Financial Apathy is Costing You Thousands: Here’s How to Fix It
Forget worrying about paying for the $5 Starbucks coffee, “financial apathy” is costing you far more. “Financial apathy” is largely a “lack of motivation” to manage (and have a plan around) your finances (a mindset that grows more expensive with time). Over the past 15 years, the financial world has been a *shit show* roller coaster ride in so many ways. If you’re a young professional in your 20’s, 30’s, or 40’s, you’ve grown up dealing with significant and unique issues your parents never had to worry about. It’s left us feeling jaded, intimidated, and disengaged around money. Further:
We’ve Lost Simplicity: Technology has given us convenience & opportunity while robbing our lives of the simplicity our parents generation had.
Information Overload: Excessive information out there with insufficient knowledge on how to apply it to your life (and a big one: knowing what info to ignore).
These circumstances lead to the following “expensive” mindsets:
Avoidance/Hopelessness:
“Money stresses me out, I’m just going to avoid it because it brings me down and I have more important things to worry about right now.”
Procrastination:
“I’ll look at my finances later when I feel like dealing with all that.”
“I want to make financial decisions but when it comes time to act, I hit a wall still feeling like I need more information. I’ll make these decisions soon I’m sure.”
“I can do this myself, I don’t need to pay someone. Oh wait, I said that last year… and the market has gone up __% since then! Ugh, this is stressing me out, I’ll deal with this later”
Now, the underlying common denominator with all this comes down to one thing, MOTIVATION.
I may be a Financial Planner but I’m still human just like you. For me, when things feel too complex to make a decision I can lose motivation and put it off until later “when I feel ready” or “I have time to do more research” (lack of motivation excuses in disguise). Unfortunately, “more info” can often lead to more confusion around “what to do next”, which leads to feeling more overwhelmed, and then your motivation shrinks even further.
The Cost of “Apathy” (Lack of Motivation):
Waiting until you feel motivated (or ready) to make a decision can cost you thousands.
I know because my own mother made this $600,000 mistake that stemmed from not understanding money and being apathetic towards it.
So, how do we overcome this apathy around our money?
The Solution to Financial Apathy: Focusing On “Wants”, Not “Needs”
Simply put, your financial “wants” are more motivating than your financial “needs”. By “needs” I don’t mean “basic needs” (I assume for now you can pay rent and put food on your table, etc). The “needs” I refer to are the things you “should do”, “need to do”, “have to do” (i.e. do your budget, save for retirement, etc), things that don’t excite you but are all too important.
“Needs” are things you “Have To” do, “Wants” are things you “Get To” do.
Pay yourself first! Setup automatic savings transfers for “needs” so it’s automatic, effortless, & no further decisions are required.
Use what income remains on your “wants” cookie jar.
The 3 Step Process For Overcoming Financial Apathy
Step #1: Explore Your “Wants” (the cookie jar)
Ask Yourself: What does money mean to me? What does it buy you that aligns with your values, improves your life, and above all excites you at the thought of having it?!
Example: The things I love most are more or less “free” (relationships, nature, being active). However, a goal of mine is to own my own home. The idea of it excites me, motivates me! I envision myself sitting in my living room hosting loved ones, planting a backyard garden, or having peaceful alone time in a space I love. This “want to” goal motivates me to plan my finances in a way that a “need to” goal like saving for retirement simply doesn’t.
Alternatively, perhaps you want to buy “more time” with people you love or “more flexibility” to do work you love.
Create a list of the most powerful “wants” you can think of (that money can buy). I want you to feel these “Wants”, ideally your desire for them is strong enough to evoke some excitement or emotion.
Step #2: Quantify Your “Wants”
You determine your “want” costs $5,000, how much money would you have to save each month to bring each of these “Wants” into reality? By what date?
Are there ways you can get financially creative to reach these “wants” sooner?
Step #3: Create a Plan of Action (With Your Cookie Jar of “Wants” at The End)
Save for your “needs” first. Set up automatic savings transfers from your checking account (or out of your paycheck) so it’s a thoughtless process.
Fund your most important “wants” from the overflow and enjoy that money guilt free!
This activity does a few things:
It motivates you financially! Making money just to make money is meaningless (it’s just a means to an end, you need to define what the “end” is). When you have a powerful “want” and you know how each dollar gets you __% closer to that want, it will motivate you to get shit done! This is your life, fill it with things that inspire you and push you forward.
Get intentional with your life. It helps you go from “one day to day one”. Example: “One day I want a home” to “today is day one of me saving $___/month to buying this specific home at this specific price by this specific date”.
Prioritizing “wants” brings Clarity. We want many things, which are top priority? Great, now focus on those and forget the rest (for now).
It promotes creativity! If you really want something and the money “left over” for that “want” isn’t enough, this will lead you to get creative. What ways can I increase my income? Reduce my spending? Alter this goal so I can achieve it sooner? Could I split the cost of this “want” with someone else?
Know When To Seek Help
Financial Apathy is expensive. If you’ve put off making financial decisions (for whatever reason), hiring a professional can be just the call to action you’ve been looking for. While hiring a professional costs money, do you fully know the cost of not hiring that professional (both in dollars and peace of mind)? I love being a Financial Planner because the value these services provide people is almost always a significant multiple of what is paid (i.e. everybody wins).
A financial planner isn’t emotionally hampered by your money like you are and will ground you when making important financial (and life) decisions. A financial planner will also educate you on your options and simplify the financial decision making process significantly so you can start taking action now, not later.
If this article resonates with you and you’d like to learn more, schedule a time with me here for a free 30 minute introductory consultation.
San Diego Financial Advisor | Fee-only Fiduciary
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