Velocity or speed. Which one would you prefer? Many times the two ideas are confused, but yet they are very different. Speed is movement. Velocity has direction.
For example, if you run on a treadmill, you get a lot of movement, sometimes several miles, but you never really go anywhere.
On the other hand, velocity has direction. When you move with purpose, you get a result.
For instance, when you run several miles on the loop in Central Park then you actually move in a certain direction. To get to any goal – health, financial or otherwise, we cannot just focus on running fast, but be aware of the direction we want to go.
Financial Velocity
There are many considerations for financial velocity and financial speed as well.
Financial velocity begins with where do you want to go with your finances? What’s on the horizon in the short term and long term?
Some ideas can be:
- I want to buy a home that costs this amount by a certain age
- Send our children to college and the cost will be X the time they turn 18
- When it comes to retirement, I can comfortably live on X dollars at Y age
There are a lot of other ideas and goals too! You can make them whatever you want. The idea about financial velocity is to keep sight of your goals and chip away at them every day, week, month, and year.
Over time you will be well on your way to your financial achievements.
Financial Speed
Recently, there’s been a lot of financial speed. There are many ups and downs in the markets, and unfortunately, many individuals may get too emotional and make decisions that could hurt their finances. Obviously the esteemed readers of this article won’t be doing that.
However, if you come across a friend or family member who does not read these letters, they may be tempted to make a financial decision that could be detrimental to their financial health and financial velocity. Please share this article with them.
So remember that velocity is disciplined and well-thought out whereas speed is doing something for the sake of doing it.
We can chat markets, velocity, or speed whenever you’d like.