What Going to the Shooting Range Can Teach Us About Financial Planning

February 15, 2012

Recently, some colleagues and I visited the local shooting range to practice firing pistols at paper targets.  I hadn’t fired a pistol in years, but I remembered that the last time I did I had fun. I was excited to go, but at the same time I was a little nervous.  What if I miss the target and my friends laugh at me? What if I do something wrong and somebody gets hurt?  What if I hurt myself?  What if, what if, what if?

Fear can be a very paralyzing emotion.  It can convince us of things that are not true.  It can cause us to do things we later regret.  It can prevent us from trying new things.  I think sometimes when it comes to financial planning, we are afraid.  What if my credit score drops?  What if I use the wrong type of account?  What if I make a bad investment decision?  These are all legitimate concerns, and without help from someone that has experience, they can be intimidating to take on.

Such was the case on the shooting range that day.  I had legitimate concerns, but with guidance from a friend who was an experienced firearms owner, I was prepared to face the challenge.  Here are three things I learned on the range that we can also apply to financial planning:

Safety first

Before we even stepped onto the range, my friend made sure that everyone in the group had ear and eye protection, and that we all knew the four basic rules of safety:

  1. Always point the muzzle in a safe direction.
  2. Know what lies beyond the target.
  3. Only put your finger on the trigger when you are ready to shoot.
  4. Treat EVERY gun as if it were loaded.

Similarly, there are some “rules of safety” when it comes to financial planning:

1. Have 6 – 8 months of expenses in an emergency fund.

You’ve probably heard this before, but it’s worth repeating.  Most financial goals get sidetracked because something unexpected occurs.  Protect yourself from the unexpected by establishing and maintaining an emergency fund.

2. Never invest in something unless you absolutely know what it is and understand how it works well enough to explain it to someone else.

One reason Warren Buffet never invested in dotcoms was because he frankly did not understand them.  If you adopt this simple principle, you will likely avoid getting yourself in serious financial trouble.

3. Maintain adequate insurance.

Damage to a home or vehicle, personal liability, major medical treatment, and long-term care expenses are all examples of things that can be potentially financially catastrophic.  Protect your financial goals by maintaining adequate coverage for any such risks.

4. Plan for contingencies

Create and maintain a basic estate plan, which includes a will, power of attorney for financial decisions, a living will, and a healthcare power of attorney.

Basic training

After we learned the basic rules of safety, the next step was learning how to properly handle the firearm. This included learning the different parts of the gun, how to properly load the gun, how to hold the gun in your hand, how to fire a round, and how to disarm the gun after firing.

Similarly, when it comes to financial planning, it is important to learn how different accounts and investment vehicles work, how they are taxed, how to put money in, and how to take money out.

There are a number of places to receive education on financial planning, including the library, the Internet (see http://www.360financialliteracy.org/), through your employer, or from a financial professional (see https://secure.financialfinesse.com/go/3055).

Ready, aim, fire!

When basic training was over, it was time to put all that training into practice.  I stepped up to the range, picked up the .40 caliber pistol, inserted a magazine full of bullets, loaded a bullet into the chamber, aligned the sites with the target, took a deep breath, and squeezed the trigger.

I must have fired 100 rounds that day, and the more I shot, the more confident I became.  I was able to consistently hit the target at close range, but my best shot was when I hit the target from 75 feet away.

In financial planning, some goals may be closer than others, but you always want to begin by aiming for your target.  Once you have your target in your sights, it’s time to execute.  All the education and planning in the world does you no good unless you put the plan into action, and the more action you take, the more confident you will become.

It’s been said that courage is not the absence of fear, but rather the willingness to face it.  I was nervous about firing a gun that day, but proper training gave me the confidence to do it.  What is holding you back from achieving your financial goals?  Maybe it’s time to step up to the range, take a deep breath, and squeeze the trigger.