Can You Quantify Financial Peace of Mind?
And What Does Financial Peace of Mind Mean?
Most investors say they want financial peace of mind, but unlike most goals, peace of mind is difficult to quantify.
Words like calm, grounded, and confident are often used to describe peace of mind. What words would you use?
From a financial planning perspective, financial peace of mind begins with a mindset that aligns your lifetime goals and resources with a path to reach those goals. When you have clarity about what you are trying to achieve, the ubiquitous problems of the day become less worrisome. Conversely, if you don’t have clear goals almost everything in the news can cause anxiety.
Ideally, peace of mind should be built into your investment strategy. It shouldn’t be just an afterthought.
How Do You Measure Financial Peace of Mind?
Mindsets and descriptive words are of course ephemeral and difficult to measure. If you can’t quantify and track peace of mind, how do you know when you’ve arrived?
Peace of mind is a close cousin to happiness. The particular things that make you happy may not mean as much to other investors. It’s highly personalized. Much like happiness, you might experience moving into and out of the bucolic peace of mind state.
Even so, there are some guidelines that can help you move toward achieving peace of mind. The backdrop is you need to be brutally honest in how you assess your ability to absorb risk and the need for investment returns.
Financial Habits That Can Support Peace of Mind
Your circumstances are unique, but many investors equate being debt free as an aspirational characteristic needed for peace of mind. Other common themes are being able to pay routine lifestyle expenses, the ability to save for retirement, and funding experiences with loved ones.
Your understanding of markets, uncertainty, and investing experience also go into the peace of mind formula. Your financial experiences, both positive and negative, might be the most important component.
One mostly invisible obstacle that can stand in the way of achieving peace of mind is what author Morgan Housel calls “moving goalposts.” If your financial expectations rise faster than your income, you’ll constantly be frustrated and unhappy. Keeping your goals in check can be a major contributor to peace of mind.
How Distractions Can Undermine Financial Peace of Mind
Achieving and maintaining peace of mind with your overall finances can compete with your daily life. That is, if you are jumping from distraction to distraction, it’s difficult to find peace of mind.
Like many aspects of life, your habits form the scaffolding for achieving something you value, in this case peace of mind. If you have a habit of saving and focusing on the future that’s a start. Without savings, your focus turns inward and peace of mind drifts further away.
Patience and Progress in Your Financial Life
Peace of mind is built upon the foundation of patience. The more noise that you allow in, the harder it becomes to sustain patience.
As I’m writing this the World Series is being played between two teams that focus more on “small ball” than home runs. You can use this same philosophy when you make financial choices. Take your time and concentrate on making progress, not just on maximizing or optimizing. Start there. Ready for a real conversation?
Disclosure
Apollon Wealth Management, LLC dba J.E. Wilson (Apollon) is an investment advisor registered with the SEC. This document is intended for the exclusive use of clients or prospective clients of Apollon. Any dissemination or distribution is strictly prohibited. Information provided in this document is for informational and/or educational purposes only and is not, in any way, to be considered investment advice nor a recommendation of any investment product or service. Investing involves risk, and while remaining invested can support long-term goals, it does not guarantee a profit or protect against losses. Advice may only be provided after entering into an engagement agreement and providing Apollon with all requested background and account information. Please visit our website https://apollonwealthmanagement.com for other important disclosures.