Do you have parts of your financial life that don’t fit together? If you answered yes, you are in the majority. It is easy to make decisions based on the information at hand , with little or no thought about how the decision impacts other existing pieces of your life. After this cycle is repeated a few times, you can have a real mess.
One of the foundational components of making good financial decisions is to approach these decisions in proper order. You need to learn to walk before you run. In our fast paced world, this is often not what happens. Your friend from church, who works for an insurance company, sells you a “super-dooper whiz-bang variable universal cosmic insurance investment”. A year or two later, a neighbor goes to work for a big bank brokerage firm and you invest in “the best” mutual fund on the market. All the while, you have no discernible structure or plan for making financial choices.
If you don’t know where you are going, any path will take you there. This approach, however, is not the way to build financial independence. Creating a coherent strategy focused on long term goals is the way. It is easy to make emotional, “knee-jerk” decisions in every realm of life but financial decisions like this create problems over time. You end up with random pieces of a jigsaw puzzle that simply don’t fit together.