What could you gain by re-ordering your finances?

It has been some time since I shared some personal finance thoughts but I was triggered by two events so I would like to share something and see if they manage to help you or your loved ones.

How do you really convince yourself or get someone to try getting your financial situation in order?

This is a problem that plagued many people but more so, it plagues those that are in a relatively good financial situation, but their loved ones are not.

Convincing people is hard.

Whether you are convincing yourself or someone else, I believe that 9 times out of 10, deep down, they know what are some of the things that they need to do to maybe get to a better position.

The problem is that when we look at the solution, we will immediately recognise what we will lose if we try to fix the situation.

The solution to not having any savings is to go and earn more, reduce your expenses. The probable solution to getting out of the debt cycle is to not accumulate more debt, reduce the expenses and prioritize debt clearance.

Not rocket science solutions. And if you ask some of your friends who are more sensible, less judging and willing to help, they would tell you the same thing.

The issue is not being oblivious to the solution but that we know, but we fear what we will lose if we do it.

If we cut our expenses and prioritize debt clearance, our debt will get less and when they cross over to zero, they will eventually go up.

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But we will lose our quality of life. How would life be if we cannot Grab to work and back? You cannot go out with your friends anymore. We have to replace our food with Maggie Mee.

What compounds this fear is that automatically, we think that we have to do this FOREVER for the rest of our lives.

So the easy way is to not do go ahead and change.

WHAT WOULD YOU GAIN IF YOU RE-ORDER YOUR FINANCES?

The solution is not to look at what you would lose but also explore what you would gain.

A lot of times, no one told you what you would gain. You have to figure that out yourself. The conclusion that you would come across is that you will "get into a better financial situation."

That is very vague, not useful, not a good representation of where you wish to get to.

Here are some examples of what you would gain if you try and implement the changes:

1. You will not have the anxiety at the back of your mind about who to avoid or dreading to see those bills
2. You wish to be known as someone who got their shit together. By going down this route, at least you would be known as someone like that
3. If some of your peers can have $XXX,XXX by this age, you should be able to do that as well. At least you show that you have the ability to do that and able to do it. This is an ego boost
4. The more you accumulate, you move further away from the times when your family does not know whether you will have money for food the next month
5. People don't believe you can do it. You are someone with some fight in you and you want to show them (and yourself) that you can do hard things. You wanna be known that you can do hard things.

In a lot of the examples list above, you may realise it is a transition to a certain better state, or that it is an identity that you wish to be at.

To convince yourself to get started, the upside must be more than the downside.

Most of the time, the upside is more than the downside.

If you cannot articulate the upside, you may not stick to it long enough. Hopefully, you will start seeing some results, and be able to understand what you gain from improving your finances.

But the strong motivator is the ability to identify upsides. If you cannot articulate what you are gaining, then why make the change at all?

THE FINAL HONOURS YEAR

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17 years ago, I was torn whether I should do the last Honours year during my university days. I really got tired of my career in academics after studying since I was 6 years old.

I was afraid that I am making the stupidest decision of my life by not having Honours credentials. But what I will gain is work income, not having to write an Honours thesis paper.

So I went around to ask some of the teaching assistants and lecturers whom I respected more to see if I am going to do something dumb. Their answers did not make things very clear.

But in the end, I felt that what I gain outweigh what I would lose. Hindsight, things turned out alright. The credentials might matter more if I was in civil service but in my last company, that was less important then my experience.

Try and assure yourself that fixing your financial s*** is worth it by also looking at what you would gain.

This article was first published in Investment Moats.