Financial Serenity — The Missing Ingredient

Please stand up if you read Tim Ferriss' The 4-Hour Workweek. Now sit down if you work less than 40 hours per week. Still standing? I thought so. Me too.

Tim's book is great, no question about it, but let's face it: we already know just about everything we need in order to be financially successful. We've got all the books and blogs we need to get on track. We know where to find the 10% coupons. We know how to track our spending, and we know where to educate ourselves about investments. But most of us are still stressed out when it comes to money. What's the problem?

Financial earthquakes (like the “Great Recession of 2008”) don't help. But as brutal as the economy has been over the last year, most of us are in the same relative place as when this mess started.

Was your financial situation perfect twelve months ago and then >poof< it all went away? For some people this maybe be the case, but it's probably not your story. It's not mine. We might be behind the eight-ball more than we were a year ago. But if we're hurting now, we were probably struggling then too.

My theory is that our financial struggles have very little to do with money. Money will never create peace of mind; only we can do that. What we need is financial balance. More money is nice but it won't create financial serenity. Balance will — and it won't cost you a cent. You can have it today. Right now.

One good start toward balance is the Serenity Prayer:

God grant me the serenity
to accept the things I cannot change,
courage to change the things I can,
and wisdom to know the difference.

Frugal Dad had a brilliant post on this several months ago. I encourage you to read it. Among other things, Frugal discusses the importance of letting go of things that are beyond our control, such as the stock market, interest rates, and unemployment rates. He also talks about having the courage to change the things we can, such as education and work ethic, and asking for the wisdom to know the difference between the two. This prayer is probably the most powerful string of words ever put together — regardless of your religious beliefs.

But accepting the things we cannot change and changing the things we can is great on paper and hard to implement, right? I mean, right now it might be very easy to agree with the Serenity Prayer. But when you've lost your job and your credit card bill is staring up at you, it's not so easy.

I faced a very frightening financial reality over the last year. But here are four steps I've taken that have really helped my financial serenity. I hope you find them useful as well.

Gather knowledge
Earlier I said that we know everything we need to know about money. I may have exaggerated. We all lack self-knowledge and understanding. To solve your financial problems you have to be crystal clear on what the problem is:

Often, folks wander around with a vague sense of being overwhelmed by their finances. Break it down. Write it down. What problem do you want to fix?

Once you know what the problem is, you need to fully understand the possible and best cures. Talk to experts. Talk to friends who have overcome similar challenges. Consult this and other excellent blogs. There are tons of resources for you — most of them free. Be open-minded and non-judgmental. You don't have to decide what to do yet. You are just gathering information.

Now that the easy part is done, it's time for the next step.

Seek clarity
Financial success is a function of you rather than your circumstances.

What is it about you that keeps you back? How do you sabotage yourself? We all have character defects. What are yours? Are you lazy? Is that why you stopped tracking your expenses? Is that why you're sitting on the couch rather than looking for work?

Do you fight with your partner about money because you are selfish? Have you stopped investing because of your fear? Does your arrogance alienate others who might otherwise provide good counsel?

How do you torpedo yourself? If you really want to get to the next level financially, be honest. It's this lack of honesty that keeps people buying financial books and systems. They keep looking for the magic bullet that's going to fix their problems. Look for your own character defects and become willing to do the work.

Fire yourself
This advice may sound strange but it's a key ingredient.

Think about this as you would any business decision. If you had an employee who continued to mess up time and time again, you'd fire him, wouldn't you? If someone demonstrates a complete lack of ability to perform a given task, she's gone. Right?

Let's say you've tried and failed several times to track your expenses. You've made promises to yourself that you break time and time again. You've failed yourself — so fire yourself.

Put someone else in charge. Get an accountability partner and “report” to her. If you prefer, hire a financial adviser and take direction. Whatever it is, if you've failed at some aspect of your financial life, fire yourself and put someone else in charge.

When you “fire” yourself, you are committing to take direction from others and ignore the little voice in your head when it tells you “forget that…I know better”.

Look around. There are plenty of people in your life who would be happy to be on your team. Tell them what it is you want to do and do it. Tell them you want them to be your accountability “boss”. Tell them the problem you are trying to solve, be honest about it, and commit to take action and report daily or weekly, as the case may be. Tell them that they can “fire” you if you fail to live up to your promises.

This one idea has helped millions of people overcome serious problems such as substance addiction, and it can be invaluable to you as well. There's something about being human: We really don't like to let other people down. Use that to your benefit.

