Why is Abe Lincoln’s Axe Philosophy Important to Your Financial Strategy?
03 Jul 2017
We love educating and inspiring people here at PII. Through our retirement classes, multiple radio shows, and TV show, our advisors are getting questions and having conversations with 5 to 10 new people each week. Here’s a sample of some of the questions we’re getting from people:
- “I received a buy-out letter from our company pension, what should I do?”
- “I’m retiring this year, when should I take Social Security?”
- “Should we be doing anything different financially to get ready for retirement?”
I always like to answer these questions by borrowing a line from our company President Jeff Johnston: “If we work together over the next 20 years, let’s spend the time and prepare to get it right!” Jeff is referring to our confidential “Premier Discovery Meeting.” It’s a confidential meeting that collects all of your financial facts and personal goals. This gets us prepared to draw up our initial “Premier Blue-Print” which is the first version of your financial plan. Jeff doesn’t mind me borrowing this line, as I’m sure he borrowed it from Abe Lincoln! Honest Abe once said about preparation, “If I had 6 hours to chop down a tree I would spend the first 4 sharpening my axe!”
I also like the Aesop story of the goat and the fox entitled “Look Before You Leap!” I usually say on our AM600 radio show: “Having any financial strategy is better than having no strategy at all!” Let’s look at an example of having no financial strategy. I really like the 2012 TED talk by Professor Schlomo Bernartzi from the UCLA Anderson School of Management (available free on YouTube) Professor Bernartzi said that the average household spends $1,000 a year on lotteries. He also asks the audience members, “How many of you spend $1,000 on lotteries?” No hands go up. He then adds, “That tells us that the people outside of this room are spending more than $1,000 to get the average to $1,000.” This is just one example of common money mismanagement among many Americans.
So, what’s your financial strategy? Are you spending most of your time sharpening the axe or are you still chopping at the tree?