First, a story from the great Steven Covey:
One day a professor was speaking to a group of business students and, to drive home a point, used an illustration I’m sure those students will never forget.
As this man stood in front of the group of high-powered over-achievers he said, “Okay, time for a quiz.” Then he pulled out a one-gallon, wide-mouthed mason jar and set it on a table in front of him. Then he produced about a dozen fist-sized rocks and carefully placed them, one at a time, into the jar.
When the jar was filled to the top and no more rocks would fit inside, he asked, “Is this jar full?”
Everyone in the class said, “Yes.”
Then he said, “Really?”
He reached under the table and pulled out a bucket of gravel. Then he dumped some gravel in and shook the jar causing pieces of gravel to work themselves down into the spaces between the big rocks.
Then he smiled and asked the group once more, “Is the jar full?”
By this time, the class was onto him.
“Probably not,” one of them answered.
“Good!” he replied.
And he reached under the table and brought out a bucket of sand. He started dumping the sand in and it went into all the spaces left between the rocks and the gravel.
Once more he asked the question, “Is this jar full?”
“No!” the class shouted.
Once again, he said, “Good!”
Then he grabbed a pitcher of water and began to pour it in until the jar was filled to the brim.
Then he looked up at the class and asked, “What is the point of this illustration?”
One eager beaver raised his hand and said, “The point is, no matter how full your schedule is if you try really hard, you can always fit some more things into it!”
“No,” the speaker replied, “that’s not the point. The truth this illustration teaches us is: If you don’t put the big rocks in first, you’ll never get them in at all.”
This lesson is very important, not only to order your priorities in life, but also to meeting your long-term financial goals. Very simply, focus on the big rocks and you won’t have to worry about the small rocks. In terms of saving for the future and meeting your long-term financial goals, what are the big and small rocks?
Big Rocks: Consistently contributing as much as possible to your 401(k) or 403(b) plan. Receiving the full company match for your 401(k) account. Investing these funds in for the long term in stocks, mutual funds, or index funds, and not trading the account on every news event. Paying off credit cards in full every month. Buying a house that you can afford and paying down the some of the principal ahead of time. Contributing to an IRA or 529 education plan if you are able. Driving a sensible car and keeping it for a few years after it is paid off.
Small Rocks: Cutting out your morning Starbucks habit. Clipping coupons. Carrying less house or car insurance than is prudent, to save money. Reusing plastic bags. Making your own Christmas gifts. Driving instead of flying on your yearly vacation. Struggling with the service on your low-cost cell phone plan. Canceling your television service. Hiding under a blanket in order to not turn on the heat. Etc.
Many financial commentators focus only on the small rocks, and state that if you add enough small rocks to the jar, then you will eventually become financially independent. However, by focusing on the big rocks consistently over time, you will be able to not sweat the small rocks, and this focus on the large things will also help you and your family sleep better at night, knowing that your financial future is secure.
Focusing on the big rocks will also allow you to have a positive relationship with money. A negative relationship with money can develop from constantly worrying about the small stuff and from consistently denying yourself anything positive resulting from your hard work. You strived to excel in school, got a good education, and are now working hard on your career. You should be able to enjoy your daily Starbucks run, binge-watching Netflix, or whatever your simple pleasure happens to be. If you take care of the big rocks first, then you can eliminate your focus on the small rocks as you will know that you are doing the things that will create a happy and secure tomorrow.
