What’s Next? Beyond the Basics of Personal Finance

A few weeks ago I got the following email from one of my readers:

Thanks for reaching out Matt! My wife and I feel fortunate to be in the unique position of having handled everything in your financial road map. We’ve paid off all our debt, we’re maxing out our 401k’s and Roth IRAs, saving for a down-payment on a house, and we have insurance and wills in place. So my question now is what’s next?

I read a lot of blogs like yours that explain how to get started saving, investing, and getting out of debt. But I’m not sure what I should be doing now that I’m “here”.

This is a FANTASTIC question! With anything in life, a big part of the interest and excitement is the journey. Reaching the destination can actually be a bit of a let down.

This is especially true in personal finance, where making all the “right” decisions is never the real goal. It’s simply a means to an end. So while getting there can be exciting, being there is often pretty dull and usually leads to the question “what’s next?”

I have some thoughts for you, though if you’re hoping for the secret financial move that only the “experts” know how to do, you’re going to be disappointed.

The blessing of handling the basics is that the next step has a lot less to do with money and a lot more to do with what you want out of life. The real trick isn’t figuring out your next financial move. It’s figuring out your next life move and allowing your financial decisions to follow.

Here’s how I would approach it.

#1. Stop and smell the roses

Getting the essentials of your financial plan in place is a HUGE accomplishment. So before you start stressing about the next step, take some time to reflect on the journey you took to get to this point and allow yourself to feel good about where you are.

The fact that you’ve already made so much progress means that the pressure is off. You no longer HAVE to do anything. Now you get to decide what you WANT to do.

That’s a great place to be. Enjoy the moment at least a little bit before diving right into the next thing.

#2. Revisit your personal priorities

You’ve already made a lot of good decisions. Your family is financially secure. You’re working towards financial independence.

You’re in good shape. You no longer have to worry about making the “optimal” financial decision or choosing the “right” thing.

Instead, take a step back and think hard about what you want from life. What’s important to you, both now and in the future? How do you want to spend your time? Which people do you want in your life? What opportunities do you want to pursue?

These aren’t always easy questions to answer. In fact, most of us (myself included) have a lot of trouble taking ourselves out of our day-to-day responsibilities long enough to give them some real thought.

To make sure you give these questions their due, I would encourage you to purposefully block some time out of your calendar to work through the process laid out here: 6 Steps Towards Creating Your Ideal Life.

And once you’ve done that, ask yourself two more questions:

1. Are you currently putting your money towards the things you care about most?
2. Is there anything your money is going towards that didn’t make your list of priorities?

That process alone will go a long way towards helping you decide what to do next. But here are a few more things to keep in mind as you think it over.

#3. Consider cutting back

The answer to “what’s next?” isn’t always “more”. Sometimes cutting back is the most satisfying decision.

Ask yourself the following questions and see what comes up:

• What causes you stress? How could you eliminate those things?
• Could you save less and still be on track for the things that truly matter?
• If so, how could you use that money to pursue more day-to-day happiness?
• If you were forced into a situation where your income was cut in half, what changes would you make?
• If you made some of those changes now, would your quality of life decrease? What other opportunities might that open up?

As you think about these questions, remember that you’re not committing to anything. You don’t have to make any dramatic changes if you don’t want to.

But as a culture we have a tendency to think that the path to happiness is always more. Research has proven that not to be true, so it’s at least worth considering whether doing less may actually be the right decision.

#4. Expand your horizons

I recently read a fascinating article about how the human decision-making process works and how people who change the world do things a little bit differently. You can read it here. It’s super long, but well worth it.

One of the points the author makes is that you can only set goals based on what you currently know is possible in the world (what he calls your Reality box). If you don’t know something is possible, you can’t set it as a goal.

And as he puts it:

“Things that are possible” is a hypothesis, maybe more so than anything else. It takes into account both the state of the world and your own abilities. And as your own abilities change and grow, the world changes even faster. What was possible in the world in 2005 is very different from what’s possible today, and it’s a huge (and rare) advantage to be working with an up-to-date Reality box.

If you can expand your Reality box, you’ll have a larger pool of goals to choose from. And if you have a larger pool of possible goals, you have a better chance of being able to choose the goals that will genuinely make you happy.

Now, I’m certainly no expert here, but looking at my own life there are three main ways that I’ve been able to expand my idea of what’s possible:

1. Reading (or otherwise consuming information)
2. Talking to people
3. Trying things out

My guess is that the more you do of each of those things, the more likely it is that you’ll be to identify and pursue goals that actually lead to a happy, meaningful life.

#5. Talk to your spouse or partner

If you have a spouse or partner, go through this process together.

Identifying possibilities and deciding on specific goals is hard work. It’s also an evolving process. As your circumstances, values, and Reality box change, the things you want to accomplish will change as well.

Having regular conversations about these things will not only help you think them through, but it will make sure that the two of you stay on the same page and that you’re able to work towards goals that make you both happy.

#6. Prioritize and take action

All of the steps above are about stepping back and thinking about what you really want out of life.

That may seem a little fluffy, but once you’ve handled the essentials that’s EXACTLY what you should do. Rushing into the next decision is more likely to lead you down someone else’s path, which may lead to more money in your bank account but isn’t likely to lead to a better life.

Taking the time to think hard about what YOU really want is quite possibly the most important step in this entire financial planning process.

But eventually you have to take action or you’re never going to make progress. So once you have a handle on what you’d like to work towards, write down the top 1-3 goals you want to prioritize now. Then write down 3-5 small steps you could take to make progress on each one.

Then get started.

You’ll learn a lot as you go and you may even learn that you want to change your goals. That’s all good. Taking action is not only the best way to make progress, it’s the best way to figure out what you really want.

#7. Accept the destination

At some point, there may no longer be a next step. Other than checking in once in a while to make sure everything is still on track, you may reach a point where your financial system is humming along and there’s nothing more you need to do.

That can be an uncomfortable point to reach. We’re trained to think that we always have to be making progress, so you may feel guilty or even anxious about the idea of not doing more.

But remember this: at it’s core, personal finance is boring. The real key to success is consistently repeating the same good habits over and over again, and that can get pretty dull.

But it’s effective. And it’s freeing. Because once you reach that point you can allow yourself to stop worrying about money and get back to the things you actually enjoy.