Take action
You have the knowledge now. You know what the problem is, and you've consulted with others about the best remedy. You've fired yourself and you are ready to take direction from your new “boss”.

Now do it. Don't think about it. Do it.

Remember, you fired yourself. You aren't the one deciding what to do anymore. It's not up to you. You are simply a cog in the wheel. You're a private and your new boss is the general. She says jump, and you ask how high.

Don't let your mind trick you. You are a smart cookie, and if you allow your character-defected mind to make decisions in this realm of your life, you'll find some rationalization why you shouldn't do it. That's the reason you've failed in the past. Actually, you haven't failed…your tricky mind has failed you.

When I write about character defects, please don't think I'm pointing fingers. I have a list of defects longer than the Bill of Rights. Fortunately, these techniques worked for me. I can honestly say that I don't remember the last time I worried about my finances.

To be sure, I've taken huge hits in my business and my income is down. But by gathering the knowledge, seeking clarity, firing myself, and taking action, it's been much easier to accept the things I cannot change, change the things I can, and it's been easier to see the difference.

Eggshells photo by Pink Sherbet Photography.

More about...Psychology

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Generation Y Investor
Generation Y Investor
11 years ago

Good post. The past two years have been rough and I’ve realized that I can’t control what the economy or market does. All I can do is continue to be smart with my money, work hard, save & invest and know that no matter what happens I’ll be better off than I would have been if I didn’t do all this.

-Gen Y Investor

Anonymous
Anonymous
11 years ago

I have repeatedly tried to fire myself. I am just horrible at taking care of our family’s finances, and the two maxed-out credit cards and frequent overdraft charges prove it. (In my defense, we are trying to make it working at home after being laid off for more than a year with no state assistance available.) Money is a “hot” issue for me, causing me grief, tears and sleepless nights. My husband simply will not accept the fiscal responsibility here. He’s very patient and kind with me, but will not take the job from my ever screwing-up hands. He won’t… Read more »

Dave
Dave
11 years ago

…you’re missing something very important that you CAN control…
..but first let’s correct something…”The Great Recession of 2008″ has been exacerbated by “Obamageddon 2009″…vote the liberals out…let’s get our lives back…we can control a lot more than what you suggest…stop caving in to the slide to socialism.

Katrina
Katrina
11 years ago

I thought the voice here was very timely as well as accurate. So many of us know a lot about personal finance; but knowing and being ABLE to do are not the same thing. I think it is a challenge for articles, or PF writers, to be able to present information that addresses the reader as both financially savvy AND stuck, taking into account how hard it is to follow such good advice AND still pay the monthly bills. Kudos. Also, have you and your partner (or just yourself) gone over a real live Financial Emergency Plan? What if one… Read more »

Jen
Jen
11 years ago

Really Dave? The last five months have been an armageddon and a different election outcome would have been what?

I think your comment is a good example of “external locus of control” ie feeling that your own actions don’t count and that you’re merely buffeted by outside forces. Sort of the opposite of the serenity prayer.

Tyler@FrugallyGreen
11 years ago

Anonymous – Do you have any inclination as to why your husband doesn’t want to touch the family finances? Maybe he’s scared to fail if he takes over. If neither of you can be the “boss” or really help each other out in this scenario, do you have any friends that you could turn to? It takes a lot of courage to swallow your pride and ask for help with something that is so taboo to discuss in our culture, but look at it as a learning opportunity. You don’t have to ask them to take over for you, just… Read more »

Bulldog Gin Co.
Bulldog Gin Co.
11 years ago

I’ve “fired myself” plenty of times by locking up all my money in a high yielding CD in years past. Why? B/c i do a lot of damage sometimes (investments in this and that).

By locking up my money, i’m guaranteed my 4-5% /annum return.

I will continue to fire myself every year by locking up all my bonus money. The amount is generally $100-250,000/yr AFTER TAX believe it or not. The issue is, the more you have, the more you have to blow oneself up as I’ve done before.

Chett
Chett
11 years ago

Two things:

1. This is not a political blog. While finances and politics can and most often are related in some way, this is not the place to make those connections. I have never seen an argument end with, “You know what you’re right. I’ll completely change my political ideology.”

2. @ Anonymous:
You are giving up on yourself and expecting everyone around you to save you from yourself. Do something to make yourself feel more empowered. You need to realize you have the ability, as much as anyone else to make positive changes in your life.

