Scrabble pieces spelling "failure"

Understanding Why We Fail Financially

A couple of months back I reiterated my goal for the year of publishing an article per week here at Abovare. Today, the merciless calendar shows us that the date is June 3rd, while the most recent article here shows May 8th as its publication date. Where did the month of May go, and why did I fail so spectacularly so shortly after restating my commitment to this goal, and how does this tie in with failure when it comes to building wealth?

The Secret Ingredient of Success

Every single failure is, of course, unique, and has its own set of circumstances and explanations behind why it came crashing down. However, I a firm believer that in the vast majority of cases where we fail to reach the goals we set for ourselves, the number one reason is the lack of one key ingredient behind almost every significant success: Persistence.

The importance of persistence is perfectly illustrated by this old quote, by former American President Calvin Coolidge, recently featured in the movie The Founder, which details the early days of the McDonald’s fast food empire:

Nothing in this world can take the place of persistence. Talent will not: nothing is more common than unsuccessful men with talent. Genius will not; unrewarded genius is almost a proverb. Education will not: the world is full of educated derelicts. Persistence and determination alone are omnipotent.

As a society, we so often misattribute success to “Eureka!” moments and motivation. But if you listen to anyone who has succeeded at something talk about how they got there, you will rarely hear them talk about how it was that one great idea that pulled them over the line. Nor will they be telling you how supremely motivated they were throughout the endeavour, to the extent that working on their thing felt like playtime. No, good ideas are a dime a dozen, and motivation is what will get you started. But what keeps the tough going when the going gets tough is persistence, and that is a matter of fact whether we are discussing writing with a particular frequency, or building wealth.

At this point, it is easy to step back, throw your hands in the air and say: “That’s it! Persistence is a character trait which eludes me, so I can’t build wealth or achieve anything else of note.” But before you throw in the towel, let me fill in some additional tidbits of information regarding my month of May, and my failures. Remember how I also aimed to do a fair bit of running this year? I am crushing that goal, currently on track to do double the mileage I targeted for 2017. And more importantly, despite spending hardly any time thinking about money, I am still on track to meet my financial goals for the year.

If persistence, which is, at least to some degree, a character trait, is the most important ingredient for realising your ambitions, how can it be that one person can reach some of his goals, and fail miserably at other targets? Can people be persistent in some matters, while susceptible to quitting at the first hint of friction in others? Probably, but the key is how we spend those precious days or weeks at the beginning, where motivation is plentiful. While planning on everything we aim to achieve, we also set ourselves up for either success or failure. And if persistence is key, we need to emulate it somehow.

How To Fake Persistence

As illustrated by my failings featured in the opening anecdote, I am not a particularly persistent person, if we measure character features. That fact hasn’t stopped me from completing quite a few feats throughout the years that, from the outside, seem like they could only be pulled off through perseverance and grit. The secret? Habits, and systems devised to form them.

Tiger facepalms
Even the coolest cat experiences the odd facepalm-moment on account of their failures. Photo by Tambako.

Motivation, as mentioned earlier in the post, will only get you so far. Once that initial burst of excitement fades, it is persistence which will pull you through, but you can fake persistence by making it as easy as possible to complete whatever it is you aim to achieve. If we once again consider my own, featured mistake, it is easy to see where I went wrong: Eager to read new and inspiring content from other sources, and write and publish new content myself, I made no clear, set schedule for when I should be writing the content. Given the fact that I am a person of no particular endurance as it pertains to completing lofty goals, my productivity decreased as soon as my burst of motivation waned. A month later, here we are, and I have to pull myself up by bootstraps in a what feels like a grand fashion to write another article and get back on track.

Contrast this to the area where I did succeed, running, and what I did differently: In addition to setting concrete goals for what I wanted to achieve with my running, I also created specific plans for how to do it. My training plan detailed when I should be running, for how long, at and which intensity. I alleviated myself of the burden of having to consciously contemplate when, how and what I should by doing to reach my goals, and as a result significantly increased my chances of reaching the goal. Before long, the runs in my plan became a habit, something I looked forward to doing. And then the real magic happened because the progression from following my original plan motivated me to push further and harder, and I was able to build on the established habits to throw in additional sessions to reach my goals sooner.

