As this site is rapidly getting closer to being two years old (which is still a baby in blogging years), the same theme keeps coming back to me again and again. People spend too much time trying to justify their financial decisions instead of seeing them for what they are.
Whether it's financing new cars, fun toys, or even going out to eat too much – there's an underlying level of being offended by someone like me questioning financial decisions that I've seen over and over again.
How dare I say new cars aren't the best decision? Who am I to tell anyone how many times they should go out to eat? What kind of a jerk am I for suggesting that people avoid vacations to pay off their student loans instead? Video games are a bad idea?
I understand the frustration. I really do.
Some of the times that I've been the most annoyed and/or pissed off about other people's opinions were times that the mentors I surround myself with told me I was wrong. Just like most people, I've got an ego and don't love the feeling of having it questioned.
A lot of things have gone right in my life so far. I've got a beautiful wife. I'm not broke. I started an online business that most people only dream about.
But…that doesn't mean I'm right all the time. In fact – I'm wrong a lot, and I've surrounded myself with people that make sure I know about it. It's annoying as hell sometimes, but 1,000% necessary.
That's why I'm successful. I have people to question me, no matter how much I like or dislike it. I know that the only way I'll continue to be successful is if I maintain my ability to be coachable.
That might be a product of having an education degree and my career as a teacher, or it might be that my parents raised me that way. I'm not sure, but I do know that it's one of my best intellectual assets.
For example: car talk pisses people off – but why?
There's probably a lot of financial decisions I could use to make my argument, and I get that cars are the easy target. But they are easy for a reason. A ton of young people buy new cars, so it's something that's relatable to almost anyone in one way or another.
I have comment sections on Facebook that are filled with people who agree with my take on driving used cars, or people that think I'm an unfair jackass for judging a financial decision. I love reading through them, because the justifications of why people drive what they drive (new or used) are fascinating to me.
Some say safety, some say new cars make them feel good, and some just say they drive new because they like it that way. They're probably all valid in some way or another.
Read also: My car just hit 100,000 miles. Is it time to buy something new?
However, rarely do people call cars what they actually are: heavily depreciating assets. They attach a feeling or justification to a financed rolling object to distract from that fact. By the way – car companies spend a lot of advertising money every year (think GDP of Jamaica money) to convince people to attach emotions to cars.
Emotions sell things. It's pretty simple. If you can get people to feel like their purchase is an extension of themselves, you've won (in the advertising/marketing world). A lot of the comments on these posts are almost verbatim what I see in car commercials, and I doubt that it's a coincidence.
Be coachable. That's the #1 trait you need.
There isn't any “personal finance expert” out there that has been perfect with their money. However, they learned from their decisions and then got ahead. Even Dave Ramsey's story is built on making the wrong decisions in real-estate investing. Being right all the time isn't the point, and trying to justify every purchase really isn't either.
Being able to admit that you were wrong, or listen without emotion to an opposing view and and then make an informed decision for yourself is the key to kicking @$$ with personal finance.
Recognize your past financial decisions for what they are (good or bad), and then evaluate after and move on to the next one. Be coachable.
What do you think the key is to mastering personal finance?
Totally agreed. Rationalization does not lead anywhere. We should be open minded, accept that we are not right all the time, listen to other opinions, do the research and if it turns out that we were wrong take the steps which needed to fix it.
Absolutely! Too many people get wrapped up in being right or wrong/choosing sides.
I agree with your “coachable”, but would add that someone also has to have some desire to understand their money realities. Too many folks simply bury their heads in the sand and don’t want to accept reality.
So…coaching and a willingnesss to accept reality. My two cents.
That is true too haha! Sometimes it’s hard for people to find the reality of a decision because of super effective advertising!
You absolutely hit the nail on the head Bobby! Being willing to be coached and learn has made a world of difference.
To answer your question – I would add that being really specific with your goals and having a concrete strategy also makes a ton of difference.
So instead of saying “I want passive income,” its better to say “I want to earn $500 a month and to do that, I will learn how to invest in dividend stocks” or “I want to earn $500 a month and to do that, I will learn more about options.” Putting a time on it also helps!
It’s so funny that you bring up cars today, because I got my first “mean” comment on my blog this weekend and it was about my opinions on cars.
I’m a horribly stubborn person, and I know I’m wrong a lot of the time, so this was a good reminder. It’s hard to define the difference between making excuses and having a need for an item–sometimes you do need an outside perspective to show you what matters, even though it feels like you’re being judged.
