Like preachers of the gospel, it’s common for us to preach financial truths to the financially challenged or materialistic, but why do so many of our sermons fall on deaf ears in the real world. Why is it so difficult to convince people to make even the tiniest of financial changes?
After having conversations multiple times with many friends, family and coworkers I’ve noticed negligible change on their financial plans, I often wondered why people don’t seem to see the light like I do. It must be the same frustration many religious people feel when trying to convert someone. But this is logic! It makes logical sense that saving and being frugal is extremely beneficial to your life and future! You’re explaining that the stock market really isn’t such a scary place. You may find, like I did, many people that agree with your logic but still don’t change their financial situations. So why is this?
Well, one thing that’s obvious is people are resistant to change, but I did notice people that were most receptive to the conversation had something in common. They were all pretty frugal, Do-it-yourself people that weren’t very materialistic.
Short History about Me:
When I ran across Mr Money Mustache in a short video a couple years ago and then visited his blog, it didn’t take long for a light bulb to go off in my head, especially after going through Jim Collin’s investing crash course. At that point I was already frugal and had been for sometime. I don’t think I was always frugal, but my college days sure beat a lot of frugality into me.
One thing that I believe turned me frugal is I’m a man of my word. I’ve been punctual for as long as I can remember and I keep my word whether it’s to a friend, family or corporation. Part of keeping my word is making sure I have enough money when I say I can pay for something and I make sure I have plenty of excess funds. In college I started freelancing computer repair work and had built up a small clientele base. I think the inconsistent work started making me analyze what I really needed and I began to be frugal with my money so I didn’t need another job. The last part was gradually caring less and less about material items. As a kid I loved gadgets and I used to build the highest end gaming desktops I could afford, skills that serve me well to this day. But today, I’m more than ok with my 3 year old mid range laptop and a couple year old mid-range android phone. I hate figuring out what to do with old items and would rather wait until they die to replace anything.
I ended up being someone who loves DIY, frugal, non-materialistic and I think I’m pretty trust-able. I also self reflect a lot and think about the future constantly, something I was just born with. Many of these traits seem to be a pattern I see ALL OVER the financial independent / early retirement blog-o-sphere.
With life experiences, some gut assumptions and a bit of random research over the years, here’s my theory on two basic groups of people.
Theory of Savers and Spenders
Group A: What about the future?
These people reflect on life and think about the future frequently, that makes them introverts on some level. They’re usually detailed in their work and constantly try to think 10 steps ahead. They day dream, make goals and plan steps to achieve. They also naturally weigh many of their actions with future consequences. I believe this group’s thinking ahead can also make them pretty considerate towards others, what’s good for the group is generally good for the individual(themselves) in the long run. They will usually save money for any number of possible future reasons and be less materialistic because most items are irrelevant in the future and they can often hurt our attempts to protect our future. Everything they do; vote, date, work, everything includes deep thought about the future and lessons they learned about the past. I’d bet a lot of hippies fall into this group, Scientists, Engineers, that workaholic guy who puts in 20 hours of overtime every week. I think an exception to this group saving money is if their view of the future is optimistically rosy. While I do make predictions of the future, I’m one of those people that plans for the worst and hopes for the best.
Group B: ME! ME! ME! NOW NOW NOW!!!
That’s probably a bit comically harsh, but these people rarely think about the future or reflect on the past. It’s all about the present, the here and now and that makes them mostly extroverts. They tend to be less detailed oriented, but they often get the job done faster because they’re not thinking so much. Any goal they make is usually pretty short term, think weeks or months. Their present nature lends them to be mostly concerned with themselves and the people in their immediate circle. Everything is more about what’s immediate, what they can see, touch and smell right now. By nature, they don’t think about possibilities or how a strangers home life might be. They’re not more selfish, in fact they may want to help people or change laws, they just need to see the problem and anything they do they’ll want pretty immediate results (that 10 steps ahead thinking they tend to lack)**. They look for immediate gratifications all the time. I would guess they also struggle at long term relationships, not just because they’re more self oriented, but because they will struggle to see a brighter day ahead while they’re in a relationship rough patch, they’ll give up quicker in their assumption that it can’t be fixed or at least not in their shorter view of the future. They live for today and tend to spend money for today which makes them more materialistic. The only area I would expect less of this group to be in is Engineering and other scientific areas. They tend to be more sociable so I’d expect sales, business, healthcare, any field that works with people heavily.
