Last January I had the pleasure of spending a weekend in Houston, Texas with a group of friends which included Dave Nevitt, a familiar name within the Maritime running community. We were both running the Chevron Houston Marathon, and while I would be enjoying my recovery the following month, Dave (53) would go on to run four marathons in four successive weekends throughout Texas and Florida.
In 2012 Dave ran 16 marathons, a 50km ultra, and hit his 100th career marathon, a 2:57 effort, in October. While this athletic feat is article-worthy in and of itself, what was equally impressive to me was how well he clearly planned financially in his working years in order to enjoy his retirement doing what he loves most – running marathons!
If I can still run a sub 3 hour marathon well into my 50’s I will be very happy. If I have the financial freedom to run in a warm climate for a month or more at a time, that’s my Canadian dream! This article discusses how I hope to get there over the next 25 years by providing some practical financial planning tips that can be applied to every runner ranging in ability from Olympian to “off-the-couch”. Some of the themes below are advice prescribed by renowned Canadian financial planning guru David Chilton in his book The Wealthy Barber Returns. My father read the original The Wealthy Barber when I was in elementary school and I owe much of my fiscal prudence to lessons learned from this book.
Live Within Your Means
In The Wealthy Barber Returns Chilton presents an exchange he has with a client who thinks he’s identified why he’s having trouble paying off his credit card each month. The client keeps getting invited to golf outings, dinners, sporting events, etc. and his entertainment expenses are too high a percentage of his disposable income. What’s he to do? Chilton’s solution is very simple. “Tell your friends you can’t afford it. You’ll be surprised how liberating that is”. It’s okay to pass on that exotic destination race that your running group is going to if you can’t afford it; support your local race instead. And I hope to never see an “Own the Podium” funded athlete standing in line for a $5 coffee when I run in to use the washroom. If you think your superfluous spending is getting out of control, this is what I suggest: run more! My personal experience is that by the time I get home from work, do my run and eat dinner, I’m too tired to even consider shopping. Besides, the stores are closed anyways.
Pay Yourself First
As runners, there’s certain quantitative data that we have memorized and can recite off the top of our heads: goal race pace, Boston Marathon Qualifying time, weekly mileage, etc. Here’s another figure you should always know: how much from each pay cheque must be set aside for retirement. Chilton indicates that this percentage be between 10% and 15% of your gross income. I have my RRSP set to automatically withdraw from my bank account each pay day. (For American readers, an RRSP is like a 401(k) plan, but colder). That way I don’t even have the option to spend that money. This can be likened to doing your run first thing in the morning – it doesn’t matter what else comes up during the day, you’ll always have your run in the bank.
Pack Your Own Lunch
Within a year or so of entering the work-force I noticed an unfavourable trend – my savings varied inversely with my waistline. This was before I was a serious marathoner, and I’ll admit my primary incentive at the time was to spend less money. I made it a resolution to make my own sandwich, pack some fruit, veggies, yogurt, and granola bars, and eat in the lunch room as opposed to venturing out to a different fast-food eatery. The accountant in me can’t help but calculate the incremental savings from packing versus eating out to be about $5 a day. If I set aside that $5 and earn 5% on it over a 30 year career, the Future Value of an Annuity formula tells me I’ll have over $120,000 waiting for me when I’m ready to retire. $5 x 365 x ((1+0.05)30 – 1)/ 0.05 = $121,251. The corollary of this is that I soon noticed my pants were too big because I was losing weight from eating healthier. I didn’t mind having to invest in smaller clothes.
Invest in Exchange-traded Funds for the Long-Term
Chilton presents an interesting mathematical certainty when it comes to investing: the aggregate return of investors trying to beat the market must match the market’s return. Exchange-traded funds don’t typically have the high Management Expense Ratio that comes with professionally managed funds, allowing for a higher net return on your investment. Chilton also advises to avoid regular tinkering with your portfolio, as you’re more likely to make irrational decisions, and there are added fees attached with each transaction. Because most of my spare brain bandwidth is dedicated to running, I don’t have the time or the desire to constantly research what stocks are going to be hot in an attempt to beat the market. I invest in Index or Exchange-traded funds as that’s one less thing to worry about. By consistently investing each month, sometimes I’ll buy high, sometimes I’ll buy low, but I have a few decades before I need to get overly concerned about where the market is at.
Buy a Modest House for your Income Level
As many families have learned the hard way, if you take on more house than you can afford, you could be in big trouble if your income is suddenly reduced or interest rates start climbing. Everyone’s different, but the last thing I want to do after a 22 mile long run is mow a big lawn, shovel a big driveway, or have to go out and buy “stuff” to fill space that I’ll never spend time in.
In the “Potpourri” section of Chilton’s book he strongly advises buying online running programs, and if you’re from the Halifax area, getting your running injuries treated at Bluenose Physiotherapy. (Kidding! Obviously.) Seriously though, my intent was to use this platform as a means to illuminate the importance of making sound financial decisions through running analogies that we can all relate to. Akin to making small changes to your training routine that allow you get fitter and fitter, I hope you continue to make smart cash-flow decisions so that one day you have the financial freedom to enjoy an active retirement doing whatever it is you love.
About the Author: Greg Wieczorek is a Chartered Accountant and 2:25 marathoner residing in Halifax, Nova Scotia. He has coached his wife Maura from a 4:17 marathon debut to a personal best of 2:58 and helps others maximize their road race potential through his online coaching service Project PB.