For the next while, we’re going to be using Mondays to talk about money. Most of us would agree that money is an area where we could stand some improvement. For a lot of us, we also need another reminder that success with money really is attainable…even with our CRAZY lives. How do you think about money? Do you like where your household is at financially? Do you feel good about your financial decisions and where they are taking you?
Money can be a bit like health for a lot of us. We always feel like we can and should be doing better, but we aren’t really sure where to start. Sometimes we have so many ideas of what we should be doing that we just want to go spend some money in order to feel better…which leads to buyer’s remorse…which leads to guilt…which leads to spending…. Maybe we’re just so exhausted from everything else in life that taking on the Money-Beast seems too daunting. In working with people on money matters in my job, one thing that I see over and over again is a nagging guilt that people have related to money.
As we delve into this topic, we’re going to get into specifics and practical steps that we can be taking to see success with money. For today, I think it will be helpful to talk a bit about how we define success and how we think about money. In the weeks to come, we’ll talk more about planning and budgeting strategies for households.
So what does it mean to succeed with money? One of my philosophies about success is that any good picture of success is process oriented and is near at hand and attainable. Otherwise, I will have pessimistic thoughts and struggle with motivation to stay on course.
As an example, for fitness I could view success as running a 4 minute mile and having 8% body fat…OR…I could view success as beginning to implement actions that are proven over time to lead to increased fitness. The first view of success would only be attainable after years of hard work and training. Even then, it would require a very rare gene pool! The second view of success is attainable today (yes – I just promised you financial success today – no – you don’t have to buy my special ‘Be Financially Successful NOW’ package, but it is highly recommended if you’re really serious J). It simply requires identifying an action and beginning to implement it. I know that I would be more fit if I got some exercise, therefore I will start doing 50 pushups in sets of 5 throughout the day every day. That’s a great start!
Success with money is all about putting some concrete things into place that get me started in the path towards my long term view of success. I really like the 80-20 rule that I have heard about in numerous venues. The basic concept is that 20% of our actions produce 80% of our desired results. With money, there are many things that need to be done well in order to max out our potential, but selecting a few of the most basic things will get us about 80% of the way with about 20% of the effort. Basically, don’t worry about anything remotely complex with money until you’ve mastered the 20%.
This is where most of us go wrong in many areas where we want to improve. We start delving into complicated “expert” philosophies and techniques before actually putting the basics into practice. That’s why ol’ cousin Rick can talk your ear off about that great “small cap venture mutual fund” that’s basically “like stealing candy from a baby” and in the same conversation, he asks you for another loan to tide him over. Cousin Rick can’t succeed because he doesn’t understand what success is.
Success is putting successful principles into practice.
Looking at success from this angle frees me from constantly stressing about money. My success doesn’t hinge on whether my ’96 Saturn SL1 decides to guzzle some more money this month. It depends on the habitual practice of the basic principles that will bring success over the long haul. This leads me to my most basic definition of success with money:
Success with money means freedom from constantly thinking about money.
The thing that frees us from constantly thinking about money is having a plan that we believe in that we are implementing. Large amounts of money cannot do this. Most wealthy people constantly think about money. Implementing a plan is the key, not lots of money. Peace and satisfaction come from knowing that we are doing the best we know to do with the things that we can control.
All of us have been taught in some way or another to view money solely in terms of numbers. As we get started talking about money together, let’s begin to change our view and our thinking about money and how we measure success with it. Let’s measure our success by intentional actions that put our minds at rest. No other measure will do. Rest assured, the numbers WILL follow.
The huge benefit as parents is that this process-oriented view of success allows for wonderful teaching opportunities for our kids. As we walk out our process, they walk with us and ask questions. They see that a proper focus is on responsible, proactive living, not just results (which can often be very haphazard). What better way to prepare our children to successfully manage their resources.
A couple of thoughts before concluding:
- What we set as our ‘measure of success’ should, then, produce success. This is how we know that Paris Hilton does not come from a financially successful family – just a rich one.
- I grew up with a model for financial success, even though we never set foot in a car within the last 7 model years.
- If money ever becomes an end, rather than a servant to better ends, a taser (or any other strong form of electrical shocking) would be appropriate.
- Being a wise, disciplined consumer is an advertiser’s worst nightmare (just thought I’d throw that one in after all of us being subjected to the advertising circus of the Super Bowl).
As we go forward, we’re going to be spending our time on the basic 20%, because, frankly, I’ve still got enough to master there before the 80% even merits a moment of my time. Also, I am concerned that adding the other 80% might actually rob me of my primary goal of thinking less about money.
What do you think about this way of approaching money?
Be sure to check back next Monday as we dive into the power 20!