If you can fix your diet you can fix your finances
If you can fix your diet you can fix your finances
It’s close to noon and you and your friends are starving after a 2 hour hike. You get seated at a restaurant and while grazing through their menu, a delicious burger catches your eyes. You order first with excitement and anticipation of taking that first juicy bite. Then one of your friends orders a salad, and the next one a salad, and the next one after that a salad. You immediately feel guilty because you should have ordered something healthier, too. The burger arrives but you’re no longer excited, and you feel ashamed with each bite.
Sound familiar? Personal finance is like this too.
Suze Orman shaming millennials for buying $3 coffee
Some guy on twitter shaming people that buys new cars
Food and money share many similarities. You need both everyday, from the day you're born to the day you die. You’re never quite sure when enough is enough. And there is an overabundance of information that all seem to contradict each other. The health and wellness food market and the personal finance industry is estimated to be worth $700 billion dollars1, each! But instead of making it easier, it just seems to make it confusing.
There is no single right or wrong way to do money and food, but society is quick to shame us for not using it “correctly.” The secret to using money and food for joy is finding confidence in a system that works for you. If you’ve figured out a way to do food, or money, well, then you can apply the same principles to do the other one well.
Here are a few suggestions and examples of what has worked for me.
Filter out the noise
There is an overload of information out there, and unfortunately most of them are bad advice with an ulterior motive to grab your attention and sell you products. Be warned that anyone can call themselves a nutritionist, and anyone can call themselves a financial advisor. If you need help on shifting through all the noise, ask a credible source.
Health: ask a clinical dietitian, preferably with a masters in applied nutrition.
Personal finance: ask a certified financial planner (CFP). CFPs are required to pass a comprehensive exam and have a minimum number of years of experience. More importantly, they are required to be fiduciaries, meaning that they have to act in your best interest. Andrea Coombes, a former star student of mine, wrote a great article on the 10 Questions to Ask a Financial Advisor.
Slow down
We overestimate how much we can do it one day, but underestimate how much we can do in one year. It’s natural to jump to drastic changes to see quick results, but slow growth may be the secret to achieving your goals. According to James Clear, the author of Atomic Habits, slow grow can lead to success for the following reasons:
1. Slow Growth Teaches You to Believe in Yourself
2. Slow Growth Removes Pressure and Allows for Passion
3. Slow Growth Teaches You How Change Actually Happens
The best systems are the one you can stick with, and slow growth allows you to build that system because small and consistent wins become a habit over time. If you want to spend less money on eating out, don’t start by completely cutting out your restaurant budget to cook at home everyday. Instead, start by staying home at least once every two weeks. Once that becomes a habit, see if you can stretch it to once a week.
This can work the other way with finances. Don’t double your budget as soon as you earn a promotion. Increase your budget slowly and give yourself a chance to slowly adapt to your new lifestyle.
To be successful over the long-term, make decisions easier.
Health: I will always choose a burger over a salad given the choice at a restaurant. What I've found to work is to buy a couple of pre-made salads at the beginning of the week. If I see it in the fridge and don’t have to choose it over a burger, it’s more likely that I will eat the salad for at least one of my meals.
Personal finance: take decisions out through automation. This is easy to do with 401(k)s since it is automatically deducted from your paycheck. I gift monthly to my parents through Chase automatically, and the rest of my savings are automated through BrightPlan. I max out my backdoor Roth IRA and HSA every February, and do it altogether so I don't have to think about it more than just once a year.
Find your balance
Okinawa, Japan has the world's highest proportion of centenarians, at approximately 50 per 100,000 people. Studies have shown that it could be due to a Confucan teaching, Hara hachi bun me (腹八分目), that instructs people to eat until they are 80% full.
In the same way, not having enough money to cover your essentials is painful, but more money does not necessarily translate to more happiness. A 2010 study by Princeton University conducted by economist Angus Deaton and psychologist Daniel Kahneman found that Americans don’t report any greater degree of happiness after income above $75,000.
To help you find the right balance:
Health: eating too much will make you sick, but not eating enough is also unhealthy. For me, eating the right amount of food that makes me feel satisfied yet not uncomfortably stuffed is an ongoing trial and error. Whether it’s 70% or 90%, find the right balance for you to develop a healthy relationship with food.
Personal finance: apply Hara hachi bun me to money by consuming only 80% of your income and saving at least 20%.
Perfect plans only exist in your mind. As soon as you start, they invariably become imperfect. The point is not to create and execute a perfect plan, but to start a process that you can stick with most of the time. And don’t worry about setbacks - amateurs and professionals have setbacks alike. The only difference is that professionals recover by getting back up.
Create your system and get back to finding happiness in a cup of coffee, burger, or a new car. If you would like to explore how I help my clients create and maintain a personal finance system that works for them, schedule a 15-minute discovery call with me below.
