Saturday, October 20, 2012

How We Think About Money

If you're reading this, you probably spend at least some time thinking about money.  And not in the "I-wish-I were-rich" or the "I-want-to-buy-a-new-iPhone" thinking kind of way. Folks of our ilk think of money in the way that engineers think about machinery or fuel.  We consider efficiency and design and improvements.  In short, when it comes to Benjamins, we are a special breed of nerd: the kind who enjoy redirecting spending money to investment accounts, and then also enjoy making a spreadsheet about it.

But if you're like me, you think about money too often.  I'll find myself in the physically in the presence of my friends or loved ones, but mentally in the presence of this month's budget and wondering if going out for a meal with these fine people is a good idea or not.  This is colossally dumb.  When I decide to do something, I should have enough common decency and common sense to give it my attention.  Money ought not occupy my conscience that much.  A big benefit of financial independence is that you don't have to worry about your financial situation all the time. Thinking about money sucks, especially if it's a distraction from the good stuff in your life.

I don't mean to say that we should never think about our finances.  Let's say our financial journey is a cross country car ride from Chicago to Los Angeles.  On one end of the spectrum, we have Johnny Consumer, who is driving to Miami for some reason while asleep at the wheel, careening into orange cones.  On the other end, we have Miser Mary who, instead of taking in the beauty of Historic Route 66, is staring at her Scan Gauge, marveling at the incredible gas mileage she's getting and, in her own way, in danger of a crash.

As always, the question is: how do we find the right balance?

Strategies to spare our minds from financial obsession:

  • Set a time to work on finances.  Setting a daily or weekly schedule is usually a good idea as it provides a goal (e.g. - I will finish cleaning the living room in the these 30 minutes).  But in this case, the benefit is really that when I have a stray thought about the monthly budget or our investments, I can remind myself that I already have an hour set aside for that this weekend, and I can defer the activity until then.
  • Focus on the task at hand.  Since I'm weird, I actually get some pleasure from looking at investments, net worth spreadsheets, and the like.  And when I have something unpleasant to do (like work), I'm tempted to instead look at my 401k.  I'll go so far at to persuade myself that maybe my retirement savings are even more important than the work project I had scheduled for this hour.  My strategy here is to fight the temptation, and focus on whatever the task or person that is in front of me. In its own way, that should also help the bottom line as it fights procrastination and improves my work performance.
  • Exercise.  For whatever reason, after a workout I've noticed that my mind is oddly clear and I'm not worrying about money, work, or anything else.  That's reason enough to turn off the television and work up a sweat.
  • Don't sweat the small stuff.   My wife is quick to remind me that while it's important not to waste all your discretionary spending on restaurants and bars, it's also important to remember the big picture.  Our big picture is that we're moving towards our goal of financial independence and that things are looking pretty good.  No need to worry about the minutia.
What tactic or philosophy have you found helpful when it comes to thinking about money?  Please share a comment, as this is an area for improvement in my life.

*The photo above was taken by boetter at Flickr Creative Commons.


  1. Thinking about how we think or using meta-cognition to make investment decisions is a healthy habit.

    Rather than think about money, why not visualize a desired outcome? Then use your TPS Report analogy to do some basic project management for how to generate and utilize said money to realize said outcome?

    So you do not actually think about money which is simply a resource. Rather you use cognitive capacity for how to realize the outcome and actually enjoy the journey.

    I seem to recall in another post you infact desire the outcome to enjoy and fulfill yourself? Why wait until you are forty or reach some self imposed future state and need to feel deprived or less than fulfilled?

    Think about the levers of performance not money itself.


  2. That's a great reminder, Kosmo. Happiness is always in our grasp -- we can find enjoyment and fulfillment by our state of mind, and not by our circumstances.

    I'm intrigued by your idea, but remain skeptical. You ask that I focus on the outcome (financial independence), rather than the money, which is just a resource. But my goal is a financial one...when tracking progress to that goal or methods for improvement, is it possible to not also be thinking about money?

    I think some of my mental garden will be devoted to things financial, almost by default, if FI is my stated goal. So as a compromise, I desire a Goldilocks state of mind: not too much, not too little. Just right.

  3. 1st, you use a powerful trigger word in that you are "skeptical". Check out Carol Dweck's book Mindset and the power of problem solving beginning by viewing a need as an opportunity which empowers choice.

    You stated your focus on money creates a conflict for you personally and clearly socially in that when with others you are not giving them the total attention they deserve, right?

    Maybe this fixation is due to not having done a personal "Show Me How To Utilize" project so that you can see the role of money to realize an outcome. Go right ahead and think about moeny but in an actionable context like how and what you will do with it along the way to realize your goals.

    Thinking is cognitive, to me you present more emotional considerations when you end up dwelling on a resource that is in fact robbing you of your most powerful wealth creation and that is your attention.


  4. There are some powerful thoughts, Kosmo. I'm latching on the notion of what one's attention really is: maybe a tool, maybe a commodity. I'm having trouble nailing down a construct, but I know that I'm at my best when my attention is focused, and focused on one thing, and when that thing is the right thing.

    Thank you for the reading recommendation. I'll put Dweck's book on the list -- it sounds like a good read.

  5. Gaming definitely captures the user attention partly due to being a visually rich, choice driven experience. Get it...visual choices so maybe bring in your TPS post of seeing an outcome and create a simple project to show us how to achieve some aspect of "PI".

    How does your audience participate as in gamification beyond posting in your blog?


  6. Thanks for this post. I'm an anxious person to begin with and it's really easy to harp on money issues, especially since I'm confronted with opportunities to purchase stuff multiple times a day.

    1. Hi Zoe,

      Thanks for the kind words. I agree that the amount of marketing we're subjected to makes it difficult to not think about purchasing decisions, almost as a form of self-defense.