A little over a week ago, J.D. at Get Rich Slowly posted an article entitled “What Next?” The Third Stage of Personal Finance, where he discussed the fact that he had dug himself out of his financial hole and was beginning to accumulate wealth. The “problem” here is that it meant that he was having to reconsider many of his goals - for so long, his goals had revolved around straightening out his financial ship and paying off debts, but those goals had been accomplished.
What J.D. discovered, after some introspection, is that he’s reached what he called the “third stage” of personal finance: what’s next? What do you do when your basic financial needs are securely met and you still have a strong income? For him, a big part of it is moving towards a more pastoral lifestyle: working less and spending more time doing things like gardening. For him, more money is not the goal.
I enjoy reading articles like that one because, more than anything, it shows the difference between my life’s situation and the situations that others find themselves in. Much like J.D., over the last few years, I’ve come to a very stable place in my personal finance situation. I no longer worry about paying bills and I earn quite a bit more than I spend. We’ve paid off most of our debts, have a very nice emergency fund, and don’t really sweat the things life throws our way. We bought a house and I’ve moved to a career that I truly love.
And that’s the point where our paths differ.
I have a three year old son and a one year old daughter at home. Rather than filling my evenings with the types of activities I might engage in if I were single or married without children (things like reading more than I do, planning an extensive garden, volunteering at some community groups, and so on), I instead tend to fill my spare hours with things involving my children. I read books to them. I cook supper for them. I play Memory with them. I put them to bed at night. In short, my overarching goal at this stage in my life is to raise my children as well as I possibly can.
The difference here, though, is that it’s not a life goal that will sit in line with personal finance freedom. Instead, it’s quite the opposite, actually - the expenses brought on by our children actually keep us from achieving the money success we might otherwise have.
There’s a huge and vital lesson here, I think: personal finance is a tool to reach the goals you want to achieve in life. While it’s great to have a goal of debt freedom (for example), that goal in itself is actually just a precursor for other things.
Why do you want to be free from debt, after all? There are as many reasons as there are people out there, but once you start digging into that question, you quickly realize that the answer to that question points a person towards what really matters in their life - and quite often, that thing that really matters in your life is your mission in life.
Take me, for example. I was inspired by my infant son to start bringing about financial changes in my life. When I think about my life now, I don’t think about being in good financial shape or being debt free. I think about being a good parent and being a writer that reaches people. Good personal finance success just makes those things possible.
Why do you want personal finance success? Spend some time thinking about that question in your own life and you might find that it leads to what you really want to do in life.
The Simple Dollar chronicles a man's road to recovery from "total financial meltdown." As author Trent Hamm puts it, "The Simple Dollar is a blog for those of us who need both cents and sense: people fighting debt and bad spending habits while building a financially secure future and still affording a latte or two." We'll post a couple of entries a week, but you can check out his writing daily at www.thesimpledollar.com