Four Thoughts
WHEN I STARTED writing about personal finance in the late 1980s, my focus was on giving “actionable” money advice. Here, at the end of my career, I’m more interested in offering thoughts that’ll help folks with all areas of their life, financial and otherwise.
I’m not sure how many articles I have left in me. Fingers crossed, it’ll be many more than my current diagnosis suggests. But whatever the case, here are four thoughts that I'd like readers to remember:
1. Worry less. As I eye the exit, my mind keeps coming back to the same notion: I hope folks can find a way to spend less time fretting, and not just about their finances.
We are, alas, hardwired to worry. That’s how our hunter-gatherer ancestors were able to survive countless dangers and reproduce, thus ensuring we’re here today. But constant worry isn’t necessary for survival anymore. Instead, it’s often a waste of time, one that mostly serves to make us unhappy.
Want to fret less? Start by pondering what stresses you out. Is there a way to address your fears? Often, when it comes to money, the path to less worrying involves simplifying our finances, keeping a healthy cash reserve, settling on the right stock-bond mix, making sure we diversify broadly, limiting debt, buying the right insurance, getting our financial affairs organized and listening less to market pundits.
Sometimes, our anxiety is the result of our own procrastination. We might dillydally over buying life insurance or getting a will drawn up. Sometimes, we’re worrying about issues over which we have no control, and what we need is some level of acceptance.
The unfortunate reality is, we’ll never stop worrying. But perhaps we can at least deal with our big fears, so our stress level isn’t quite so high, and sweat less over the small stuff. No, it doesn't much matter whether we rebalance every year or every two years, or whether we have 75% in stocks rather than 70%, or whether our credit card pays 2% cash back on restaurant spending instead of 1.5%.
2. Talk it through. So much nonsense could be avoided by discussing the issues that estrange us from others, rather than assuming we know what they're thinking. We might imagine that folks are out to cause us harm. But often, the reason for their apparently unkind behavior has nothing to do with us and everything to do with some misfortune in their life about which we have no clue.
Similarly, we can save a lot of time by asking about the matters that puzzle us, rather than worrying that our questions will lead others to view us as ignorant. I’ve sat through countless meetings where someone finally confesses, “Sorry, I don’t understand….” At that point, a majority of participants then admit that they too are confused.
3. Think for yourself. When folks raise their voice and pound the table, we sit up and take notice. Perhaps we shouldn’t. I’ve found that the loudest folks often least understand the issue at hand. Instead, they’re noisily trying to justify their own choices, about which they aren’t all that confident.
We also shouldn’t allow ourselves to be bullied into action by popular opinion, whether it’s reflected in the words of neighbors, colleagues or market pundits. In addition, we shouldn’t let ourselves be swayed by stock and bond prices, believing the pattern we see in market prices offers some message about the future. Got a sensible, low-cost, diversified portfolio? It’s important to stand our ground, even as those around us flit from one investment to another.
When folks offer seemingly sensible advice, keep in mind that there’s more than one way up the mountain. Personal finance is indeed personal. What makes sense for others may not make sense for you—because you have a different financial situation and different emotional makeup. Yes, we can learn a lot from others, but we shouldn’t necessarily mimic their actions. My advice: Listen when others tell you what they themselves have done. But don’t listen when they tell you what you ought to be doing.
4. Understand what’s influencing you. We aren’t just swayed by those around us, by the media, by advertising and by recent market returns. We’re also influenced by the past—the good and bad experiences that shape our fears and values.
What are the situations we seek to avoid? How do we like to spend our time? Why do we use our money in the way that we do? Events in our past—perhaps involving our parents or our schooling—likely bear heavily on our behavior today, even if we no longer remember many of those incidents.
Still, it’s worth getting a good handle on our values and fears. For instance, I hate the sense that I’m under attack, I loathe pretense and boasting, and it can ruin my day if I know a bad meal awaits me. All this I can trace to my time at English boarding school.
Perhaps nothing is more important in managing money, and in how we conduct ourselves more generally, than knowing ourselves. No, you’ll never totally get there. I know I haven’t. But the more we understand about ourselves, the better we can cope with our fears—and the more we can create a life where we’re truly happy.
This is my final week writing the lead Saturday newsletter article. In future weeks, you'll be treated to Adam Grossman's wisdom, with my wife Elaine overseeing the newsletter. Meanwhile, I plan to continue contributing articles and Forum posts for as long as I'm able.
Jonathan Clements is the founder and editor of HumbleDollar. Follow him on X @ClementsMoney and on Facebook, and check out his earlier articles.The post Four Thoughts appeared first on HumbleDollar.
