Improving our Finances is like Trying to Lose Weight

Last week Chief Family Officer explained how she’s using the same approach she used to improve her personal finances to lose weight. How we lose weight and improve our personal finances is a parallel that has been in my mind for a while. Here are some of the ways both are similar:

  1. They are both about making choices. Just as when we are trying to decide to lose weight we must choose between a salad and a double cheeseburger, improving our personal finance situation requires making choices between spending and saving.
  2. They both require a level of commitment and discipline. You won’t lose weight if you diet 5 days and binge out the other two days of the week. Same principle applies to saving money or paying off debt, unless you are truly committed to following the course you have set up, you will find yourself in the same or worse position as before you started your journey.
  3. They both require a great attitude and motivation. Saving money and/or paying down debt require that you stay motivated through the whole process. They also require a positive attitude. If you start getting caught up on the things you are giving up instead of the progress you are making you are more likely to relapse in your progress.
  4. Awareness of your actions. Just like Cathy at CFO a good way to start the weight loss journey is to track what you eat everyday. Unless you are able to identify the unhealthy patterns in your spending habits you are less likely to be able to target them effectively.
  5. They both require that you educate yourself. Just cutting back on calories won’t usually lead you to permanent weight loss. Eventually you will need to learn about how your metabolism works, which exercises target better certain areas than others. Just saving money won’t lead you to riches unless you learn about how to invest your money in order to create the maximum wealth for your situation.
  6. They both require a support system. This is the reason programs like Weight Watchers and Jenny Craig exist. We are more likely to succeed in our efforts if we have someone cheering us on or just going through the same as we are. We are more likely to advance faster in debt pay off programs if the people around us at least understand why we are doing what we are doing. Surrounding yourself by spendthrifts or people who have very little concern for how much debt they carry will probably lead you to fall back on those unhealthy habits. Seek like minded individuals who share the same values you do.
  7. They both require patience and setting up realistic goals. It took you a while to put on that weight, it will take you a bit to lose it in a healthy way. Same applies to paying off debt. If you carry a serious amount of debt and are living paycheck to paycheck, don’t expect to have it paid off in one year. You will just be setting yourself up for disappointment. Set up a goal that it’s doable with the resources that you currently have.
  8. They both require flexibility. Recognize that during your journey unexpected events will happen that will probably set you back.
  9. They both require that you pick yourself up and start again. We are all human and chances are that there will be times when we do give up on our journey and “fall off the wagon.” The secret lies in recognizing that you have fallen and picking yourself up as fast as you can.