I am on vacation in Oregon right now, so summer is officially upon me. I have always wanted to write about the four seasons of personal finance. I’ve seen a couple of seasons come and go in my life and I wanted to explain it to those who are just starting out. Like the story of the ant and the grasshopper, anyone who ignores the changing seasons may wind up cold and hungry when the winter sets in. Here is the secret to avoid it.
Change is the Only Constant
In order for financial planning to be effective, it must take life events and personal factors into account. A 25 year old single parent isn’t going to be able to save money like a middle-aged DINKs couple. But, it’s still every bit as important.
One of the saddest things I see are people who are unprepared for the future who wind up in financial trouble. They may have worked hard their entire lives, only to wind up broke when they are older and can no longer work to generate income. The worst part is that it’s completely avoidable with a little bit of planning and financial discipline.
Spring (Teens & 20s)
Spring is the season where everything is fresh and new. Life is colorful and exciting. Energy and optimism are in abundance. Every door is open and opportunties are endless. This is also the season of youth and inexperience. Others know this and they take advantage with credit cards, overdraft and cell phone contracts. Winter is still 40-50 years away, yet the new car and the bright lights of the city beckon today.
Spring is a time for balance. It’s a time to heed the call of nature and enjoy the qualities of youth before they disappear. Yet, it’s also the time to plot a mature course toward the future. Choices made in the Spring can lead in directions that may be difficult to change later in life. It’s a good time to go on an adventure or start a business. It’s the time to take a shot at big dreams, while the downside is minimal. This is a bad time for extremes. It’s a bad time to engage in destructive behavior or develop addictive habits.
Summer (30s & 40s)
Summer is the season of the long hot day. It is the season of buying houses and raising children. The burden is heavy and the bills are endless. The resources are limited and needs overwhelming. Work becomes the focus, the solution and the consolation. A person’s title becomes their identity. Income is the key element which balances the books of life. And, it becomes the prize.
Summer is a time to make hay while the sun is shining. It’s a time to shore up the financial foundation and to pull ahead in life. It’s a time when the choices made earlier start to produce a result. It’s the time when the industrious are rewarded and slackers fall behind. It’s the time to shed debt and accumulate assets. It’s a bad time to squander resources or purchase liabilities.
Autumn (50s & 60s)
Autumn is the season of the harvest. It’s the time when all of the hard work finally starts to pay off. The kids are big; the bills are small; the house is finally paid off. Saving money becomes much easier. Yet, the compounded results are minimal. Those who have experienced setbacks will struggle to catch up, while those who are fortunate pack their pantries.
Autumn is a time when winter becomes inescapable. It’s a time of panic and anxiety for the unprepared and a time of happiness and pride for those who have been resourceful. It’s a good time to become more conservative with investments and to avoid potential risks. It’s a bad time to learn about money the hard way or to lose focus on the future.
Winter is the season of long nights and bitter cold. It’s a time of tumultuous change. The strong survive; the weak struggle; the old and sick are lost. Resources become scarce for the ill prepared, while others live in warmth and comfort. Although time is ticking away, daily freedom is in abundance.
Winter is a time for conservation and relaxation. Life is precious and waste becomes a sin. It’s a good time to do and see the things that have always been dreamed of. It’s a good time to adopt a healthy lifestyle and keep a positive attitude. It’s a time to show some love and impart some wisdom. It’s a bad time to become concerned with all of life’s problems.
The Moral of the Story
The moral of the story is that people must save during the first three seasons of their lives, in order to survive the Winter. Waiting until Summer or Autumn is a huge mistake. Whether someone is 25, 35, 45 or even 55 years old, they need to invest in their future, before their paycheck disappears.
Never give your paycheck to others without keeping some for yourself.
“You must take personal responsibility. You cannot change the circumstances, the seasons, or the wind, but you can change yourself. That is something you have charge of.”
Jim Rohn – Motivational Speaker & Entrepreneur