When Is The Perfect Time In Life?
The answer may not surprise you!
I can confidently say that I often walk the path least traveled. For me personally, this year has brought significant ups and downs, which has led me to spend a lot of time and energy identifying my current options for the future. Before I continue discussing my current situation, lets take a look at the traditional life plan that many prescribe to.
What seems to be a common misunderstanding, for many of us, is failing to take the extra time to assess if any of the above milestones are being approached at the right time. Your family and friends will usually tell you that there is no such thing as a perfect time to do anything, and the right thing to do is go with your gut feeling.
For me personally, I have inherited my paranoia & stubbornness from my family. For starters, I am 31 years old and I waited almost 11 years before proposing to my partner in crime. I believe marriage is forever and I never really understood why some rush into marriage. Especially, when you most likely could be spending your entire lives together. Regarding home ownership, I am still sitting on the fence with buying a place in Vancouver, because I am entertaining the idea of immigrating to Europe. Finally, I am a business owner, and as an entrepreneur, my mind is hard-coded that financial prosperity is always just around the corner.
Does anyone get anxious when such shortsighted advice is given regards to major life changing milestones?
It is getting more difficult to analyze the true motivation of others; especially, when many of us create an online persona showcasing a life that is not entirely accurate. Unfortunately, life imitates art, which leaves some lost and hopeless. The most important takeaway that we need to understand is that time can never be recovered. Therefore, it is important for individuals to understand the true value of their time. This is a skill that is indirectly taught in school known as determining opportunity cost.
A quick example that many can remember is studying for midterms and finals. There are never any perfect solutions; however, many of us had to make a plan that benefited one or a few outcomes and potentially worsen others. I remember going into finals having 95% in Business Statistics, I decided to spend more time studying for courses I was doing poorly (I had 8 courses in one semester). I ended up acing the finals in three courses that I was concerned with, and I bombed the stat final leaving me with a much lower mark.
The same decision process should be considered for major milestones in life. Let us look at a few of the milestones illustrated above and analyze what would the opportunity cost could be:
- Attending post secondary school:
- Do I even know what I want to do at graduation?
- Is there even a demand for the degree/diploma/certificate/designation I am completing?
- Can I postpone schooling and work for a bit to save more money and avoid using student loans?
- Before settling into adulthood are there things on my bucket list that I want to achieve before I get too old?
- Choosing a career:
- Is this line of work stable?
- Will my employer still be in business in 10 years
- Is there any potential for growth?
- Will I enjoy doing this work when I am older?
- Getting married and/or starting a family:
- Do I have enough money saved up?
- Considering the stats, will I be a victim of the current high divorce rate?
- Would there be enough for both to survive independently if there is a divorce?
- Do I have an employer that embraces a work/lifestyle balance that will allow me to raise a family?
- Do I live in a safe neighbourhood with a good school for my children to attend?
- Can the household survive if either person loses their job?
- Buying a home:
- Do I have enough saved where I have a sizeable down payment and still have enough to cover the closing costs?
- Do I live in an area that I could easily sell my place if an opportunity out of province/country occurs?
- Do I even like my neighbours or will I be stressed every time I pass the neighbourhood while coming and going?
- Do I have enough cash flow to afford repairs & maintenance?
- Do I have the time to maintain a house on top of my current obligations?
- How much will my discretionary spending be cut to finance a home?
- Are there transactions I need to cover first before becoming a home owner?
- Do I even want to stop working permanently, if I will have the energy/resources to keep working?
- Do I have enough activities to keep me occupied throughout my retirement?
- If I retire too early, will I have enough savings to afford proper care when I am too old to take care of myself?
- Would I have gained more from taking sabbaticals throughout my working life instead of saving up for retirement when there aren’t any guarantees how long it will last?
- Estate Planning:
- How soon should I be preparing my will?
- What happens to my estate after I die?
- How much will my estate be taxed on my final tax return?
- Am I leaving behind loved ones that require help and how much am I willing to contribute today to deal with an inevitability tomorrow?
A major problem is as time passes, not pursuing these milestones have a certain opportunity cost lost. For example:
- Without higher education, you may be limiting your ability to make a decent living (depending on what you were originally planning on taking).
- Choosing a career could also be limited if you start creating gaps in your employment history (it may get harder to enter an industry at a later age), as well, potentially foregoing income stability in the long run.
- Buying a home may save your thousands in the long run and there may be opportunities to aggressively increase your net worth.
- You may be passing up on an opportunity to marry someone who will be there by your side when you need someone the most.
- Without planning for retirement, you may be at risk of suffering health issues that could prevent you from working at a senior age.
- Without an estate plan you may be leaving loved ones behind that depended on you when you were alive. Most estates will pay close to the top marginal tax rate on their final tax return leaving almost half to loved ones.
Unfortunately there isn’t a universal template for everyone; however, this does conclude that inactivity is the most dangerous thing you can do to yourself. In the spirit of Financial Literacy month, if you don’t have a solid plan, may I suggest turning off the TV, logging off, and get started ASAP.
As long as you are reasonable, you shouldn’t come across too many roadblocks in your plan.