Editor’s note: This is the second article in a five-part series in which Feroz Ansari highlights ideas from his book, The Wisdom and Wealth Solution. Feroz, CFP®, is a portfolio manager at Compak Asset Management and an adjunct professor at the University of California-Irvine. (The Wisdom and Wealth Solution is published by Kiplinger Books and is a national bestseller*.)
Most of us know more about our investment portfolios than we know about ourselves.
We know how much we have in our 401(k). We know the value of our home. We can pull up our investment returns in seconds. Some of us know our asset allocation down to the percentage point.
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But ask a different set of questions and the answers become much harder.
What brings you joy? What does financial security mean to you? How much is enough?
And perhaps most importantly: How much of your definition of success did you consciously choose, and how much was handed to you?
In my previous article, I introduced the idea of the “concrete box.” It is the invisible structure that our family, culture, religion, education, politics, economics and life experiences place around us. We are all born inside one. The problem is not that the box exists. The problem is that we may not realize how much of our thinking takes place inside it.
Recognizing the box creates awareness. But awareness alone doesn’t change your life.
The next step is to look inward.
That is why the first step in the LIVING360 method I developed is deceptively simple:
Know yourself.
Whose definition of success are you pursuing?
Try a thought experiment.
Imagine that nobody else could see your life.
Your neighbors wouldn’t know the size of your house. Your friends wouldn’t know which car you drove. Nobody could see your job title, your investment account balance, where your children went to college or where you spend your vacations.
Would you still want all the same things?
Perhaps you would. But perhaps some things would suddenly matter a lot less.
This isn’t an argument against ambition, wealth or success. I’ve spent much of my professional life helping families build financial security and teaching students about wealth management. I believe financial wealth is essential. Money provides options, freedom and protection against many of life’s uncertainties.
The question isn’t whether you should accumulate wealth.
The question is why.
Consider two people who each want a $5 million portfolio.
One wants $5 million because it would provide the financial independence to leave a stressful job, travel with family and stop worrying about paying the bills.
The other wants $5 million because reaching that number would prove that he has finally “arrived.”
The financial goal is identical.
The emotional goal is not.
One may reflect the life the person genuinely wants to live. The other may be heavily influenced by comparison, status or expectations absorbed from the concrete box.
Knowing yourself means learning to recognize the difference.
We often treat financial goals as if they were purely mathematical: Retire at 60. Buy the second home. Leave $3 million to each child. Reach $10 million in net worth.
But behind every number is a story.
Sometimes there is a thoughtful reason. Other times, we have simply absorbed an idea about what successful people like us are supposed to do.
We work harder, earn more, buy the house, build the portfolio and reach the title we once wanted. Then we discover that the finish line has moved again. Five million becomes 10. The first house becomes the second. Success creates another expectation rather than satisfaction.
At some point, it is worth asking whether you are still pursuing a goal or simply continuing a race you forgot you entered.
That is where financial planning and self-awareness intersect.
Your concrete box influences your money and life choices
Some of the strongest walls of our concrete box are also the ones we may be most reluctant to examine.
Religion, for example, can profoundly shape our worldview. It can influence how we think about money, generosity, consumption, family obligations, work, success and even the purpose of life itself.
For some people, faith becomes a source of meaning and perspective that helps define what “enough” means. For others, inherited religious or cultural expectations may create obligations or definitions of success they’ve never consciously examined.
Politics can influence us in a different way, including how we invest.
A change in political leadership can make some investors suddenly optimistic and others convinced that economic disaster is imminent. The same stock market, the same portfolio and the same long-term financial goals can look entirely different depending on someone’s political worldview.
The useful question isn’t whether your political or religious beliefs are right or wrong.
It’s whether you recognize when those beliefs are influencing your decisions about life and money. That is what it means to see the walls of your own box.
Your calendar and bank statement may know you better than you do
If you want to understand what you truly value, don’t begin by writing a list of values.
Look at your calendar. Then look at your bank and credit-card statements.
Where are your time and money actually going?
You may say family is the most important part of your life, yet discover that work receives nearly all your waking hours.
You may believe travel brings you tremendous joy, yet repeatedly postpone it while spending considerably more remodeling a house you barely have time to enjoy.
By knowing yourself better, you may also realize that something you once considered indulgent, such as an annual family vacation that seemed too expensive or a golf membership that felt too frivolous, may actually be the setting for some of your closest relationships and happiest memories.
There is no universal right answer.
That is precisely the point.
Knowing yourself also includes understanding your emotions around money. How do you react when the stock market falls 25%? Can you remain disciplined, or does fear take over? At the other extreme, do you find it difficult to spend money, even on experiences that could bring lasting joy?
These behaviors may have roots far beyond investment theory. They may come from childhood experiences, family attitudes toward money, fear, ego, scarcity or the concrete box itself.
Knowing yourself, therefore, isn’t separate from good financial planning.
It’s part of good financial planning.
Take a snapshot of your life
We measure our finances constantly. We calculate net worth, investment performance and retirement readiness.
But how often do we measure the rest of our lives?
That question led me to develop the LIVING360 Grid and LIVING360 Compass, tools designed to help us examine not simply what we have, but how we are living.
Think of the Grid as the “you are here” marker on a map. It asks you to consider your life across two dimensions: Financial wealth and wisdom wealth.
Someone with considerable financial resources but little meaning, happiness or peace may recognize themselves in prosperity without peace.
Someone rich in relationships, purpose and perspective but constrained by financial insecurity may identify with stifled enlightenment.
Others may feel they are simply surviving, not thriving.
The aspiration is “total wealth” or, as I call it, LIVING360. This is where financial wealth and wisdom wealth increasingly support one another.
The purpose isn’t to label yourself. It’s to understand where you’re starting.
The Grid helps you see where you are. The Compass helps you decide where you want to go.
The Compass points in four directions: Know yourself. Know the world. Know your purpose. Build financial security.
And everything begins with knowing yourself.
From goals to alignment
Knowing yourself can change financial planning in surprisingly practical ways.
“Retire at 60” may become: “At 60, I want enough financial freedom to teach, travel and work only on projects that interest me.”
Wanting a larger house may become wanting a smaller home closer to your children.
Maximizing the inheritance you leave behind may become less important than creating experiences with your family while you’re still here to enjoy them.
Or you may discover that you genuinely love your work and have no desire to retire. What you actually want is financial freedom: The ability to continue working because you choose to, rather than because you have to.
There is no correct destination.
Your ambitions don’t need to become smaller. They need to become yours.
The goal of knowing yourself isn’t endless introspection. It’s alignment.
Alignment between what you value and how you spend. Between what gives you meaning and how you use your time. Between the life you say you want and the financial decisions you make every day.
Financial planning can help you reach your destination.
Knowing yourself helps ensure that the destination is actually yours
Now consider a harder question:
If you could step outside your concrete box and design your life again, knowing what you know today, what would you keep, what would you change and what would you finally stop chasing?
Your portfolio can help finance the answer.
But first, you have to know yourself well enough to discover what the answer really is.
That is where the journey toward LIVING360 begins.
To learn more, visit wisdomandwealthsolution.com or subscribe to The Wisdom and Wealth Solution YouTube channel.