Create Your Financial Plan Now!

Given that you are reading this right now, it is reasonable to assume that you are motivated, to some degree, to make changes in your financial life. You have likely already thought about what you want to achieve, and perhaps some of the steps you can take to get there. But don’t stop there! I’m not saying that everyone is as devoid of persistence as I am, but why take the chance when it concerns something as important as your finances, your future, and your freedom?

If you haven’t already done it, sit down and get to work on creating a concrete and actionable plan for how you are going to achieve your financial goals. Detail what you are going to do, when you need to do it, to make sure that you save yourself from having to figure that out each time.

How much money do you have available to spend on buying fidget spinners? These are points you need to cover in your plan, and if you are out of funds in the relevant category, then no spinner until you refill that lot. How much money should you be saving each month? So many people make the mistake of thinking that they will just save whatever’s left at the end of the month, meaning that every purchase decision they make has to be weighed up against saving. It requires ridiculous mental strength and restraint to be sensible every single time you’re forced with a decision between “fun and awesome” and “boring and safe.” That’s why you need to make a plan and decide right now that you should be saving $x every single month. Make a non-negotiable commitment to yourself, so that you don’t have to rely on your sound judgement.

If you are unsure where you should start when making your plan, I covered the basics of how I set myself up for financial progress in this post titled How I Learned to Stop Worrying and Love Saving Money, and it is a good place to start. After you’ve finished that, leave a comment if you have any questions or need assistance. I will welcome the distraction from sitting down and figuring out my plan for how I will be reaching my goals for Abovare from here on and out.

Title photo by airpix.

Rainbow in Iceland

Running on Treadmills, Chasing After Rainbows

If you were anything like me when growing up, you probably went looking for the end of the rainbow at some point. Yes, you did pick up the addendum of it only being a myth after hearing about the pot of gold, not to mention the fact that it’s quite difficult to find the end of the rainbow. But, still, no smoke without fire and nobody else probably bothered to try to find all that gold, because they readily dismissed it as fairy tales. But you knew better, and off you went when the rainbow showed its colours.

Flash forward a couple of decades, and most of us would be remiss to admit that we went chasing rainbows with the hoping unearthing treasure. Now, we think, we are older and know much more about the world, and wouldn’t even contemplate wasting our precious time chasing a mirage, a mere pipe dream. Despite all the wisdom we’ve acquired through the years, so many of us never stop and take a step back, and realise that the difference between our current selves and the young version chasing rainbows is negligent. The only real difference is that now that we are grownups, we don’t put drop our hopeless dreams when the next distraction comes along, but instead we dedicate our entire life in pursuit of the pot of gold at the end of the rainbow, which none of us will ever find.

The Hedonic Treadmill

Even if you don’t know the concept by name, I am confident that you will be intimately familiar with what it describes. Remember back to a time when you had less, and you told yourself that if you just got that one pay bump you would be able to afford all you need, and you could finally be happy and content. Or once you were able to upgrade to that big house with the beautiful backyard, everything would change, and you would finally allow yourself to enjoy life without longing for more.

How did that work out for you? Unless you are very different to most people, you probably overestimated the effect that raise or that newer and bigger house would have on your happiness. And if you are like most people, it probably had little lasting impact on your happiness at all. Sure, it felt great when you got the first pay cheque or the day you moved in, but after a while, you were probably back to thinking about if you just made a little bit more, you would be set. Or if you were just able to afford a similar house in a slightly better neighbourhood, with an ocean view, everything would be perfect.

