“But I’ve Made So Many Bad Money Decisions in the Past . . .”
Forgive yourself and release your guilt. Pick one particular money moment that makes you feel shame, and remind yourself that you made the best decision you could. Express gratitude for what you learned as a result.
“But I Have So Much Debt . . .”
Practice gratitude. Why did you take on this debt? What was the benefit to you at the time? What are all the ways this debt has benefited you? Practice savoring this purchase, whatever it is.
“But I Love Having Nice Things . . .”
Spend on what brings you the most joy. Do you really want another purse, or do you want to go on vacation more? Do you really want to eat out at the same restaurant three times this month, or do you want your future self to have XYZ?
Practice asking yourself: How can I have both? What would that look like? If you truly want both, you can have both—you just need to take the actions to create that reality.
“But Money Doesn’t Really Matter, Because Money Can’t Buy Happiness . . .”
Write down three things that would genuinely make life feel a little lighter and brighter—for example, “more free time,” “clear skin,” and “less anxiety.” Consider how each (probably) requires money in some way or another and how money could help you attain them more quickly and with less stress.
“But I Can’t Save for the Future, Because I Barely Have Enough to Survive . . .”
Pick an amount, no matter how small, and commit to saving that much every single pay period. It could be a dollar; it could even be a single penny. In the beginning, it doesn’t matter how much you save. It matters more to build a habit of saving. Then start brainstorming what you can do to slowly increase that amount, bit by bit, over time. There’s no need to commit to those changes just yet. Just ask yourself the question: If I wanted to increase my savings by X amount next year, what are some ways I could make that happen?
“But It’s Too Late for Me, Because I Am Forty, Fifty, Sixty . . .”
Consider this moment, right now, as a fresh start. Accept that the past has happened, and release it. Now look toward the future. Given where you are right now, and where you want to be in the future, what’s the next action you could take to start shifting your trajectory?
Make a personal win list. List all the things you have going for you: achievements you’re proud of, skills you’ve acquired, memories and moments you’re grateful to have lived. Reflect on how the years of your life and the way you chose to spend that time made those wins possible. Then consider how those skills and experiences might serve you going forward.
“But I Have a Low-Paying Profession . . .”
Think about whether your current career is still the best career for you, now and over the long term. First, brainstorm what opportunities your current career offers to grow your income over time. Will that growth be enough to support your ideal lifestyle? Next, think about the work itself. Is this the career that you actually want to stay in indefinitely? If you’re already feeling some friction in your line of work, maybe now is a good time to look at alternatives and new paths.
“But I Am Just Bad with Numbers, Period . . .”
Think back to the first time you can recall feeling like you were “not a numbers person.” What person or event triggered that feeling in you? How can you view that moment differently now?
Reflect on another time when you felt like you were bad with numbers and what triggered that thought in you. Then come up with counterarguments based on all the ways you use numbers and numerical reasoning in your daily life. How do you feel?
The Seven Money Capacities
Being effective with money isn’t a fixed or inborn trait. It’s a set of skills that you can acquire, build up, and improve on. Anyone can learn them. You can learn them. When we talk about being effective with money, we’re talking about seven key areas of capacity. These capacities represent all the ways of interacting with money that everyone should get used to recognizing and navigating. They are: understand, decide, earn, have, spend, lose, grow. All together, they comprise your financial fluency.
the world of money is continuously evolving, and that’s what makes the capacity to understand so vital. It’s not about memorizing the rules and regulations of what’s out there right now; it’s about having the skills and confidence to investigate, to learn, and not to assume things will always be as they are now. When you understand money, you can examine the pros and cons and make a decision for yourself. Maybe that new get-paid-sooner debit card sounds like a great idea. But maybe the deposits aren’t FDIC-insured. Understanding what that actually means—namely, if the company folds, you aren’t guaranteed to get your money back—could be a big factor in whether you sign up or not.
Specific examples aside, all you need to understand is that these things can—and will—change throughout your life. It’s important to find a comfortable balance in your understanding, too. You want to continue to be well informed, but you aren’t going down rabbit holes on everything finance related (unless that’s your jam). You can make choices as new products and options emerge. Learn their ins and outs, or become just familiar enough with them to make the decision about whether you want to participate. This way, you’re neither confused nor locked into old strategies that might become obsolete over time.
