By: Joey Casolaro, Analyst
Personal fitness and personal finance are two of the most critical focuses in your life. Both affect everyone in some way or another. Making progress in either area results in dramatic improvements in your life. Being that your health and finances are essential and dictate your life, it should come as no surprise that you must prioritize your everyday lifestyle to excel at both. A healthy and wealthy life requires considering trade-offs and developing and maintaining good habits. The skills healthy people use every day are the same skills that people use to grow wealth. Below are some of the required skills to have success in either:
Patience
Being patient and having a long-term-oriented mindset is paramount to find success in your health and finances. Rome wasn’t built in a day; the adage suggests that you cannot rush outstanding achievements, which take time and effort. It is essential to realize your health journey is a marathon, not a sprint, and you may not see any progress for some time. However, if you stay consistent and keep pushing, the results will follow. The same is true for your finances. For example, take a college graduate who just began their investment journey and contributes $250 per month into their company 401(k) retirement plan. After five years, their account would be worth about $17,443, assuming a 6% annual return, consisting of $15,000 of contributions and $2,443 of earnings. At this point, they may become discouraged and start to believe they will never have enough money to retire. However, after 40 years using the same contribution rate and annual return rate, their account would grow to almost $500,000, which would consist of $120k of contributions and $380,000 of earnings! This result represents the true power of compound interest, with time being the magic ingredient.
Discipline
To be healthy and fit, you must create a habit of staying active every week and maintaining a balanced diet. To form this habit, you need the discipline to hold yourself accountable every week and carve out time to perform your fitness activity during the day. In personal finance, you need the discipline to live below your means and stay invested, especially during down markets. There also will be times when you have a setback like an injury or sudden emergency expense. During these times, you must have the discipline not to let yourself get off track and stay on the path to achieve your goals.
Focus
Staying focused is an essential skill to have to be successful. With the vast amount of information at our fingertips, it’s easy to get distracted and fall victim to advertisements that promise fast and easy results, like a pill that will help you lose weight or the next “Amazon” stock that will help you get rich quick. These types of thoughts take you off the objective and down a rabbit hole. Short-term scenarios that promise quick results will ultimately fail. One way to avoid this is by keeping the end goal in mind. For this reason, HIGHLAND creates an investment policy statement (IPS) for every client tailored to their circumstances and goals, which they can refer to when they begin to get distracted.
Maintaining good health and keeping your finances in order is work. Poor health and money problems cause stress to your body and drain your vigor. Those are the trade-offs. By developing great financial habits now and working to improve your health, you will realize a significant improvement in two of the most critical areas of your life.
Joey Casolaro is a CERTIFIED FINANCIAL PLANNER™ at HIGHLAND Financial Advisors, a Fee-Only fiduciary wealth advisory firm that offers comprehensive financial planning, retirement planning, and investment management. Joey graduated from the University of South Florida with a bachelor’s degree in personal finance and successfully passed the CFP national exam in 2021. Joey enjoys working out, spending time outdoors, and hanging out with family and friends in his free time.