That is life on the hedonic treadmill for you. It is brutal, and there’s but little room for rest. Why is it that so many of us spend our lives chasing arbitrary artefacts, thinking that they are the pots of gold at the end of the rainbow that will bring us happiness and contentedness? The theory of hedonic adaption, also known as the hedonic treadmill, states that major positive, or negative life events, have little lasting effect on our levels of happiness because we adjust our expectations and desires as soon as the changes occur. Or, put another way, we believe that we will get off the treadmill once we can run a little bit faster, but instead, our minds adjust the speed of the treadmill according to the pace we run at.

The concept is not a novel one. In Discourse on Inequality, which was published nearly three centuries ago, the Swiss-French philosopher, author and musician Jean Jacques Rosseau wrote:

Since these conveniences by becoming habitual had almost entirely ceased to be enjoyable, and at the same time degenerated into true needs, it became much more cruel to be deprived of them than to possess them was sweet, and men were unhappy to lose them without being happy to possess them.

For most people this will not be a new concept, and, as mentioned before, nearly everyone will recognise what it describes. “Life on the hampster wheel” is a familiar trope in popular culture as well. So, why am I writing about the concept, if is familiar to most already, and I have no new revelations to add? Simply to state that we are all destined to spend our lives in futile pursuit of happiness we can never achieve, pots of gold we can never reach?

Jump Off The Treadmill and Take a Run Outside

It so happens that despite most people being vaguely familiar with the concept, very few take it in, process this knowledge and try to figure out what it means for the lives they have and continue to work so hard to build. Instead, we think to themselves “well ain’t that the truth!” before going to bed a little too late, feeling a bit of guilt because we know we won’t be able to perform to our full potential at work on too little sleep. And that’s a crying shame because our boss has indicated that if we just go the extra mile a couple of more times, we’ll be a shoo-in for that promotion. And the extra money from that promotion would go a long way in covering the bump in our car loan payments from a slightly more expensive car, which we desperately need despite our current car doing the job just fine. Because if you don’t drive the right car, you’re unlikely to get that next promotion after that because, as we all know, appearances do count for something. But, at least we realised the folly of it all and felt enlightened, if only for a brief moment, after skimming the headlines of one of the long reads articles we saved to Instapaper a couple of months back.

A row of treadmills
Will you ditch the treadmill, and go for a run outside instead? Photo by Jeff Blackler.

The point of writing this is to tell you that there is another way of life. Knowledge, and a conscious approach to the choices we make and how they will affect our mental, and physical, well-being gives us another way. Regularly reminding ourselves to take a step back, and examine why we make the choices we do, and if they truly will provide the happiness we are looking for, means that we can combat the effects of the hedonic treadmill, and make actual progress towards a more fulfilling life.

The added side effect of liberating ourselves from the hedonic treadmill is, usually, a better grip on your finances. Because, while not many people are consciously aware of how the concept of hedonic adaption shapes and influences their decision making, consumer-facing companies base their business model on hedonic adaption. Apple is counting on being able to appeal to your need for just a little more pace on the treadmill by marketing an only slightly upgraded iPhone for a seemingly fair price. Automakers are utterly reliant on you reaching the decision that getting from A to B just isn’t the same unless you do it in style. Couple that business model with a population that isn’t conscious with regards to why they feel the need for an upgrade, and lo’ and behold, you get an entire society built around rampant, unchecked consumerism. A world where nothing is valued higher than the next high that comes from acquiring something to adds no discernible value to our lives.

Adopting a more conscious lifestyle does not need to entail moving to a cabin in the woods and embracing the life of a hermit. All we need to do is remind ourselves now and then that particular psychological aspects influence us, and large enterprises are relying on us to let those aspects guide our decision making. But by being conscious about what truly adds value to our lives, we can spend our time, our energy, and our money in the areas that truly add to the life we want to lead.

Try it, and I promise you your wallet will thank you for it. And don’t forget to subscribe to our mailing list, so that you can read the upcoming articles about how to put all that extra money to work for you.

Header photo by Sindre Skrede.

