Managing money, like any skill in life, involves learning and making better choices over time.
Nobody goes from regularly over-drafting their checking account to investing money via a backdoor ROTH IRA overnight.
It’s a progression.
Make good choices today and new good choices will become available next week, next month and next year.
The key, very simply, is to make good choices.
Now the phrasing of that sentence is important.
You don’t have to make perfect choices. (Very rare, indeed.)
You don’t even have to make the best choices in any given scenario.
If you are simply able to avoid making bad choices with money you will steadily grow and learn and get better.
String together days, weeks, and months of good choices and your financial life will start to change.
But as you grow, you will inevitably attract the Better People.
Who Are the Better People?
The Better People are the ones that inform you, no matter what choices you’re making with your money right now, you could be doing it better.
You’ve likely encountered some of the Better People already.
The conversations generally go something like this.
I’m doing a budget and not eating out as much!
Buying peanut butter by the gallon would be better.
I’m saving up money every month in my savings account at the bank?
Getting a higher interest rate at an online bank would be better.
We’ve started investing $300 every month in a broad-market index fund.
Investing in a handful of dividend-paying companies would be better.
And, of course, the Better People aren’t just confined to the financial space.
We’re looking to buy this as our next car.
This car is better.
Better People have a better for just about everything.
The Deficiency of Better People
You probably noticed that not all of the “better” solutions above are actually better.
Better People often struggle to realize that “better” is rarely a trait that is universally applicable.
That is, a better solution for them is not always a better solution for everyone.
And even if one solution is objectively better than another, it’s often tough to predict just how much better one solution is over another.
For a working professional with a flexible schedule, going to 3 stores to get a better deal on a purchase may be worth it.
For a stay-at-home parent of 3 young kids, being done after stopping at just one store is likely the better solution.
For the family of 6, buying peanut butter by the gallon might be worth it.
For the couple without kids, buying anything by the gallon is likely a waste.
But the main deficiency of the Better People is that their desire to help you make better choices often overshadows the good choices you are already making, and possibly the incredible progress you’ve made over time.
Regularly saving money into any savings account is a good choice.
Having money left over and investing it every month is a good choice.
Doing a budget so you can go out to eat is a good choice.
Those good choices are not invalidated because there are, perhaps, better choices that can be made.
Better is the Enemy of Good Enough
Part of the progression we all go through on our financial journey involves:
- Making new choices.
- Getting accustomed to making those choices.
- Learning and growing into new choices in the future.
The time we spend getting accustomed to our choices in Step 2 is critical.
For good choices to become our default, we have to sit with them for a while measuring them in terms of time commitment and impact.
Without that step, it’s difficult to determine if some other choice is truly better for us or not.
Yet it’s often in Step 2 where the Better People come flying into our lives inadvertently short-circuiting the process.
Paying Off Our House Early – Not What Better People Would Do
When we decided we were going to pay off our house early – like super early – we had lots of Better People gently reminding us of how low our interest rate was, how much more our money would grow in the rising stock market, and how inaccessible our money would be once it was tied up in our home.
None of those things were wrong.
The Better People were just out there Better People-ing.
But we decided to pay off our house because we felt that was the best decision to achieve what we wanted – freedom from fear in case I lost my job, and the lowest monthly cost of living when I retired. (Who knew those would both happen on the same day!)
Given the benefit of hindsight, I can look back and do the math and realize investing in the market would have been better financially, but at the time we didn’t know the stock market was going to continue rising for the next 7 years.
It was a calculated risk either way, and it turns out better didn’t even matter.
Paying off our house early was a good choice.
In fact, if we still had a mortgage payment I likely wouldn’t have retired, so investing may have been financially better, but paying off the house turned out to be situationally better.
Again, better is relative.
Vowing Not to Be Better People
As I share our financial journey with you and try to help you make good choices with your money, I hope that I always acknowledge two things:
- Making any good choice with money is hard and always worth celebrating.
- Better is a relative term and I’m in no position to tell you exactly which good choices are better for you and your family.
If I acknowledge those two things, then I’m in a healthy place to share the financial choices we’ve made, allowing you to decide which choices might be a good fit for you and your situation.
My wife and I learned long ago that we are the only ones who have to live with our choices 1, not the people we take advice from, so we’ve learned to do our research, then agree on a choice and move forward.
If it works out, that’s great.
If it doesn’t work out, there’s no blame, only adjusting and getting better.
If it works out but we discover there was some better choice we could have made, we don’t sweat it. We know we made a good choice and that’s good enough.
So if you ever find me being one of the Better People, you are absolutely allowed to remind me that you are making good choices – and good enough choices – and you’ll decide which new choices are truly better for you and your family.