Tim Ferris recently spoke with Greg McKeun and provided “tactics and strategies for a 2025 reboot.” and rewind:
“What I’ve learned is this strange rule of reverse prioritization,” McKeun said. . ”
Why not do the most important thing?
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Reverse prioritization, do you say?
Is this the answer to the question “Why do we avoid the most important things?”
perhaps. Let us investigate and consider the impact of this phenomenon on the ability to advance economically and personally.
Reverse prioritization
McKeown’s short answer is that reverse prioritization occurs due to the emotional weight of our most important tasks. You can connect your identity to the most important tasks. Therefore, the emotional cost of failing with something meaningful outweighs the discomfort of simply avoiding it.
Here we use procrastination as a protective mechanism. And, with the most important tasks, perfectionism slows us down, and performance anxiety stops us on our tracks.
Most of us will object to that money management is one of the most important tasks in our lives. It’s not that since I left Gold Standard at least in the 1970s, currency has inherent value, but almost everything in life requires money and it’s paramount to managing it effectively.
But when it comes to money, it’s not just about the importance that slows us down. There are additional barriers thanks to excessive information, misinformation spread, and the unfortunate preference of the financial industry for profits rather than your personal happiness.
So let’s take a look at the four most important money tasks through the lens of our mental model. There is no right or wrong way to prioritize these four basic human felt needs, but we start with the ones that attract the most attention.
growing up
The attention pressure shown on various pillars of financial planning has caused the bucket to grow disproportionately. Perhaps this is appealing to everyday market tickers, creating a greedy flywheel that grabs all headlines, even though choosing a full investment is not the most important task Because it provides a reminder. Make sure you grow your assets well.
The investment you choose is important, but the most important task in a growth game is investment. But why is this so difficult?
This is because there is such a strong current bias. Throughout human history, we have been properly wired for survival. Therefore, there is an inherent preference for what can be unfolded or enjoyed compared to the future. Our current needs are clearly focused, but our future is uncertain.
Dr. Halhirschfield, Professor of Marketing, Behavioral Decision Making and Psychology at UCLA and author of the book, Your Future Self: How to Make Today’s Tomorrow Better is “Savings Are the Money of Today” It’s like a choice between or give it to a stranger in a few years’ time.’ Therefore, he instructs us to seriously deliberate our future – what is it To imagine what you look or feel – improve your current financial decisions.
In fact, what do we do to become successful money growers? Of course, we must invest, but instead of enforcing a series of successive decisions to concede today’s guaranteed enjoyment for an uncertain future, we can simply automate savings. You can make a decision.
Usually, the easiest and most profitable place to start is the 401(k). First, do everything you can to get the matches offered by the company. (For example, your company can give 50% of the salary you contribute from 50%.) And with many 401(k) you can increase your contribution each year through automatic escalation elections .
The biggest part of this is that unlike uncertain performance in the market, especially in the short term, the choice to save is completely within your control. By saving regularly, you will increase the elasticity of your portfolio (as you buy more stocks when the market drops) and increase reliability for all other domains of your personal finances. This positive phenomenon known as “behavioral spillover” is especially important when dealing with one of the most emotionally stacked issues: protection.
protect
Protection may be the most challenging of the four pillars we are working on, as it involves facing the most powerful emotions in personal finance. Two types of fear slow us down: fear of what is known and fear of what is unknown. Fortunately, there are two antidotes that can help you tackle financial success to these obstacles.
The best example of our known fear is our mortality rate. We are sorry to be the one who bears bad news, but we can all be pretty sure that our odds of death are very close to 100%. So why do Lim only report 52% of people with life insurance, and many people with shortages report?
Certainly, a few people may have enough assets to withstand self-insurance for the financial risks inherent in death, but if someone is financially dependent on you, you are probably living You need insurance.
So why don’t we do that? We don’t like to deal with the fear of an inevitable end mise.
Then we fear fear itself. There are many things that can surprise us financially, especially as homeowners, spouses and parents, from busted appliances to increased utility costs. The occurrence of these risks is unknown, but the way these risks are not. There are only four ways to manage known and unknown risks.
Risk Assumption – Take it yourself. Self-insurance. Eliminating risk – Are you afraid of flying? Take the bus. Risk reduction – drive, but wear a seat belt. Risk Transfer – Buy insurance.
You cannot get insurance for any risk. And for the unknown, that is the purpose of margins and emergency savings.
give
Few philanthropists, but they even label themselves as charity, but most have causes beyond themselves. We are all driven by a sense of purpose. As Daniel Pink concludes in his book “Drive,” “the deepest and most motivated people… seize desire for a cause greater than you.”
Are you a parent who is paying or planning to pay for your child’s education? It’s a generous act. And while they may not be dripping with romanticism, the most powerful love letters that any of us write is our estate planning documents, especially our will, and I argue that ” “Recommendations for financial planning that everyone needs.”
If the hurdle to having a life insurance need is quite low, it is even lower for those who need a will. Are you an adult who owns something? After that, you have real estate and probably need a will. If you have a minor child, if you are gone, it is your will to tell you who your child’s guardian should be.
Real estate planning exacerbates our general predisposition to avoiding the topic of death, which is exacerbated by the confusion and complexity of real estate tax laws (this varies by state), but the most we take from this post If you have only one important financial task, this is it. please.
Live
As we first discussed, one reason people dislike budgeting and avoid financial planning is that they prefer to enjoy and recruit today’s resources rather than wait until tomorrow. Understood. However, if your financial plan fails, it is only addressing it in the future.
The best financial plans deliberately fund the pursuit of happiness today, bringing a great deal of life to our money. Let me give you a good example:
Over 50% of marriages end with divorce, right? Additionally, financial disputes are often listed as one of the main causes of these divisions. So why not invest in your marriage? Why don’t you fund relational success?
One of the better rules of thumb I’ve heard about maintaining a marriage is the 2-2-2 rule, at least every other week, a date night, an overnight trip with a partner, and every other month Travel and a big excursion every other year.
It sounds great, but if you don’t purposely fund that intentional enjoyment, your plans will fall apart, or you and your beloved scream in the boat of love, and you will It may be emphasizing how you pay.
In his book, Die With Zero, Bill Perkins competently offers an ode formula to the saying, “You can’t take it with you.” That wisdom can apply irresponsibly, but I argue that funding the life you want to live, namely Todai and tomorrow – the most important thing we can do with money.
So, have you checked all four big boxes above? If not, what are the most important financial tasks you can complete this year?
