The Common Habit That Might Be Holding You Back Financially

I don’t know about you, but I’m sick and tired of the personal finance cult. I’m tired of all the tips and tricks, the flavors of the month to help you save five cents off every dollar. All of it plays like a cheap, never-ending infomercial. Like reading 66 sex tips off Cosmopolitan magazine.

But above all else, I’m tired of the financial voyeurism. How we’re constantly trying to measure ourselves against how other people “do money.” It’s become the new status symbol these days. Instead of comparing the square footage of our McMansions, it’s “how much freedom do you have in your bank account?”

As if obsessing over money makes us free.

Here’s the thing: personal finance, when done right, is supposed to be simple and boring. There is literally nothing to write home about. But in the financial blogosphere, the same old content just keeps on churning. Once again, something that was real and true has become another echo chamber for our self esteem.

1. Comparing yourself to others is a recipe for unhappiness.

Whether you’re beating yourself up or patting yourself on the back, what you’re really doing is relinquishing control (and perspective) of your life. There’s always going to be someone ahead of you, just as 90% of the planet is worse off. We have to remember that awareness is only the first in a series of steps towards action and change. Don’t get caught up at the starting line.

2. The more we think, the less we do.

The more information we consume, the more paralyzed we become. Life is short, and our attention spans are even shorter. Don’t squander it being a voyeur of someone else’s life.

3. It muddies the water.

While people should be free to share their opinions, this election cycle has taught us that not all opinions are equally valid. Facts still matter. There’s now so much noise out there in the financial blogosphere that we get tricked into following the voice that best conforms with what we already believe.

On one hand, money is a personal journey where people have to make choices based on what they value. On the other hand, it’s also basic arithmetic. One plus one equals two, regardless of “who you are” or what your “personal beliefs” are.

While there aren’t any right or wrong decisions in the strict sense of those words, there ARE rational and irrational ones when it comes to money. Here are some ways we might be more financially productive:

• Adopt a Low Information, Low Tech Diet: Turn off notifications on your phone. I can assure you that after you’ve read a half dozen money/investing/retirement articles, you’ve read them all. The next one won’t change your life. Instead, pick up a book like John Bogle’s The Little Book of Common Sense Investing. It may be low-tech, but at least it doesn’t deal in dopamine.
• Focus on changing one behavior at a time: Start with something small. Do it until it becomes a habit, then move onto the next thing. Your financial life is not going to change all at once. You know how long it took me to convince my wife to start tracking every expense?
  My messaging went through three phases:  
  • Phase 1: I don’t care what you spend as long as you log it.
  • Phase 2: Here’s where our money went last month.
  • Phase 3:  Can we do better next month? In what areas?
    After rinsing and repeating for twenty four months, our last two money diaries were titled Autopilot and Freedom.

• Draft a plan for the future: Do it in increments. What are your “big rocks” next month? The next quarter? The next year? Commit to something challenging. Have something to look forward to.
• Practice cautious optimism: The script should look something like this: as long as I do X, Y, and Z by next month/quarter/year, I know I’m making progress and moving in the right direction. Very few people go through their day-to-day being excited and motivated all the time. Curb your enthusiasm, and practice taking joy in small and seemingly insignificant achievements.