Have you ever wondered if there are things that you can do that won’t cost a cent but may greatly change your life? Recent research suggests that there IS something that you can do that could dramatically change the path of your wealth creation.

The global investment, information and asset management firm Morningstar calls it the ‘Mental Time Horizon’.

Show Notes

• [02.41] Some context - last week's episode

• [04.06] The Morningstar survey

• [05.56] Why the data matches

• [08.31] Hope

• [09.27] The most important step that you can take

• [11.57] The thing that makes this whole exercise worth it

• [15.51] The next step

Quotes

"Because you can live and feel your life in more detail in ten years from now, the decisions you make now have a completely different context to JUST surviving the current moment." - Lisa Linfield

"By deeply talking about and envisioning your future through the chapters of your life ahead, it enables you to firstly honestly face up to your financial situation, to look forward as to what school fees and university fees will be, and what age you will be able to start saving that same money for your future." - Lisa Linfield

"Only once we've acted, only then can it all fall into place. Inaction, or digging our head in the sand and hoping it'll go away, only creates a bigger problem down the line. One that's harder to fix." - Lisa Linfield

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• Empowerment through financial literacy with Gugu Sidaki
  

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TRANSCRIPT

Ever wondered if there are things that don't cost you a cent, but can greatly change your life? Well, I stumbled on some recent reach from the global investment information and asset management firm, Morningstar, that struck me powerfully as something that can greatly change the path of your wealth creation that I thought I'd share with you. They call it the Morningstar Mental Time Horizon and I'll translate for you what that means in Human Speak for us everyday people.

So everyone keeps telling us we must save more… earn more… invest more, but it feels so hard, and it feels like we battle every day just to make it through the month, let alone find the space and time to do all of that… Right?

And then, we end up feeling bad because we aren't doing what we know we should be doing... which adds more stress to our already stressful money situations... right?

But what happens if there is a different way?

In last weeks episode I aluded to this briefly, but had a few people come say to me... WHAT??? TELL ME MORE! So I thought I would.

So last week we were talking about the research of four professors who looked at the different reasons why some people were able to set a goal AND stick to it AND then achieve it, when most of us give up, right?

And one of the things we spoke about was having a vision of your goal that was clear and specific - because it sends a signal to your brain to search for opportunities to fulfil it.

Well I stumbled across this research from Morningstar that builds on that when it comes to having a clear and specific goal for your money.

Effectively they asked the question "when you think about your finances, how far into the future do you tend to think and plan?

So I want you to pause right now and answer that question… are your money discussions and planning for the next year, next three years, next five years, next 10 years or more?

Now your plans may be around your life, not your money… and having a clear vision of your life beyond 3 years or 5 years or 10 years...So for you personally, and for your family, how far are you thinking?

The Morningstar Research... and the question it raises

So our friends at Morningstar gathered a lot of information, and what they found is two things

1. For every single earnings category, those who thought and planned their money 10 years or more out had a higher net worth than those who earned the exact same amount of money, but only thought about their money in terms of weeks, months or a few years ahead.

2. Those who thought and planned more than 10 years out had more confidence and wellbeing when it came to their money than those with short-term financial horizons

So here's the question "What if thinking in detail about your money more than ten years out enables you to have more money EVEN IF you still earn the exact same amount?"

Let me repeat that…

I know… sounds a bit out there… but let me tell you why I think the data matches what I see in the money I manage.

1. Stop digging your head in the sand - Do Something

2. Stop kicking the can down the road... tomorrow's problem... face honestly the situation and know that changing it now will have a big impact

3. Difficult to make sacrifices for this vague thing out there... Clear, felt picture of the future makes decisions now not so hard.

4. Stressed about money and it niggles in our subconscious. Confidence builds when you know you are tackling something...

Often, it's actually worse in a marriage because one of you is stressing and the other is digging the head in the sand, or you both are because you think if they don't spot the problem, and I don't say anything, we won't have to change our way...

"Whilst I don't like the answer, I feel much more in control, and have a to do list I can achieve, and a plan that at least puts us heading in the right direction…"

Do you and your partner have a clear view of your next ten years… and the ten years after that, and what it will take to get there?

