In the 15 signs of financial denial, I mentioned that talking out of your rear end without hard data to back it up is pointless.
I know it, and hopefully you’re self-aware enough to know it, too. Yes, it will definitely make you feel better, for a little while. However, it does nothing to actually move you toward a solution.
Let’s pause and reflect.
Talking about finances used to be taboo in social circles. We can thank the recession, in particular, for helping people open up with others about money.
But the ability to talk doesn’t eliminate the ability to lie. Did I say lie? I meant embellish… enhance, and creatively filter.
Even if you’re not being creative with your friends or family, your self-talk (or self-thought – who talks to themselves, right?) can be just as guilty.
Stephen Covey captures the essence of what I’m trying to say in The 7 Habits…
“You can’t talk your way out of what you’ve behaved yourself into.”
Come on, now – read it again. Really understand what he’s trying to communicate.
You can’t undo years of financial habits by simply absolving them with empty promises and lofty resolutions. You actually need to buckle down, go through genuine change, and establish a proven pattern of success.
Before you start proclaiming it.
A small caveat before the ‘Secret’ crowd hangs me. My wife loves ‘The Secret,’ by the way.
The power of positive visualization should not be underestimated. Seeing yourself as being successful, making affirmative statements, and actually believing them is great and it does work. It works very well, actually.
However, if what you say and believe is not in alignment with what you actually do, no amount of faith will get you to the end of the road. Maybe luck…but if you’re counting on it, you’re still in denial.
Let’s get to the nitty gritty. What are some concrete ways to align what you do with what you (want to) say?
I propose some of the following exercises as good medicine:
Focus on Data
Ignore for a minute how you feel or what you think about your financial situation. Collect all the hard data you can get your hands on. For example:
- All current account balances (not just the ones you like)
- All expenses over the last 6 months, preferably organized by category
- Credit score and credit report data
- Retirement portfolio information
- A family budget (you do have one of those, right?)
Really disconnect from your emotions and evaluate your situation. Does what you’re looking at make sense? Are your decisions reflecting what you value? Are you setting yourself up for failure?
Share with a Stranger
Imagine you’re sharing your finances with a stranger (or even someone you know), preferably one that’s reasonably well-versed in finances. How would you feel?
- Lost in Space
Often, this is a very powerful exercise because we tend to keep our money problems private, which makes them easy to ignore and cover up.
Who are your life’s ‘shareholders?’ Prove to them that you know what you’re doing.
Find the Disconnect
If you’re guilty of not doing what you say, do you know why you do it? Do any of these reasons resonate with you?
- You see money as power and want the world to know you’re doing well.
- You’re competitive and like being ‘better’ than your friends, even if you’re really not.
- You’re ashamed of your situation, so you don’t want anyone to know about it, and you end up ignoring it yourself.
- You like making people happy with promises, but you only disappoint them when you don’t deliver.
Understanding the reasons why you’re unhappy with reality is the first step – taking action to realign your priorities and change how you feel comes only after self-awareness.
Sometimes, the problem is genuine ignorance. You don’t know how to do something, you don’t realize a problem exists, or you simply follow the first thing someone tells you.
At the very least, a basic financial education equips you to weigh your own situation against a baseline and make some important realizations, like:
- Holy smokes! My credit score is horrible, or,
- Dang, that savings account isn’t making me any money!
Learn as much as possible about the basics of handling money, as well as the conventions and norms. There’s always time to improve and adjust later.
I mention this last because it’s probably the hardest thing to do if you’ve been ‘lying’ (there’s that dirty word again) about the state of your finances.
It takes a long time to let your guard down and allow someone to see the real issues you’re facing. Do it with someone you’re comfortable with, and be open to their input.
Don’t let them bully or lecture you, either! Explain that you’re looking for genuine change and want to start slow. Small, gentle adjustments are all you need to turn the ship.
Alignment and Peace
If you let yourself live in disconnect between what you appear to be, and what you actually are, your character will suffer. The lies will get bigger. Other people’s expectations of you will rise.
Sooner or later, it will all come crashing down, painfully. You’ll learn to live within your realities.
Do yourself a favor and live there now. Find financial peace in accepting what you have, making the best of it, and striving for a better future, to the best of your abilities. It’s the most you can hope to do.
Don’t be that infamous saying – ‘Do as I Say, Not as I Do…”