I think the key to mastering personal finance is being open-minded. I’m doing things today that I used to think were ab-so-lute-ly crazy. But they work for us and have enabled us to pay off a crazy amount of debt. So it’s all worth it in the end, thanks to keeping an open mind.
As your site keeps getting bigger you’ll get a lot more of those, but after about 30 they don’t really matter very much any more haha! Being open-minded is a great one!
Never thought about it this way, but you’re totally right. I think anyone who’s really great with personal finance is the type of person who’s willing to learn. It’s tough to make anyone change their mind, of course, but I think being willing to go into things with eyes wide open is important.
I’ve always thought that they key to personal finance to is be weird. All of us PF nerds are pretty weird and we don’t do things normal. Saving money, paying off debt, investing, and TALKING about money, these are all really weird things to most people.
Haha I like that one! We are weird when you really start to think about it.
Self Control is the one attribute that an individual needs to accomplish their financial goals and it’s not a teachable thing rather it’s a behavior change.
I agree that it’s an important aspect of personal finance, but I DO think you can teach people to change their behavior when it comes to money!
Haha yes definitely in a used car!
Great post Bobby, I completely agree. Being coachable is such an important trait to have in life, whether than be for finances or even a job setting in general. You HAVE to be able to take constructive criticism and then be able to apply it. It helps you stand out from your peers and it helps you reach your fullest potential. It’s hard not to be stubborn or prideful sometimes, but the people that cling onto those attitudes the most are the ones that aren’t going to make any progress in life.
Thanks Matt. I am stubborn and prideful MOST of the time…but I also try to have perspective on what is really important. Definitely helps.
Good points, Bobby. After college, I was lucky that my sister set me straight regarding my finances. If I didn’t take her advice seriously I’m not sure what kind of mess I would be in now.
It’s important to have the right attitude and learn and take action from people that have been there and done that.
Being coachable is good, but there may be one trait that is even more fundamental. You need a compelling desire to master personal finance. Just like an alcoholic needs to hit “rock bottom” before going into treatment, people need the same motivation to start down the path of mastering their finances.
Maybe it’s an overwhelming amount of debt, perhaps it’s a layoff, maybe they found themselves evicted or maybe they just hate their job. Perhaps they see this happen to someone else.
I think people need that trigger to get them moving and motivated to master their personal finances. Once they’re moving, being coachable is fantastic!
I think that’s a great point, but I’m not sure everyone needs that rock bottom type of event to be motivated about personal finance. Perfect example – one of my friends with a $4+ million net worth never really hit rock bottom. He just worked really hard and listened to his dad’s investment advice. A lot of it has to do with personality and family environment.
While I think some people need to hit rock bottom, I don’t think everyone does. We were doing “just fine” when we realized we needed to be more aware of our finances. We’ve made a lot of behavioral money changes. We also continue to learn and grow in the finance area, thanks to resources like this blog.
Mr Money Mustache said that until you become a millionaire, you should not be buying a new car. I bought a new car last year but then I had already tripped over the 7-figure mark so I can buy new lol. It was also my 50th birthday present to myself so it would be rude to refuse a gift even if it is from yourself.
Seriously though, I have considered downgrading as I don’t use it as much now that I’m retired but when I worked it out, the funds that selling it would free up aren’t going to make a hell of a lot of difference to my financial wellbeing, so bugger it, the car stays.
However, I still totally agree that in 99% of cases, buying new is one of the best ways to throw good money down the drain. And don’t get me started on financing new cars…..
That’s a pretty good rule, I highly doubt we will buy new cars until it’s an insignificant amount compared to our net worth.
Love this post! So true that nobody likes being questioned or criticized. People have to remember they make their own decisions about finances, and those decisions affect them, not you! They can get offended all they want, but they should realize you’re writing all this to help people, not judge them. I and your other fans appreciate what you’re doing here; it’s such an important message!
I agreed in number one trait that mastering personal finance is to be ” coachable “. However, you must be neglected by the people surrounds you. Admit it that you are wrong in making decisions when it comes to a financial, all you have to think or do is to listen on what you must do in order to be good. You must recognized your past decisions so that you can move to the next one.
This was a great post. We cannot earn or we cannot have enough financial if we don’t have this one important trait. Try to adopt this trait and have a stable and good financial status. Not all the time we can find money easily, our good traits, wise decision and willingness to learn and have other people advice are what really needed and important to have.