When you're on holiday, take some time to journal a timeline… how old will you and your kids be in 5, 10, 20 years time? What's happening in your life?

I did this 9 years ago in 2013 and on a spreadsheet put our family's ages at the top of the spreadsheet. I pulled it up now, and see Jess was 6 and the twins were 2... so Jess would have just been starting primary school..., and then the big milestones of Jess starting high school and Jess finishing high school, and the twins then finishing high school.

Back then, it seemed SO long in the future... yet now I still work off the same financial spreadsheet, and I'm mid way between the two vertical lines that say Jess finishes Jnr and Jess finishes high school.

I've changed and reforecasted that sheet so often, but one thing remains, It keeps forcing me to look ahead and plan for ten years ahead.

When you see your money laid out for you not in terms of numbers, but in terms of the big chapters in life, and you can see what you need to do to make your dreams happen, it's amazing how much easier it is to make the now decisions.

Why this research is DYNAMITE

Now here's the thing that makes it worth it….

When you look at the morningstar data, it's not just that people in EVERY earnings category had a higher net wealth AND personal satisfaction and confidence, they had on average THREE TIMES as much money as the people who thought and planned less than three times the amount of money.

THREE TIMES.

That's not a small difference. Imagine having three times the money you currently have today?

It comes down to the fact that because you can live and feel your life in detail more than 10 years from now, the decisions you make now have a completely different context to just surviving the NOW.

When we made the hard decision to step off the city ratrace and downsize our life ... it made NO sense in the context of our lives then. We had thriving jobs and careers and our life, business and family were based in Johannesburg.

But because we could deeply visualise the quality of life, the way we wanted to spend our time, and were deeply committed to spending more time with the girls, seeing through their high school and into their university, and then to what life would look like for John and I after they left home, those decisions were rooted in our future, not our past.

The move made sense to align us more closely to our values and vision for our life going forward... not the rat race we'd got caught up in going backwards. Don't get me wrong, we had a lovely life, and it was perfectly suited for a time of baby twins, our careers and businesses then... but we could see those paths diverge in terms of the future we envisioned.

So by deeply talking about and envisioning your future through the chapters of your life ahead, it enables you to

1. Honestly face up to your future financial situation, looking forward as to what school fees and university fees will be and what age you will be before you can start saving that money for your future... this exercise made us

2. Do Something - Knowing what the future we had in mind looked like, and what was important to us, we realise that if we wanted John to stop working, we would need to cut our living expenses to continue to afford good schooling... which we were able to do in a smaller home in a little village

3. And whilst it wasn't easy to leave the safety of what we knew, having a clear picture meant that we weren't making sacrifices for something vague... it feels like it's part of our path, and so it made it an easier decision to make

4. Which means we remain confident about our ability to live now AND have enough for the future.

So let's ask this question… if you knew that your view of the future would be made much more possible by changing stuff now in your life, would you have more courage to step out and make those changes?

So as you look at this sheet you've drawn about your future… with all the key dates and plans in it, what stands out for you?

When I do this for clients who have young kids, I just go to the school's fee schedule that they want to send their kids to… and somehow, just seeing it all on one page, the costs they will need so clearly written, it often helps to facilitate the decisions they need to make, but don't want to.

It's supported decisions for stay at home mums to go back to work - not with a heavy heart, but with a defined purpose (if you want to go on holiday, you need to earn the money for it)... another to be brave enough to go and tender for a big client, and another woman to have the courage to leave the safety of her work and go out on her own.

Adulting is hard, it requires us to see life for what it is, not what we want it to be... but the amazing thing is that when we do, and we make the decisions and ACT, only then can it fall into place.

Inaction, digging our head in the sand and hoping it will go away only creates a bigger problem down the line… one that is harder to fix.

The earlier we see it, act and change it, the better our position becomes.

THAT's why people who think 10 years or more out have more money... it's not because of some wishy washy "putting it out there"... it's because thinking deeply and planning our money and lives enables us to then take the actions we may be putting off... and so have the money we need.