestly, the map will begin to reveal itself.

CREATE YOUR ROAD MAP.

If you want to get somewhere, you've got to understand two things: where you are and where you want to go. And the only thing that is certain is uncertainty. On the roadmap of life, there are many detours, wrong turns, and traffic jams, but staring at a blue sky and a straight road for the entire ride would get old.

Don't get me wrong, if there is a genuine need in your life, start there. If you’re struggling to put food on your table or keep a roof over your head, bust your butt to fix that situation. And once you grind through it and have a second to come up for air, then you can start to look at the big picture.

No matter what life throws at you, it helps to know the North. Whether in good times or bad, you are always going in the right direction if you’re heading towards the true North.

Stop focusing on short-term wants and turn your focus to significant desires. What business consultant and public speaker Jim Collins calls the BHAGs – Big Hairy Audacious Goals. These are the get-youout-of-bed-in-the-morning dreams. Motivational speaker Tony Robbins regularly proclaims, "Progress equals happiness." Defining your BHAGs and making progress will lead to happiness.

Let's walk through a common want and decide what needs to happen to accomplish it.

I WANT TO RETIRE.

Don't we all?! But one thing is for sure, you can't fight fire forever so, whether you hang it up for good or just move on to something new, having a nest egg will make it easier.

But, please, don't be the firefighter who says, "I'll never be able to retire." You’re really saying that you don't know what you need to do to retire, and you don't want to take the time to figure it out. You’re taking a loss without even stepping in the ring.

Whether you think you’re on the right path or not, you've got to face the facts. Ignoring the twinge you feel in your chest while overhauling your second house fire of the day won't make the heart issue disappear.

Similarly, ignoring the anxiety you feel when you get an account statement won't make your financial woes any better. As the ancient Roman philosopher Seneca pointed out centuries ago, "Our fears are always more numerous than our dangers."

Overcome your financial fears and chart a path to accomplishing your retirement goals.

NOW, FOR THE EXAMPLE:

Firefighter Fred is 32 years old and married with two kids. He wants to retire from the fire service at age 55. He plans to work another five years or so after that, but hopes to retire completely – if he wants to at the time – by age 60.

Fred has a defined benefit pension plan and contributes to a 457(b) plan. He conservatively estimates his pension benefit at age 55 to be $50k per year. He wants to live on $65k per year in retirement. So, using a 15 percent tax rate, he'll need about $76k of pre-tax income per year.

He thinks he can earn at least $26k per year from age 55 to 60 to supplement his pension. Fred plans to stop saving for his retirement when he leaves the fire department.

Fred and his wife, Nurse Nancy, currently have a nest egg of $50k. They use the four percent rule (net income – in this case, $26k – divided by four percent) to get their nest egg goal of $650k. Then they use a simple retirement calculator to figure that they will need to contribute $375 per month into their retirement plans (assuming a seven percent annual return).

This will give them a nest egg of $506k at age 55. And then, from age 55 to 60, with no additional savings, they assume it will grow by five percent a year to reach their goal of $650k.

PRIORITIZE AND EXECUTE.

Beating yourself up over needs and wants can be tiring. It's a constant mental battle to tell yourself you don't need a coffee from that fancy cafe. Or that you don't need a leather helmet.

If you focus on your goals – the meaningful wants – and take care of those, then you won't have to beat yourself up over the little things. The little wants become the icing on the cake. But don't be the knuckle-dragging firefighter eating the icing out of the tube. Bake the cake first.

Prioritize your wants, decide what you need to do to accomplish them, and execute.