Money

The Real Secret to Being Good with Money

April 19, 2018
the secret to being good with money

“Oh yeah, I used to use Mint! …but I eventually deleted it off my phone because it was too depressing.”

I overheard this at an event I attended a few months ago, and I didn’t know how to react. I hear this from friends, acquaintances, and strangers a lot — this casual, said-in-a-joking admission of guilt in being financially irresponsible.

Maybe that sounds harsh, but let’s call it how it is. If you’re deliberately ignoring your finances because you don’t want to deal with the reality of your money, that’s a problem.

The thing is, it doesn’t have to be this way. You don’t have to resign yourself to a life of being bad with money.

That’s exactly what Eric and I set out to explain when we did a recent talk together in Boston. We wanted to explain our insight on the real secret to being good with money, and how anyone — yes, even you — could improve their financial situation through a few simple steps.

Planning for the event was almost as fun as being there, because the conversations Eric and I had around this topic — and didn’t necessarily get into during our talk — contained some really great pearls of wisdom I wanted to share with you here.

Here It Is: The Secret to Being Good with Money

I’ll get to the point, because claiming to know the secret to being good with money is a pretty big statement to make. So here goes:

The secret to being good with money has nothing to do with money. Or at least, it has nothing to do with how much you make or earn and everything to do with your decisions and your awareness. The secret is being self-aware, paying attention, and questioning just about everything.

Let me explain.

If you want to be good with money, you must work on your self-awareness. Honestly, this is probably the secret to being good with anything and everything in your life.

Now, it’s important to make a distinction here: self-awareness is not the same thing as introspection. Introspection means spending a lot of time thinking about yourself, or psychoanalyzing yourself.

Self-awareness, on the other hand, is a mindful practice. It requires you to notice your thoughts, feelings, and behaviors — but that’s about it. Notice without judgment. Notice what happens without making up stories about why it happened or what it means.

I recently came across a briliant article on the difference between awareness/mindfulness and introspection by Gustavo Razzetti. The whole thing is worth printing out and reading over and over again, but I really like what Razzetti says

You may spend considerable time doing introspection without necessarily gaining insight. Constantly inspecting your thoughts, feelings, and behaviors doesn’t mean you understand them. Introspection is of the thinking realm; meditation is of the witnessing realm.

Introspection involves thinking, categorizing, labeling, analyzing — you are evaluating your thoughts and emotions. Meditation is about being aware of what you are doing and just observe — you contemplate your thoughts without judging them.

Many people approach self-improvement with a rigid mindset — they expect to find a perfect answer. But mindfulness is not about having the right formula but about appreciating the journey. Mindfulness is the practice of noticing the degree in which we are identified with our thoughts and beliefs. It’s creating space for:

Awareness, not thinking. An attitude of openness and curiosity, not judging. Flexibility of attention, not resisting.

This is the kind of self-reflection I mean when I say the secret to being good with money lies in the ability to be aware of your own thoughts and choices.

When you start observing your feelings and actions without judging them, you may start to see them more clearly. You pay attention to what actually happens in your life, and instead of just passively accepting it you can start making more mindful choices.

You can position yourself to ask “but why am I doing this, really?” and that can lead to some pretty deep insights for yourself and your money.

The Power of Asking Why and Paying Attention

When used carefully, “why?” can be a pointer that leads to presence and awareness. Instead of simply doing things because everyone else is doing them, or because you feel it’s what you should do or it’s just something that people like you do, “why” makes you stop and reflect.

That can be a slippery slope to introspection and dwelling on yourself, but when applied lightly it’s more of a reminder. Here’s a quick example of a (condensed) series of thoughts asking why can spark:

“Why am I doing this?”

“Oh, because I felt obligated. I didn’t really choose to do this… this is a reflection of someone else’s agenda, or some cultural conditioning”

“Well, in that case, what do I actually want to do right now?”

So how does this connect to being good with money?

Say you go out with your friends every weekend. Fridays and Saturday nights mean dinners, drinks, and dancing to the wee hours of the morning — and Sundays, you know there’s gonna be brunch somewhere.

You also know your bank account is going to be gasping its last breath on Monday, but that’s something you ignore. You’re having so much fun.

Right?

Well, actually think about that for a second. Ask yourself, “why am I doing this?” That may lead to other questions, like “how does this make me feel? Am I truly happy? What am I seeking from this experience?”

This is the paying-attention part of being good with money. You have to pay attention not just to why you’re doing something, but to the value and satisfaction you are (or are not) getting out of your experiences.

I would be willing to bet that living this way all the time doesn’t actually make you happy. It’s exhausting, depleting, and unhealthy in a lot of ways.