KC
KC
11 years ago

I like your mention of letting go of things that are beyond our control. There is a common saying only worry about things you can control. When I remember this I greatly reduce my stress level and it’s pertinent to every part of life not just finance.

Neal@Wealth Pilgrim
11 years ago

I really like the idea of a “financial fire drill”. Never thought of it before.

Anonymous,

The folks before me provided great ideas. I can understand how sad it could be to have a partner who is not willing or able to get on the team. Having said that, I hope you do take the advice provided by finding someone else to give you the financial direction you need. I’m sure there are plenty of people around who can and would love to do so.

Taylor Ellwood
Taylor Ellwood
11 years ago

Excellent post and much more realistic than the four hour work week. I have read that book and while it has some interesting ideas, it’s mainly suited for people who are selling products…even then, the reality of owning a business is that you put a lot more time into it four hours.

MoneyEnergy
MoneyEnergy
11 years ago

Excellent post, just like Neal’s other writing. I like the idea of “firing yourself” if you’re just getting in the way of your own progress. The way someone else put it which resonated with me is that he was becoming the victim of his own excesses. And excesses aren’t just the extremes of bad behaviours, they are extremes of otherwise good moves, too – like trying to stay focused or organized. I also think Neal has an excellent point about the fact that we already “know” all there is we need to know to become financially successful or at least… Read more »

Joey
Joey
11 years ago

The idea that FF/FI will bring freedom from worry is one oft-repeated in PF blogs. Inevitably, most people who worry about money before reaching FI continue to worry about it afterward; they just start worrying about losing it instead of making it.

Ben
Ben
11 years ago

Hey Bulldog Gin Co….why don’t you stop trying to hack your crappy wares on this website. People come here to read about financial advice, not hear about how much money you supposedly made every time you post. Read the blogpost, comment on it, and stop posting your link to whatever scam you have going on.

J.D.
J.D.
11 years ago

@Ben (#14)

Thanks for pointing out that Bulldog was linking in every comment. This is not acceptable at GRS, and I’ve removed links from past comments. It’s fine to link to your own site if you’re linking to something DIRECTLY related to the discussion, but gratuitous links are not allowed.

AT
AT
11 years ago

“Serenity now… insanity later” – Lloyd Braun

Beckie
Beckie
11 years ago

Thanks for the excellent and timely advice – sometimes we really do need a reminder to get off the couch and act on the things that we know how to change.

DDFD at DivorcedDadFrugalDad
DDFD at DivorcedDadFrugalDad
11 years ago

Solid advice. Balance and moderation are key. Change takes time, but we all have the power to make change. The key is WE have to make the changes . . .

Kevin
Kevin
11 years ago

@Bulldog Gin (#7): “I will continue to fire myself every year by locking up all my bonus money. The amount is generally $100-250,000/yr AFTER TAX believe it or not.” I think it’s pretty obvious we don’t believe it. Real live rich people don’t feel a need to constantly tell everyone else how rich they are. “By locking up my money, i’m guaranteed my 4-5% /annum return.” Please tell us where we can find CD’s paying 5% guaranteed. This claim is about as credible as your boasting about your quarter-million dollar bonuses, while still having enough time to spam PF blogs… Read more »

Aniruddha
Aniruddha
11 years ago

Very true, nice post Neal 🙂

Beth
Beth
11 years ago

Neal: THANK YOU! Every time I hear the title of Ferriss’s book I cringe. (Don’t think it’s possible in the line of work I’m in).

I think I need to write the Serenity Prayer in big letters across my wall 🙂

Jessica
Jessica
11 years ago

Ive tried the “firing” myself technique but in my case, it just doesnt work well. No one is ever going to hold me to the level that I feel like I need to be at. Instead I have just grown used to the fact, that worrying about cash is just a way of life for me. I managed to get myself out of debt once and I will eventually get DH and I out of it as well. He has realized that I will forever be a financial nerd and do the numbers constantly. The one upside of it though,… Read more »

Maria
Maria
11 years ago

This is very good article. It gives loads of useful and a must guide for everyone, especially now that our economy is struggling. It is also very true that we must all accept the things that we cannot change or maybe we cannot change right away, but it is also advisable that within this unchangeable things, we must also act to make ourselves more ready, ready to accept these things and be ready for the consequences these will bring us and the people around us. To fire ourselves is one of the best guide that we can follow, this is… Read more »

katy
katy
10 years ago

Greaaaat post. FWIW, Neal gets my vote JD.

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