Low-Grade Headache

For just a minute, think about how much money impacts our lives. I’m not sure how it was 100 years ago, but I know today it seems like money plays a powerful influence in almost everything we do. We spend most of our time either working for money, worrying about money, or figuring out how to protect our money.

Like a low-grade headache, the idea of money is always there, but never quite strong enough for us to actually do something about it. Until, of course, we reach a moment in time that demands we make some changes. One of the interesting things going on right now is how many of us are reaching that point now or have done so during the last year. We’re being forced to ask questions about our relationship with money to get rid of the headache.

It’s fascinating that for something so important, so many of us feel ill-equipped to deal with it. On top of that discomfort, the traditional financial services industry hasn’t done a very good job at making things easy to understand. So on one hand, you have incredibly important decisions that need to be made, and on the other hand, you have a giant pile of complexity you need to wade through to make them.

It’s no wonder that many of us would rather get a root canal than talk about money. But there does seem to be a change in the air. We’re asking more questions about the conventional wisdom that simply hasn’t worked for most of us that we shouldn’t even ask questions. And remember, just because it’s conventional doesn’t mean that it’s right.

This entire process of increasing one’s money awareness reminds me a little bit of the old Zen story about the two young fishes swimming in the water. They were approached by an old, wise fish who asked them, “Boys, how’s the water?” And they responded, “What water?”

If the way you handled your money in the past hasn’t worked (which is the case for most of us), isn’t it time to think about things differently? Maybe it’s time to shift your view. Maybe earning the highest rate of return isn’t the most important thing. Maybe you need to take a look around and see where things actually stand with your money.

Part of the problem stems from the fact that we’re often focused on the means rather than the end. Earning a higher rate of return, being focused on outperforming the S&P 500, or finding the next great mutual fund manager are not real financial goals. Too often those things distract us from where we should focus. It’s time that we start having clear financial goals. Being able to afford to put your kids through college is a financial goal. Having the money set aside for a reasonable retirement is a financial goal. Being able to help your parents in old age is a financial goal.

Once you recognize what real goals look like, it becomes much easier to separate them from the complexity that can overwhelm us.

This sketch and post originally appeared in the Behavior Gap Newsletter. Sign up for your FREE subscription today.