Having two seniors in high school, neither of whom chose to apply early decision to colleges, means that we get to wait until March to find out where they will be heading next year. Their anxiety waxes and wanes as they hear news of their friends' early acceptances and rejections. Since parents are only as happy as their unhappiest child, we sometimes feel as though we are going through this admission process ourselves.
The application process is interesting at different levels. The high school experience is reduced to a grade point average, a list of activities, a standardized test score, a couple of letters of recommendation, maybe an interview and an essay. Admissions counselors choose one child for every five or 10 that they reject. As the stress mounts, it is easy to forget that the student's objective should not be to get into the best school, but to get into the best school for them.
What if you viewed your financial planning as if it were a college application?
The challenge in financial planning is making choices that are true for you. Virtually every decision that we make is part of our ultimate essay. One of our clients was making great money as a consultant, but he was slowly dying in the job. He really wanted to be a writer. In order to do this, he had to significantly reduce his lifestyle. We sold his home, began a process where we took early distributions from his retirement plan and cut his spending to the bone. After 10 years, he has sold his second book and feels as though he can make this choice work. There were times when he regretted not having money. But he never regretted not being a consultant. Your essay should be about your personal definition of success, not that of society's.
While many kids show activities on their applications that represent them -- choir, sports, debate -- others do things simply to make their application look better.
As you look over your own activities, how are they consistent with what you want your life to be? One of our clients takes a few days each month to go to the North Shore of Minnesota where he can decompress from the intensity of his daily work. This activity centers him in order to think about the things he is doing for his clients and for others and slows him down enough that he can be sure he is acting in a way that nourishes him. Slowing down is an "activity" that each of us should incorporate into our lives.
A grade-point average can be an objective way to measure how the student has done in school, but it is incomplete. Honors classes, tough or easy teachers and class size may have a positive or negative impact on grade point. In financial planning, many people confuse someone's net worth with a grade-point average.
Inheritance, career choice, dedication can all have positive and negative effects on your balance sheet. But net worth and self-worth are very different. As long as we use our balance sheet as a form of comparison, we will never make the grade.
If you were to interview yourself, what would you say? You have no one to impress, no image to project. The questions you may wish to ask are: "How can I best have an impact? With whom do I want to form connections? What do I need or want to do while I can still do it?''
Spend your life wisely.
Ross Levin, a certified financial planner, is founding principal and president of Accredited Investors Inc., Edina. His Gains & Losses column appears on the fourth and fifth Sundays of the month. His e-mail is email@example.com.