Developing your capacity to decide is all about uncovering what you want and all the ways you could get there, and choosing the path that feels most appealing. It may be appealing because it’s the fastest. It may be appealing because it’s the most efficient, or requires the least sacrifices, or just feel the most fun. No matter what, you want to pick your path thoughtfully, rather than hastily. When you’re comfortable in your capacity to decide, you understand that you don’t have to wait for life to happen to you. You can plan your finances in advance and figure out how much money you will need for each fork in the road, and you are open to possibilities instead of pre-rejecting any potential option.
Earning more keeps your options open. It allows you to practice possibilities and put your values first. When your capacity to earn expands, so do the choices in your life, both short- and long-term. If you forget your lunch at home one day, you don’t have to go hungry in the name of saving. You can buy a sandwich because earning more has given you a cushion in your budget. If you want to spend your retirement traveling, you don’t have to choose your destinations based on which is cheapest. You can go to the places that will bring you the most joy, because earning more expanded your travel budget. Of course, you can still live a minimalist, no-frills lifestyle if you want to. Maybe you have no desire to own a home and you love the freedom of renting, but you want to be able to buy ethically and sustainably sourced products that tend to cost more because those companies compensate their workers fairly at every level. You can strengthen your capacity to earn no matter how you choose to live. The point is that you get to choose. If minimalism stops feeling right for you, you have the power to try new things, upgrade parts of your life, or shift your priorities around to reflect your deepest values.
Having money isn’t exactly the same as saving. When I was “saving” $50, it was quick and easy. I just initiated a transfer from my checking account to my savings account. It took maybe five minutes. At the end, I got a check mark or a “Transaction Complete” notification. The bank told me when I was done. The money was saved. Having money isn’t something you can complete in the same way. There’s no check mark or notification to let you know when you’re “done.” Having means you can feel comfortable holding on to that money as long as it makes sense for you. It means you’re comfortable defining “as long as it makes sense” for yourself.
Having also isn’t the same as not spending. It means spending the money that it makes sense to spend, when it makes sense to spend it. Conversely, it means not spending money that doesn’t make sense for a particular expense. It means having money set aside for different purposes, and not borrowing from one to cover another.
Your capacity to spend has nothing to do with the amount of money you pay for this or that, or how often. It has everything to do with being intentional. A price is relative. Knowing what it costs doesn’t tell you how much you will value and savor it. If I asked if you’d enjoy a $3,000 vacation, you’d probably say something like “That depends. Where’s the vacation?” If you love snorkeling and hate the cold, a $3,000 trip to the Cayman Islands would make you a lot happier than a $3,000 trip to Norwegian ski country. Spending effectively means judging on more than just price. It means you don’t default to the cheapest option, or to the most expensive. It means you think about what you want out of the expense, and spend to make that happen.
Losing money is a fact of life. Still, when it happens, it feels like a catastrophe. Your emotions kick in, and that causes you to make choices out of fear, out of lack, out of scarcity. When you’re in a state of panic, your advanced brain goes off-line, your instinctive brain takes over, and you’re not able to access the highest levels of decision-making.
Getting comfortable losing money doesn’t mean you will take constant risks, of course. You should still be choosy about when you roll the dice. You don’t have to risk everything—but you need to be willing to risk something. Every decision comes with unknowns. Investing in an advanced degree so that you can uplevel your career and earn more in the long run is a calculated risk. Starting a side hustle? That’s a risk. Purchasing a condo that you intend to rent out to tenants? That’s a risk. Taking on more challenges at work so you can push for a raise in six months? That’s a risk. All of these have likely upsides, but also a chance of downsides. We take calculated risks every day by just getting out of bed in the morning; it’s a natural part of life.
Your capacity to grow starts by making peace with starting where you are. You’ve already learned about the time value of money, and using this capacity means making that principle work for you. As a brief refresher, the time value of money means that the longer you wait to invest, the more you’ll have to invest to reach the same target. When you use this capacity, you embody the proverb, “The best time to plant a tree is twenty years ago. The next best time is today.”
To grow your money most effectively, you also have to know where you’re going. That means adopting a long-term mindset, because growing is all about the future. You already know that it is critical to build a nest egg to support yourself and your desired lifestyle in retirement. This capacity is what will get you there, and investing is the best way to build that nest egg. Investing is how you become an “inevitable millionaire.” Yes, millionaire. Even a multimillionaire.