Protecting Yourself From Yourself

In a recent meeting, someone told me about how they invest in their company’s stock from each paycheck. This in and of itself isn’t worth writing about…..lots of people do this. What she said next is what drew me in. “I really don’t know if this is the best investment, but it makes sure I don’t spend it on something else. I know it’s there.” This is one of the countless ways people play games with themselves to achieve something. Or as I like to call it, “protecting yourself from yourself.”

As I meet with people, lots of versions of this story are told. Lots of interesting ideas, ranging from practical to absurd. Lots of people automate their savings/investing as if it were a utility bill. One friend pays extra on their mortgage instead of saving for their next house to ensure they can’t repurpose that money for a different use. One client loves buying shoes, but knows she could easily overdo it in the shoe-shopping department. Therefore, she only buys a pair of shoes if she accomplishes certain goals in her business. Another client knows they struggle to spend money on themselves (to an unhealthy extent). So we’ve created a structure so that every time they spend money on their kids, they also spend a certain amount on themselves. Another friend, due to some bad (really bad!) childhood experiences growing up, struggled to spend money on dining out. They budgeted for it, but never spent it. I helped them negotiate a ridiculous rule where if there is any unused money in their dining out budget at the end of each month, they have to give it to one of their in-laws. They really don’t want to give money to their in-laws, so they miraculously started spending it each month. Over time, they’ve not only gotten comfortable spending it, but actually learned to enjoy it.

I have a few of my own. In my pursuit to become a more generous person, I recognized the allure investing had on me. Knowing how investing works, how powerful it can be, and frankly just liking the process of it, I knew it could potentially inhibit my giving journey. Therefore, we negotiated a rule in our house about a decade ago. Never again would we invest more than we give. We have to give at least as much as we invest. No exceptions. This one simple decision has transformed the way we approach finances, investing, and generosity. It was a simple decision, with simple implementation, with powerful results. Protecting myself from myself.

What are some ways you protect yourself from yourself? I’d love to hear your ideas, whether they are practical or absurd.

Pick Your One Thing

I was recently talking to a frustrated parent who was sharing their displeasure with their grown child’s financial habits….or lack thereof. In the conversation, they listed a dozen things this young adult needs to do better in order to get their financial life back on track. Things like stop spending on frivolous things, save more, get an emergency fund, get a second job, pay off their debt, start investing……and the list goes on and on. These things very well may be true, but there was a problem. If this young adult actually tries to do all these things, they will inevitably fail. They can’t go from having little-to-no healthy financial habits to implementing a dozen new things into their life at once. That’s a setup for defeat. It’s like telling me - who wants to get in better shape - I should run 3 miles each morning, do some yoga during lunch, and lift at night……7 days per week. There’s no chance I make it even 4 days doing this. Personal finance is the same.

If I were sitting down for coffee with this young person, I’d tell them to pick one thing and get really good at it. Any one of them would move them in a positive direction, but they must pick one and focus hard on it. Through repetition, they will create a stronger habit and continually get better at it. Eventually, it will just be something they do, like brushing their teeth.

For most people, the best and most effective place to start is to get in the habit of budgeting. Accounting for ALL income they have coming in this month, making sure each dollar has a purpose (spend/save/give), executing that plan, and tracking their progress. Then repeat again next month. The first few months will likely be ugly, but give yourself grace. Learn from the experience then do better next time. In a handful of months, you’ll wonder how you ever handled your money without a budget. Once you lock down this habit, all the other aspects of personal finance become accessible.

Even if you do well in this money arena, there’s always room to grow. What’s your one thing for this season of life? What one thing will you implement to enhance the quality of your life?