If you’re an avid reader of personal finance blogs then you’ve no doubt stumbled across some incredible success stories.
For example consider how Mr Money Mustache managed to retire in his early 30s.
You compare that to your own personal situation and its all too easy to feel intimidated. To wonder if you’ll ever manage to transform your own life as others have done.
So you dig deeper. And whether its in blog comments or on forums the same advice keeps on cropping up…
If you want it badly enough you’ll make it happen
You’re too weak to change your financial situation
You’re not trying hard enough – or giving up too soon
Indeed there are numerous blog posts out there telling you to give up your car, your central heating and any semblance of luxury.
If you’re serious about changing your financial situation you therefore start making changes. BIG changes.
You downsize your home. Cycle to work. Take bagged lunches to work, quit taking vacations or buying gifts at Christmas.
And while, admittedly, your financial situation does start to change, there’s always that lingering feeling that maybe, just maybe, you’ve gone too far.
That some of the pleasures of life have drained away. That you’re focused so firmly on the future that you’re forgetting to enjoy the present.
Then it happens. You snap.
The Dieting Analogy
On more than one occasion here I’ve drawn the analogy between weight loss and personal finance. To create a strong financial future you’ll need self discipline.
You’ll need to give up what you want now, for what you really want long term. The process of reducing your spending and increasing your savings isn’t difficult. Neither is eating less junk food and exercising more.
It’s not the physical action that is tough; it’s the mental game.
Now consider how many times you’ve heard of someone going “all in” on a new diet. They get up at 5am every day to hit the gym. They consume nothing but green juices for months on end. The weight just falls off. They look slimmer, younger, fitter. They’re a success. Then it happens…
One day, out of the blue, their resolve disappears.
They reach for the candy. Except they don’t just eat a piece of two. They binge.
3,000 calories later, and shaking with guilt, they finally collapse in a sugar-fuelled coma.
Frequently, this one “binge” is enough to end that trajectory – and with it their motivation. Six months later you see them looking as podgy as they did before the diet.
Winning With Psychology
What happened to our dieter? Quite simply they gave up every pleasure and focused 100% on their desired outcome. They took a sick pleasure in not eating out, or having a salad to eat on Christmas day. The weight was falling off so why not keep going?
The problem is that we only have so much resolve. That full-on 100% effective dieter fails sooner or later. It might only be a single binge, but that can often be enough to kill the whole process for them.
Its the same for money.
If you manage every cent in your bank account, forgoing any of life’s pleasures (which typically cost money) while socking away as much as you can into savings and investments, if you’re unlucky you’ll hit that same wall. You’ll want to binge, then give up.
You know the people who manage to get slim and stay slim for life? They do things a little differently. They’re subscribers to the “little and often” mentality. The “slow and steady” ideology. The “everything in moderation” camp.
These people make major changes to their life, but they don’t go “all in” and give up on life entirely. They’ll eat that turkey and stuffing at Christmas. They’ll have the odd glass of wine. Heck, they might even enjoy a candy bar once a week.
Those occasional treats along the way help to keep them on the straight and narrow the rest of the time. In many ways its the “hair and tortoise” story all over again.
The reality is that too many people I speak to seem to feel “pressured” into managing their finances to the last penny.
They’re “financial perfectionists” – and sooner or later there’s a risk that such people will eventually “binge”. They’ll buy that new car they so desperately want – and to hell with the consequences.
And with that, 12 month of careful budgeting goes up in smoke.
How to Succeed Without Perfectionism
The truth is that you can make significant changes to your financial situation without being perfect. You just need to be better than you were yesterday.
Every improvement strengthens your situation, without you having to give up entirely on everyday life.
If you’re currently working hard to be more frugal, pay off debt and build your savings – but you’re feeling your motivation dropping – here are some tips to keep yourself on the right track…
Cut Yourself Some Slack
Lets start with the obvious thing. If you’re trying to improve your financial situation then you’re already miles ahead of the competition.
I know that trying to get your finances in order can feel like climbing Mount Everest, but every step you take gets you ever closer to the summit.
As someone who has struggled with significant debt in the past I know only too well that its easy to get de-motivated in the early days, where every last dollar seems like a struggle. However the truth is that things get easier in time.
The more debt you pay off, the easier it gets to clear the rest. The higher your income gets, the quicker you can improve your situation.
If you’re already on the right track then don’t constantly kick yourself for your lack of progress – instead congratulate yourself for sticking with the plan.
Stop Comparing Yourself to Others
I know its tough when you read all those success stories online, but its important to appreciate that your personal situation is different to anyone else’s. Maybe you’ve got kids. Maybe you’re in a dead-end job paying you peanuts.
Maybe you’ve got monthly expenses that you have no control over. Maybe you’ve been stuck with debt after a partner left you or you fell ill. Life happens.
All those success stories can be used in two different ways. On the one hand they can fill you with inspiration for what is possible. On the other hand they can depress you when you compare these “successes” to your current situation.
If you’re finding it too depressing hearing about well-off everyone else is then the key is to stop comparing yourself to others. Instead compare current you to past you. If you’re doing better than you were this time last month or last year then pat yourself on the back.
Aim for Progress Not Perfection
Everyone has to start somewhere. Just a few years ago I was struggling under a mountain of debt. Just keeping up with my minimum payments was a struggle some months.
There were more than a few situations where I wasn’t even sure how I was going to pay the rent. It felt like swimming through treacle.
Contrast that with today, where I’m debt free and earning more than ever before. Each month I stash away a sum of money into savings that would have been unimaginable just a few years ago.
What I’ve found is that personal finance is like a “snowball” – it can be hard to get started, but over time that ball of money just keeps on growing faster and faster.
The key is that you keep on pushing it in those first few months or years – until it starts to grow with minimal effort.
So don’t worry about perfection. Instead focus on progress. Aim to pay off just a little more debt every month – without fail. Aim to reduce your spending just a fraction each month.
Plan to put a little something into your savings account – no matter how insignificant and pointless that sum may feel right now. All too soon you’ll look back at your progress and wonder what all the fuss was about.
To give you one of my favorite quotes: “do something today that your future self will thank you for”.
Don’t Feel Guilty About Taking A Break
Lastly taking a break doesn’t have to mean the end of your journey. The key is simply not to slip too much in that time.
Me? I’m super-frugal all year long – except for Christmas.
At Christmas I splurge and buy my family (and myself) gifts to be proud of. It’s that one month where I might treat myself to a new gadget or a clothing spree.
But its just that one month. I only spend what I earn that month and nothing more.
So all my hard-won savings for the rest of the year still sit there comfortably protected. Then when January swings around I get back on the savings, having had a few weeks of relative luxury to keep me motivated for many months into the future.
If you’re getting fed up with your new life of frugality accept that its OK to spend money occasionally on yourself – just in a controlled manner.
So go on – treat yourself to something nice as a reward for all your hard work. It’ll make saving money next month that much easier.
What do you do to keep your finances in order? Do you ever feel under pressure when planning for your financial future? Please leave your experiences in the comments section below…
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