re-engineering your thinking

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I spend a lot of time working on business process re-engineering (famously promoted in Keith Ferrazi’s “Never Eat Alone,” a great book), or business process management, or whatever you want to call it these days. If you aren’t familiar with it, I’ll define it this way:  you take a company organized along function lines – accounting, sales, distribution, and so on.  You take that company and reorganize it by process:  the process of selling, accounting for and distributing a particular product is studied and roadblocks to efficiency are removed.  So instead of spending management time worrying about the accounting department’s systems, you spend management time making sure a product “moves” through the process of production, sales and accounting to a customer.    To me, it’s like organizing all of the food you need to make a meal so that you can prepare it quickly and well, rather than buying a new stove to cook it faster.

Most people think of their lives as independent little blocks:  health, money, career, family, kids, friends, fun, etc.  We try to focus on one area.  Let’s think about some of the written-in-stone truisms of personal finance:

  • I need to save for retirement!
  • I need to be more frugal to save more money!
  • I need to invest in the market because people who stay out of the market are missing out on the 7% returns we know as gospel, because the market always does well!

A lot of time is spent on the function of making money. Save.  Be frugal.  Invest. All good ideas, but let’s face it:  if you save money and you’re frugal and you’re investing, you may increase your net worth a bit, but to what end?  You have increased your personal system’s ability to put money in your pocket, but the process of making money can still be broken.  Why save?  Why be frugal?  You may bake your own bread, for example, but why?  Financial freedom?  I thought I wanted that for a long time, but as time has gone by and I’ve thought more about money, I’ve realized that wanting financial freedom is somewhat meaningless.  You have to think more about how you make money (or manage your health, or career, and so on) in relation to your whole life.  Or, to put it more simply, freedom from what?

Why save for retirement? Should you save money on food, or medical care or on things that make life more enjoyable (and less stressful) to ‘save for retirement?’  Which one of those three jumped out?  Saving money on medical care can make sense to a certain extent but you don’t want to economize in that area if you want your retirement to be enjoyable.  I’d rather work a little longer and have extra money for dental care, or routine exams.  Think about the process:  living a happy healthy life until you are old involves more than just accumulating money.

These days I’m trying to think more and more about how to spend money in meaningful ways, and how to make my career meet my goals instead of trying to make my goals fit my already-developed career. You want free time?  Don’t be an employee or a small business owner:  those are time suck careers.  Be a consultant or an entrepreneur with a franchise-model system (read the E-Myth Revisited if you don’t know what I mean).  Want to retire early?  Answer two questions first:  (1) is it really necessary to achieve what you want, and (2) is it just the work you hate or are you hoping for a different life in retirement?  Are you hoping free time gives you the answers?  It won’t.

If you pick up a financial magazine, they’ll tell you whether to get a Roth or a traditional IRA, and they’ll tell you why you need $1.8 mil socked away by age 56 to retire early.  What they won’t tell you is that – if you look deep inside yourself – your idea of sailing the world might actually bore you to death when you do it at age 57, and maybe you would have enjoyed fishing with your kids a few weekends and working until 62 instead. Focusing on the end game all the time can be frustrating, demoralizing and ultimately self-defeating.  Learning to enjoy the process is a better way to spend your money, time and effort.

photo by toolfan.hess

18 comments

  • Very good article, nice piece of information, I really like it. Thank you for sharing.

  • Hmm. I know a fair number of people in their late 60s and early 70s. I'm saving for retirement because there's a reasonable chance I will be physically incapable of working sometime at that point – on average people spend the last decade of their lives with chronic ill health. It's a sort of insurance policy.

    I changed my job because my old one was making me anxious, tired and not happy – and I used to love it. My new job is going really well, but I've realised that it's likely that at some point I'll fall out of love with it. I suspect that change is in the future, and that will probably limit my earning potential. Happiness is more important than money.

  • Wow! Steve, great post!
    People should not live in the dreams of some distant future, even though everybody should save for retirement. But you have your life now too.
    We have built a fantasy that we want to retire early, which means NO work for most people. Thanks to imporoved longevity the average retirement (after age 65) is about 20 years. You think that 20 years of free time is a dream come true. It's NOT.
    I also believe that when old people are unoccupied with anything they are more likely to feel disoriented and depressed, have more time on their hands to concentrate on aches and pains. Working in retirement is good for your health and early retirement can be harmful, especially if retirement means a more sedentary and less intellectually stimulating lifestyle.

  • It's so interesting to see how this blog has grown out of the typical personal finance blog. I totally agree we need more holistic perspective. For example, fear of retirement is often not about having insufficient funds — it's about health concerns, uncertainly about one's social worth, etc. But people close their eyes on these more “complicated” issues and focus on money.

  • Love this idea.
    My husband and I were talking about this the other day since we don't have anywhere near the recommended retirement savings.

    We have this idea that we will continue on the standard path we're on for a few more years, and focus on repaying debt, and saving money, and then totally change our lives by moving across the country.

    I see my parents who are 65 and 67 and their struggles and I think hell no! My Dad retired at 62 and then went back to work this year. It's a rough job, with long hours, but pays really well. It's a young man's job.

    Mom is without any kind of social circle, and struggles to keep busy.

    My ideal would be to have both of us working part-time at our own businesses/consulting by age 40 (7 years from now). Then we can spend more time with our kids as young adults, travel, and expose them to the world in a way most kids can't experience.

    It's all about balance. We struggle constantly with money versus happiness, and raising our family with the experiences we want them to have versus throwing money into savings.

    I want to have a meaningful work life, and a wonderful home life, and “retirement”. I'll let you know how that goes. 🙂

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  • Awesome post. I came to this realization over the last couple of years and I am still working on it.
    I save money but I also spend.
    I love spending time with my kids (always have so thats not new:) but I work 9-5 Monday to Friday.
    I want to retire early but I keep saying that when I retire I want a job at the golf course or hockey rink – so is that retirement?
    I've started to go more with the flow and not worry about having the 2mil in retirement savings.
    I take my life now as it is with a great family, good job, money in the bank and some retirement savings. These are my golden years!! (I'm 35)

    Eric

  • This is excellent – and captures exactly what I've been thinking about lately … so much of financial advice focuses on your future self to the detriment of the you here-and-now. If you focus your entire life on earning enough money so you can be happy in retirement, you might arrive having realized you forgot to learn how to be happy in the first place. Like you said, it's not just the end game that matters.

  • the very last paragraph was the best.

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  • I had an epiphany sometime last year. Prior to that, all I could think about was having enough money for retirement. I set up spreadsheets to track my progress against my goal. I changed my attitude towards retirement after talking with a retired relative. His hobbies became going shopping and going to the doctor. He was a vibrant man prior to his retirement. I also read a quote that said, in effect, people live a longer, more fulfilling life if they have somewhere to go each day. I realized that I actually liked to work. I climb the walls when I don't have anything to do. I made up my mind then and there not to seek a conventional retirement. I may change my mind, but for now, I'm planning on keeping busy in some fashion.

  • I had an epiphany sometime last year. Prior to that, all I could think about was having enough money for retirement. I set up spreadsheets to track my progress against my goal. I changed my attitude towards retirement after talking with a retired relative. His hobbies became going shopping and going to the doctor. He was a vibrant man prior to his retirement. I also read a quote that said, in effect, people live a longer, more fulfilling life if they have somewhere to go each day. I realized that I actually liked to work. I climb the walls when I don't have anything to do. I made up my mind then and there not to seek a conventional retirement. I may change my mind, but for now, I'm planning on keeping busy in some fashion.

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