Do you have a “Money Metaphor” to help keep you on track to reach your personal finance goals?
Maybe — but probably not.
We’re all more or less adults in the Nest Egg Ninjas community, but that doesn’t mean all of us have perfect self-control all the time.
In fact, quite the opposite: Richard Thaler just won the Nobel Prize in Economics for his studies in the field of behavioral economics. Basically, he upended conventional economic wisdom outlining the fact that all individuals are rational actors all the time. Instead, Thaler concluded that we are all basically wild animals. We’re all just out here trying our darnedest to use whatever information is in front of us instead of simply flying by the seats of our pants.
But the seats of our pants are where we wind up making most of our decisions from!
Much to the dismay of economists left and right, Thaler made plain what most of us have known to be obvious our entire lives.
Our behavior, basically, is anything but rational.
So what can we all do about it?
The world is built to keep us in a continuous cycle of consumption. We are taught from an early age that one of the main reasons why we need to make money is to buy THINGS. All kinds of things, both big and small. The coffee on the way to work. The upgraded house.
All money spent today keeps us from buying our free time later in life.
The solution is to stop spending …
But that’s easier said than done, now isn’t it? That’s pretty much the entire point of Thaler’s studies, and it is all so complex that the work was deserving of a Nobel Prize.
Again, what the heck can we all do about it?
There are plenty of options. Some people choose to cut up their credit cards and only carry cash. Others record every single transaction they make on Excel or Mint or Personal Capital.
Personally, what works best is a simple “Money Metaphor.”
When I was first setting out to get my finances in order, I struggled with the waiting game. It can be extremely difficult to maintain motivation over the course of months and years, even when you know that the end result will be something as important as financial freedom.
It can be a very similar situation to someone trying to lose weight. Watching only a pound or two every week or month can make it extremely difficult to view the bigger picture.
Trying to master a sport or an academic discipline necessitates similar daily motivation.
Ask yourself: What “Money Metaphor” translates to my personal experience?
Think of something relatable to your life, and repeat that to yourself as often as you need. For example, when I was in college, I joined the rugby team. Despite being about 175 pounds soaking wet, I honed my skills day by day, to the point where I was named the captain as a senior.
My skills didn’t develop overnight. Consistent practice and dedication, however, did the trick.
Today, almost 10 years later, I still think back to those days at practice. I knew that putting in the time would get me to where I wanted to be in terms of my game.
And I use those memories in my personal financial life as well. To me, money is like rugby. I won’t get rich overnight, but if I maintain solid spending habits and learn how to invest, I will achieve my long-term goals.
Just like I was able to do on the rugby pitch.
What is your “Money Metaphor?”
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