The more self-aware you are, the more you’ll be in tune with the fact that going out every weekend is actually not making you happy… but it could be a band-aid for other hurts. It could be a distraction from unpleasant feelings.

Who Is Making Your Decisions: You, Or Someone Else?

When you start asking why and start paying attention, you may realize that you’re engaging in things that don’t actually serve you or provide you the value or experience you’re really seeking — and at the same time, those things are costing you a lot of money.

And none of this is to bash “going out.” That’s just one example. There are a range of behaviors we engage in that are means of escape, avoidance, or self-soothing. There are also a range of reasons we do these things. We may feel societal or peer pressure; we may just be conditioned to think “people like me do things like this to be happy.”

The more self-aware you are, the easier it will be for you to pick up on the habits you have or actions you take that are driven by outside influences. Another good example of this might be shopping and buying certain brands or items.

Recently, a friend gushed to me about a certain kind of handbag. I had never heard the brand name before (and I can’t even remember it now), but I knew what she was talking about: she had one of these bags and so did most 20-somethings in Boston. I literally saw 4 different women with 4 different colors of the same bag within a 1 hour time frame walking through the city earlier this week.

“I saw one of these bags in Marshall’s for one hundred dollars!” my friend exclaimed dramatically.

“Holy shit!” I replied, my eyes wide. Before I could finish my thought, she said, “I know — that’s incredible! You can’t find them that cheap anywhere!”

I laughed and she threw me a slightly confused look. “Oh,” I explained, “I was saying ‘holy shit,’ as in, ‘holy shit that is insanely expensive.'”

My friend then looked at me like I had lobsters crawling out of my ears, and I just shrugged. To me, a cheap bag is one I pick up secondhand for $10. And a desirable bag is one that a million of other people don’t have, and isn’t a plain, bucket-like tote with no special or distinguishing feature whatsoever.

Don’t get me wrong, it’s a nice bag and it looks good. But I’m not seeing why every other girl in Boston will drop more than just a Benjamin on one.

Other than, of course, because someone else said, “people like us buy bags like this.” And so people buy the bags as a way to display a certain type of status.

All this is subconscious, of course — which is exactly why it happens. Once you become aware, once these things rise to the surface level of your consciousness, you can start asking why and realizing there’s no good answer. And then you can ask questions like, “well, what do I actually want?” and you may find the answer is very different than “a plain sack with no personality that I can haul around after spending $100 or more on it.”

You might also realize you have some habits or behaviors that are internally driven, but your energy is being misdirected (like drinking a lot to get you to a happy place, or overeating to sooth emotions — both of which I have been 100% guilty of myself).

I think this is what predisposed me to being better with money than most people I knew. While it took me until very recently to gain self-awareness and regularly practice mindfulness, I’m a skeptical person by nature. “Why?” was always my favorite question.

And when it came to doing things, I was quick to ask, “alright, why are we doing this? Do I want to do this? No? Okay, not doing it.” I was perfectly happy to not go along with the crowd in most cases. I still am.

Most cases, I want to point out, does not mean all. Again, I have my weaknesses and blind spots.

Here’s an example: I used to feel like I had to be drinking to be in social situations in order to get over my social anxiety, but the more self-awareness I’ve developed the more comfortable I feel showing up to events without a drink in hand because I don’t need it to be free and who I really am.

And some of my biggest financial mistakes came from taking actions that were culturally conditioned, not reflections of who I really was. Buying a house was an example of that; I looked around, saw everyone else doing it, and thought, “aha! This is what I need to do to be happy like everyone else.”

Only By Being Self Aware Can You Identify Your Values, and Only Then Can You Align Your Spending with What’s Important to You

To me, the foundational act of being good with money is aligning your spending with what you actually value. That’s what I do today, and it allows me to spend freely on things that actually matter to me — because I don’t waste my money on stuff that doesn’t rank high on the priority list.

If a purchase isn’t for me — meaning, it’s more about showing off something (be it literal or figurative) to someone else — I don’t buy it.

Making sure I spend on what’s important to me and scrimping everywhere else is the easy part. Figuring out what you value is the tough part, and that’s why I believe the secret to being good with money has nothing to do with money itself.

Once you understand what’s important to you, financial decisions become incredibly easy to make. You can say yes to what matters — and you can do the hard work of saving or investing for what’s important to you because you’re properly motivated to get there.

You can also say no, without guilt or shame, to things that just don’t align with where you want to go. And those “nos” feel less like a form of deprivation, or sacrifice, because you’re not saying no to things you love — you’re only turning down distractions.

This is the fundamental thing to get right: cultivating your self-awareness. Everything else sort of trickles down from there.

It’s all about knowing yourself, and being brave enough to be true to who you are.

Keep up with the conversation as it unfolds.

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