The case to be boring with your money
The idea of getting rich in flashy ways is not new. After all, Charles Ponzi, for whom Ponzi schemes were named, defrauded investors over 100 years ago with a get-rich-quick scheme based on lies. Today, speculative investments, multilevel marketing companies, and other risky endeavors to generate profits are still enticing traps.
You can always leave your money alone in an interest-bearing account and let the time do its thing, but that doesn’t really make for exciting party conversations, does it? We therefore open and close accounts. We invest in hot stocks and sell them at the first sign of bad news. We waste our money because, in our minds, growing wealth is supposed to take effort.
“In almost everything we do, activity pays off: if I want to be a good runner, I should run every day. If I want to be a good painter, I should constantly practice, ”Morgan Housel, Collaborative Fund partner and author of“ The Psychology of Money, ”said in an email. “But if you want to be a good investor, the best thing for people to do is don’t trade, don’t tinker, leave it alone – and I think it’s so counterintuitive because it’s so unique to invest. “
In a world full of financial influencers peddling products and friends bragging about buying NFTs, it’s perfectly okay to manage your money in a way that primarily entices you to yawn. Here’s why.
Being boring gives you more time to live your life
Managing your money is a necessary chore, and it’s not really fun. Fortunately, we are living in efficient times. Within minutes, you can set up automatic money transfers that discreetly send your money to separate accounts that serve different purposes. Why keep money management on your to-do list when it can happen on its own while you sleep?
“Money is a way you live your life, not the life itself,” Meg Bartelt, financial planner and founder of Flow Financial Planning, said in an email. “The more complicated, changeable, or scary your investments, the more time you spend working or thinking about them, and therefore the less time you have to live.”
Being boring keeps you from making rash decisions
It’s important to periodically take a look at your investment accounts, but obsessing over every move in the market is exhausting and counterproductive. This can lead to reactive decisions that damage your wealth in the long run.
Choosing to be boring with your money is an exercise in letting go of the illusion of total control. Yes, there will always be financial news around the clock, but not everything that happens in the big economy affects you as an individual. Turn off news and stock market alerts on your phone so you don’t want to react. Instead, consciously decide when to watch the news and check your accounts so you can stay informed with less stress.
What boring money management looks like
• Create a plan that you stick to (mostly): Bartelt finds that whether his clients avoid their money or obsessively follow it is because they all feel the same emotion: fear. The antidote is a financial plan based on specific goals and values. “Having a plan is reassuring,” she said. “Once they have the plan, or hell, once they know they’re going to have one, people relax.” Base your savings and investment goals on what you plan to spend in the short, medium and long term. Leave some leeway for life changes and other uncertainties, as these are guaranteed.
• Prepare for Emergencies: There is nothing particularly appealing about emergency funds, up-to-date life insurance and wills, but if the unexpected were to happen, these things can help you stay financially. stable.
• Automate your money: Automatically transfer funds from check to savings or check to brokerage account. Contributing to a 401 (k) through your job is automation too, because that money comes straight from your paycheck. Making regular contributions to different accounts and increasing them as your budget allows and your goals change will increase your nest egg.
Once you’ve established your boring financial base, you can sprinkle some riskier investments if you want. But stick to your plan. “You must actively and continually ignore the pervasive distractions, charlatans and blowers in order to stay true to your own values and goals,” Bartelt said.
Get rich tips are everywhere. Friends brag about their latest cash moves at parties, while social media influencers brag about how to get rich. You might be a little afraid of missing out if you don’t have your own exciting financial news to share. But increasing your net worth doesn’t have to be conversation-worthy – in fact, it can be more effective when it isn’t.