I’m not saying one group is superior to the other, I think they both have their pros and cons, that being said, we can guess which group is larger.
These two groups actually work very well together too, While I may get pretty frustrated thinking 10 steps ahead on a project, struggling to even get started, the other group will jump in and get started and can help me focus. I’ll in return, bring up details they may forget to include and help check their work along the way.
Seeing myself in the first group obviously, I wanted to point out more flaws of people in group A, like me, so people don’t think I’m saying I’m some global icon of perfection. I probably self reflect and think too much about what I’m going to say in a conversation which makes people I meet think I’m shy or quiet. Instead of jumping into things, like starting a business, I over analyze and worry about possible future issues until I do nothing and give up. I’m not in the moment as often as most people, I sometimes have to try and force myself to “smell the roses”. If I meet a girl, I’ll already be running an analysis in my head on our chances for success instead of just enjoying the conversation and getting to know someone. I can waste a lot of time analyzing future possibilities for anything and get very little actually done. I can worry about making decisions I’ll later regret, and because of that I’m not very decisive. I can be the annoying guy thinking about getting shit done, while Group B actually gets the shit done. And I can be as selfish and ignorant as anyone else, and many times I really wish I was as selfish as most. I think Ideally someone would want to be a little of column A and a little of column B, but I mostly see one or the other in people.
How to convert someone’s financial way of thinking?
Trick question, when it comes to trying to convert Group B people, you may have a good conversation with them, but you’re all but wasting your breath if you’re trying to convert them to your frugal ways. They will always be in the present and feel it’s mostly pointless to worry or plan for the future, at least at our “extreme” levels. I just remember you never know what they’ll do, they may start putting a tiny bit of money away for retirement, so it’s worth a conversation to me. Don’t be discouraged if they don’t embrace your ways or even if they argue against it, it’s just different opinions on ways of life.
In my experience, If you want to find someone that may really benefit from your financial knowledge, look for the cues of people in Group A:
- Non materialistic
- Goal or future oriented, they talk about long term future plans.
- Into DIY and learning new things
If they have a couple of these traits and they’re green to the world of finances and investing(most are), it may just be possible to convert another fellow.
** Politically, I think many laws we pass attempt to quick fix issues today, but actually make problems WORSE in the long term.
I don’t like to think of people in terms of better or worse, I think about it in terms of different skill sets. Life isn’t a competition, but people are competitive.
I’m expecting a full on assault on my analysis. Am I too general or dead wrong, am I spewing worthless garbage in text format, let me know what you think.
Update: While I was mostly thinking about people that are already pretty well off middle and upper middle class people who are only getting in their own way, James over at Retirement Savvy brought up good points about how difficult it can be to not only plan ahead and manage money, but have high self esteem and healthy relationships when you’re in poverty and struggling to get by.
It’s a good read with interesting points: Retirement Savvy – A Richer Understanding: Thinking About Maslow and Poverty
While I’ve never been in poverty, there was a time when I worked at Walmart, lived in a tiny 350 square foot studio, tightly managed my money to make ends meet, failing to accomplish anything besides showing up to my job, didn’t know what I was doing with my life, had low self-esteem and was pretty suicidal. I remember feeling like the future was very foggy and I sure didn’t feel like my life was going to get better, on that pyramid I was probably in the “Safety” level. I also remember my curiosity of my own future and the outside world kept me going.
Afterthought: After more thought on the Group A vs Group B, I think this Idea of these two categories has at the heart of it Extroverts vs Introverts. People that internalize and reflect in solitude thought vs people that externalize and reflect in social conversation. There are different levels of Introverts and Extroverts so It would make sense that there are many of you that may have a mix of these group tendencies, I just happen to be a good boot to the far left of Introverts.