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Make meaningful improvements to your finances every week.

3 Reasons Why You Suck with Money

 

“To Improve is to Change, To Be Perfect is to Change Often” – Winston Churchill

Winston Churchill has many compelling quotes but this one is by far my favorite. I find the quote to be both jarring and obvious. I mean, of course you need to change to improve. Who ever got better at something by doing the same thing they’ve always done?

This of course begs the question, what should I change? It’s the answer to that question which will inch you ever closer to achieving your goals. I find that it’s best to have a frank conversation with yourself because the chances are, you already know why you’re not achieving your goals – you just haven’t admitted it yet.

1. You Don’t Want to Deprive Yourself

I liken this to the reason why I’ve put on a few pounds this winter. I desperately want to get in better shape and eat healthier. I know I’ll feel better, be able to do more during the week and look great. Problem is, I also love burritos and beer.

On New Years Day as well as other random times throughout the year I’ve put my foot down saying, “No more!” and resolve to improve my lifestyle and get healthy. However, even though I have this desire to get healthy it directly contradicts some other more powerful habits that I have. To eat burritos and drink beer. Since I love burritos more than asparagus, it’s not hard to figure out which one wins the battle to my plate.

The same goes for the gym. For me the hardest part is showing up. It’s not that I don’t want to get fit, I just want to play on the computer more.

When it comes to money and buying stuff, the same thing happens. It’s not that anyone wants to be in debt, it’s just that the desire to have a new smartphone today is more powerful than any saving habit they’ve developed.

The problem is we’re trying to replace an old habit with a new one and we’re trying to do it all at once. Want to learn how to build solid habits? Check out Matt’s post, The Don’t Spend Money Daily Habit Using the Lift App.

2. You Think Budgeting is Difficult and Time Consuming

You know what use to be hard? Finding an apartment to rent. You had to go through a real estate agent, make sure your schedule matched with theirs and spend hours seeing apartments that didn’t quite fit what you had in mind. Then Craigslist came along and changed everything. Now it’s super easy to find exactly what you want because technology does the work for you.

The same could be said for selling your old stuff online (eBay), finding a good restaurant for your anniversary (Yelp) or planning the perfect vacation (Expedia). It turns out our old assumptions are constantly being challenged by technology. This is a great thing because it makes our lives so much easier giving us back valuable time. Now we can spend more time on the things that matter most to us and make us happy.

The story is no different with managing your money and budgeting. Technology came, it saw the problem and it conquered it. That’s what Mint is all about. Welcome to the future, automate your money already and stop making excuses.

What a step by step guide to setting up Mint? Read our Budgeting for Dummies post. Want a complete walk through on automating your finances with Mint and its best practices so money drama can fade into the background? Check out our book, Mastering Mint.

3. You Confuse Gambling with Investing

There’s a reason casinos are so rich. People love to gamble, betting their hard earned cash on the dream of instant wealth. The reason investment banks are so rich isn’t much different. Plenty more people gamble on the stock market  than casinos every day and the do it with much more money. For every winner there must be a loser in the stock market and the biggest losers are the gamblers. As the saying goes: Bulls make money, Bears make money, Pigs get slaughtered. Careful with that get rich quick mentality.

See, these banks have tons of analysts that get paid quite a lot of money to research publicly traded companies as well as the worlds economies. This allows the banks to make educated investments based on the true prospects of a business and the economic climate.

Then Joe the-no-research-investor comes along and throws all his money on red, I mean in a stock that some guy on the internet recommended. Problem is neither Joe nor the random guy on the internet did their research. As a result, the investment bank with all it’s knowledge and data swallows Joe’s life savings whole. This is the typical story of gamblers greed in the stock market.

There is nothing wrong with a little gambling for fun as long as you know full well that you’re likely to lose everything. However, investors aren’t gamblers because they don’t expect to lose any of their money. Actually, they expect their investments to grow at a steady clip year over year supporting them for years to come.

What makes someone an investor and not a gambler? The investor doesn’t hope to do well, they do the necessary research before they invest their money. An investor understands that it pays to be average because with a market average of 7% a year they can actually build wealth pretty quickly. Like more than double their money in 11 years quick.

As I’m sure you know, we’re big on being average here at Listen Money Matters. As such we primarily invest in core index funds which consistently beat even the best portfolio managers – Warren Buffet included.

In order to keep our money performing well, our fees extremely low and our money diversified we’ve chosen Betterment as our primary investment tool. We consider it the Amazon of investing. What to watch the progress of my money invested with Betterment? Check out our investment series, The Betterment Experiment.

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  • Budgeting is very difficult for me before, but now with the help of some applications on mobile it’s very easy to track on your expenses and income. Especially now that online banking is widely so popular you can budget easily on how much you are going to pay.

    • Definitely agree, budgeting was a pain before all the awesome tools out there now!

  • Some people are just ignorant about money as well. Steps 1 and 2 could also be categorized as “lazy.” A lot of us think we desire to be rich, but we just want to be rich because those with desires actually are willing to put in the work. Everything takes work and if we don’t invest time in being better whether it’s working out, money, playing sports…then you usually just stay in the same spot….wishing. Nice post.

  • Sucking at money is all about emotion, right? We “feel” we’re being deprived. We “feel” it’s not fair. We feel it’s externally imposed…once we look within, it can get easier…maybe even nearly effortless. Nice post. It certainly got me noodling.