I recently heard this financial advice which I thought was ingenious. The advice simply says:
Get in line and stay in line
What does it mean exactly?
The concept is very simple. No matter who we are or how much skills or knowledge we have, we simply can’t do things super fast and expect success.
The faster we try to do something, the easier/faster we will fail.
Imagine a long line at a cafeteria. Look at the first guy at the front of the line who is about to get his food. He’s first in line now but not long ago he was at the back of the line, wondering when he would get to the front.
Everyone starts at the back of the line at one point.
How often do we wait in line and switch to get in a new line because the original line was taking too long? Once we made the switch, the new line ends up being not much faster than the original line, or maybe slower than the original line.
Instead of continuing to wait in the new line, we exit the line again and join yet another line. We keep doing this exiting then joining a new line process again and again and we’re constantly stuck at the back of the line, never getting anywhere.
An analogy of this is the “chasing the shiny penny” symptom. We try an idea for a few days or a few months only to find that we’ve lost interest, so we start on a new idea and start a new process. Because we’re always trying something new, we end up achieving absolutely nothing and wasting our time.
So how does this apply to investing and personal finance?
First of all, we can’t become a millionaire overnight. Yes, we can win the lottery and become an instant multi-millionaire, but the odds are stacked against us.
To play the personal finance game right and to be successful, we have to be patient. We need to learn and have all the right tools and strategies.
For example, we need to learn about budgeting so we can control our cash inflow and outflow. We need to learn how to save money once we have budgeting sorted out. We need to learn about insurance so we’re covered when the unthinkable happens.
If you’re just starting a budget system, keep it up for at least a year then review your spending history after 1 year. If you find flaws in the budget system, tweak it and modify it to fit your need.
If you just started investing, put aside a small amount of money each month and slowly increase your portfolio. Read investment related books to slowly increase your investing knowledge. If you’re investing in dividend growth stocks, set realistic dividend goals accordingly. Don’t start investing in dividend paying stocks the very first year and expect to have the dividend income to cover all your expenses.
Most importantly, we need to learn how to invest our money so they can grow and work hard for us. But we need to be patient.
One of the best ways to be patient when it comes to investing is to time in the market, rather than timing the market. Staying in the market for the long term will allow you to diversify through time. Who cares about the daily ups and downs of the stock market when the market has the tendency to go up by 8% on average in the long term?
Remember, speed kills so learn to get in line and stay in line. You will get somewhere eventually.