I have a saying that I used frequently in the past: "You have to pay the price..." In order to get healthy, you have to pay the price with exercise. In order to master your craft, you have to pay the price by working hard. You get the idea.
This phrase is helpful by exposing the reality of the trade-off. In other words, you do not become an Olympic gymnast and have a normal upbringing at the same time. Contrary to popular culture, you can't have it all. Life necessitates trade-offs.
Trade-offs lead into an investment mindset, which is something that I have been working on lately. Investors are always playing the long game. They are after realizing gain over the long-term. While trade-offs may exist today, they see the bigger picture. For instance, there is something deep inside us all that hesitates investing our hard-earned dollars in companies whose stock has taken a substantial hit, yet these kinds of strategic bets are what have made Warren Buffet, well, Warren Buffett.
Our more natural inclination, especially in the west, is to have a spending mentality. Spenders are about experiencing and acquiring. Rather than investing in a downtrodden company, a spender would look at something with a more immediate gratification. While this may not be a bad thing--and it should be noted that not every company turns around--it is a different mindset altogether.
Our investment strategies aside, we all should be playing the long game in our personal lives. Therefore, adopting an investment mentality has several positive implications. I'll use a few personal anecdotes to illustrate:
For starters, an investment mindset has helped me see the long term potential of trade-offs at home. Trade focusing on golf for family time and what will be the long-term implications for my relationship with my three kids? What about my wife? Notice, like investing in a company, there is no guarantee of success. For instance, there are many people who have experienced terrible familial relationships and have never touched a golf club. The reverse is true as well. The point here is investment. Where do I want to invest my time and talents?
Another example occurred over Labor Day Weekend. I signed up for, and participated in, Michael Hyatt's Free to Focus seminar. This meant that I invested an hour each day over the weekend to watch that day's featured interview and take notes. This was a trade-off that I made with the family because the investment would (I believe) pay dividends in the future. While time will tell, I do not anticipate regretting the investment.
A final example is something that my wife and I have set as a goal for each our children to have a designated amount invested in their college funds by the end of their first year of life. This is investing 101 as it gives the money the opportunity to earn compound interest. It also may be the most difficult of the examples listed because it deals directly with the money we have. We could easily rationalize using the money elsewhere. In fact, a vacation sounds pretty darn nice right now. But that would be a significant trade-off, wouldn't it?
Life involves trade-offs, so it is best to determine in advance where you want to invest your time and treasure. Otherwise you may be tempted to spend it on frivolous activities that may not be bad in themselves, but may not lead to the life you want to live.
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