Each time I’m reminded that the fundamentals of money management are similar to the fundamentals of weight loss:
#1: Perfect is the Enemy of Good.
It’s far better to have a “good” plan you’ll follow than to have a “perfect” plan that’s too tough to follow.
#2: Think Long-Term.
Supermodel Kate Moss is famous for saying “nothing tastes as good as skinny feels.” Nothing you buy is as rewarding as having true wealth and being financially free.
#3: It’s Not About How You Look. It’s About How You Feel.
Have you noticed how some people who have reached their target weight continue to eat healthy and exercise? When you ask what their motivation is, they almost universally reply: “This makes my body feel better.” They don’t emphasize their flat stomach – they emphasize the way they feel after jogging five miles.
Ask wealthy people why they continue to save, and they’ll almost universally say: “Because it makes sense.”
Money is a weak motivator if your only goal is outward appearance – designer clothes and sports cars. Money is a great motivator if your goal is — like with healthy eating — to feel healthy from the inside out.
Financial security lets you leave a job you hate, change careers, start a business or feed a huge family. In other words, you’ll feel more free and in control.
#4: Small Splurges Don’t Matter. Long-Term Habits Do.
If you’re trying to maintain your waistline, one Friday night splurge on a steak dinner with margaritas and cheesecake ultimately won’t matter. What matters are your long-term habits: do you follow that Friday night splurge dinner with a bowl of oatmeal, handful of almonds and a jog on Saturday morning? Or do you follow that Friday night dinner with a bacon-and-fried-eggs brunch?
The slow-and-steady habits – not the occasional splurges – create results.
The same is true of your wallet. Enjoy that expensive Friday night steak – just follow it with healthy habits for the rest of the week.
#5: Crash Diets Don’t Work.
Extreme frugality stinks – and is counterproductive. Being too cheap (or too hungry) leads to feeling deprived – which leads to overindulging.
If you’re hungry, you’ll more likely to gorge on bacon and nachos. If you’re living too frugally, you might snap one day, blowing your savings on a Louis Vuitton handbag.
The health industry warns you against “yo-yo dieting” – and I’m warning you against “frugality fatigue.” Same idea, different applications.
#6: Consistency is Key
Am I repeating myself now? It ridiculous to eat only raw veggies for a week if you know you’ll splurge on chocolate and cheeseburgers on Friday. You’re better off adopting a sensible eating plan that you can consistently stick to. Remember lesson #1: perfect is the enemy of good.
Want to learn more about the Psychology of Money? Check out these posts:
- Forget Your Debt. Just Forget About It. Really.
- 5 Habits that Help me Save Without Trying
- Surprising Research Reveals How to Be Happier
- Superman is Dead: The Real Secret to Success