How to get out of your own way
Photo by Jamie Templeton on Unsplash
If I had to categorize everyone I've spoken with over 15 years as a financial planner, they would go into two buckets:
People who don’t worry about their finances enough
People who worry about their finances too much
Is this a gross generalization and not 100% applicable to your personal situation? Of course!
But upon hearing those two categories, you likely immediately associated more closely with one of them. And perhaps ironically, both categories can lead to the same problem…
Not worrying enough or worrying too much about your finances gets in the way of you living your best life.
Let’s break them down:
1) Not worrying enough about your finances
Are you worried paying more attention to your finances will limit you? Or are you scared that your current lifestyle and spending might not be sustainable?
It’s 100% normal and expected to feel this way.
Paying more attention to your finances feels scary at first but the more you practice paying attention, the more confidence it will create around your financial situation.
Having sufficient confidence around your financial situation allows you to live your best life without feeling like you’re waiting for the other shoe to drop.
When you start paying more attention to your finances, it usually means you’re no longer operating at the margins because you’ve purposely built margin into your financial life. And that’s one of the only ways I know to live your best life no matter what life throws your way.
2) Worrying too much about your finances
Is it even possible to worry too much about your finances, Brian?
If you’re asking this question, chances are this section applies to you!
To be clear, paying attention to your finances is a good thing. And the more you practice paying attention to your finances, the better your life tends to become. However, it helps to remember that too much of a good thing can also become a bad thing.
One of my favorite writers, Morgan Housel, shared a great question recently that really drives home this point:
“Is this thing I’m worried about actually a problem, or am I looking for problems to worry about because they make me feel in control?”
Paying attention to your finances is ALL about feeling in control. It’s how we get prepared for the unlimited amount of future unknowns that we are bound to encounter in our lives.
BUT…
It helps to remind yourself from time to time that the primary reason for paying attention to your finances is to enable you to live your best life.
The better we become at paying attention to our finances, the easier it becomes to get sucked down the giant rabbit hole of over-optimization.
For example…
Are we seriously considering putting off a family trip to Europe to prioritize paying the taxes on an optional Roth IRA conversion?
Or…
Why did I just spend two hours mentally debating the tax efficiency of two extremely similar investment options instead of taking my family to our community pool for an evening swim?
As Morgan so aptly shares, we can look for problems to worry about in the name of control. And if this is where we find ourselves, it’s a good reminder to take a deep breath and ask whether or not this is how we really want to be spending our limited time and energy.
Remember that your most valuable and limited resource is your time, not your money.
So whether you’re paying too little or too much attention to your financial situation right now, it helps to remember that living your best life is usually found somewhere right in the middle. Or as I like to say – everything is better in moderation.