Vilfredo Pareto, an Italian Polymath, found that 80% of Italy’s land was owned by only 20% of the population. Based on the “power law statistic,” 80% of results can often come from 20% of work. It’s amazing to think that we could be doing WAY less work to yield the exact same, or even more results.
There are a ton of financial resources out there these days, with the rise of financial entertainers, YoutTube, and all of the other mediums we scroll though on our lunch breaks. Figuring out who and what are worth a listen can be overwhelming.
On top of the tornado of financial resources, we also have a lot to focus on just to get through everyday life. We have car payments, mortgages, children, and just keeping up our everyday lifestyle to worry about.
Each day we only have so much time, but we often waste it. So, how do we hone in on exactly what activities we should be focusing on to get the financial results we want?
- Stop chasing investment returns and worrying about the economy. Understanding that the market rises and falls is key to comfortably investing money. Make sure that you’re investing at your comfort level of risk.
- Figure out a budget that works for you and your family. Don’t worry about what other’s are saving and spending; ignore the noise of “keeping up with the Jonses” and make sure that you’re creating a realistic budget that allows you to save at least 20% of your annual income.
- Focus on building and maintaining consistent savings patterns.
- Adding and refining goals at least quarterly. Keeping a list of targeted goals is crucial to figuring out what you need to do to achieve them. Make sure that you’re constantly updating your list, and celebrating when you get to mark a goal off!
- Learn bits and pieces to become slightly knowledgeable instead of trying to become an expert all at once. Learning an unfamiliar topic can be daunting. Most of us don’t have the time to fully dedicate ourselves to becoming a student again. Climbing the mountain little by little is more than okay – you’re still going to reach the summit.
Remember, the top 20% of income earners in the U.S. make around $200,000 a year. The top three things to focus on in order to really lock in what activities you need to do are:
- Reflect and solidify what it is you really want to accomplish in life. To reach your goals, you have to know what they are first! Examine what you really want out of life and start from there.
- Examine all of your finances. Be honest with yourself about where you’re currently at, and where you want to be. Keep a spreadsheet, or whatever is helpful to keep you on track.
- Delegate the heavy lifting to an expert, such as a financial advisor. We can’t all be experts at everything – we don’t know how to do surgery on a dog! Leave the more complicated financial matters to a financial advisor – that’s what we’re here for.
Once you have a better grasp on how to apply the 80/20 rule, you’ll be able to spend more time doing what you want instead of trying to become an expert on finances. You leave that to us.
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