The word why pictured in handwritten text

Start With The Why

I thought it only fitting to open Abovare with an article focusing on what you should be thinking about as you embark on your journey towards better control over your finances and in turn more freedom to lead the life you want. The ability to exert control over your finances and the variables that influence them correlates strongly with your mental strength and overall steadfastness and ability to follow through on your plans. Therefore, it stands to reason that utilising some simple tricks that are shown to improve the chances of follow-through will help you us on our to better financial control.

One of these tricks is ages old and propagated in recent years by authors such as Steven Covey in his book The 7 Habits of Highly Effective People and more recently the high-profile TED-talker Simon Sinek’s aptly titled Start With Why. Following the advice is as simple as having a clear picture of what it is you want to achieve before you start something; what the why? Far too often we start something without a clear end goal in mind, which makes it almost impossible to achieve anything of note.

Consider the anecdote of going on a trip. Sure, travelling is nice, but setting out willy-nilly without any plan of where you want to go, you are likely to abandon travelling before reaching the place you want to go. Instead of going off on a whim, use the planning stages of your expedition to sort out where you want to go, and why you want to go there. Preparation will give purpose to your travels, increase your chances of follow through, and increase the feeling of accomplishment after reaching the end.

When it comes controlling your personal finances, not drawing a clear picture of what it is you want to achieve is simply too big of a risk to assume, regardless of your particular tolerance for risk. Consider the consequences of failing to identify your why, and as a result relaxing a bit and slowly letting go of the control over your finances. You don’t have to be in possession of a particularly vivid imagination to get an accurate idea of what the outcome is likely to be. The Internet is full of stories telling us exactly what happens.

I do have good news for you, however. The mere fact that you are reading this sets you apart and indicates that you are on the right path, away from the ruin of debt. Instead, you are actively looking to educate yourself and through the power of knowledge take control of your finances. To make sure that you build on that momentum, and maximise the chances of success and avoid the pitfalls of losing motivation because of a lack of end goals, it is important to stop and take a moment to reflect.

For many people, money becomes an end in and of itself. If you stick around to read coming content here at Abovare, which you can, for instance, do by subscribing to our mailing list, you will quickly and often notice that my philosophy is that money has no intrinsic value. Money only means something as long as we can use it as leverage to achieve the things that matter in life. And what are those things? The true is the beauty of it is that no one else can tell you what is important to you. Some people work to accumulate money to retire from the rat race, while others want to buy a new car. And if one of those things truly makes you happy, then that is fine, nobody can object.

Part of defining your mission statement, and formulating why handling your finances matters to you, is examining the depths of your psyche and discovering your core values. While nobody can tell you that there is something wrong with wanting to buy a fancy car, as stated above, it is important to be conscious about what you define as your why. Much of what will be written here at Abovare in the future will be about trying to hammer this point home, and in turn dissuade unconscious consumption. So many of the situations where people find themselves between a financial rock and a hard place is avoidable simply by adopting a more conscious approach to what money is spent on, and why.

If you are already familiar with your why, and utilise a conscious approach to what you spend your hard earned money on, that’s great. But do not worry, there is plenty of content coming for you as well here at Abovare. The why behind Abovare is to educate and share actionable tips and tools for improving your personal finances, and that will include in-depth looks at topics such as budgeting, saving and investing, in addition to many other related topics.

And, if you are among the many people who have not yet given careful consideration to their why when it comes to accumulating assets, I suggest that you spend some time with yourself. Reflect on what you wish to achieve in life, and what part money plays in getting you there. When the why is sorted out, you are ready to start your journey, and the place to start is by reading The Basic Principles of Personal Finance. This is the first of Abovare’s Guides to Building Wealth, and it introduces some of the most fundamental concepts of personal finance.

Finally, make sure that you never miss new content from Abovare by either signing up for our mailing list. You can also stay up to date on other interesting articles related to personal finance around the web by following us on Twitter. If you prefer Facebook, we naturally have a profile there as well, so don’t hesitate to hit that like button.

Header photo by Quinn Dombrowski.