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Have Your Dollar and Eat it Too

Have Your Dollar and Eat it Too

June 24, 2021

As a 7-year-old, I remember my parents decided it was time for a change. Determined to lose weight and improve their health, they latched onto Body for Life, a nutrition and exercise program. It was fun to watch the old videos of people following the program, changing their bodies, and becoming better versions of themselves. The books and videos featured people young and old, with before and after pictures and essays that were frankly inspiring. Of course, the program touted their own proprietary supplements to monetize the motivation, but the basic tenets of the program were fairly reasonable. My parents embarked on their fitness journey, and my dad went on to win a prize from one of their competitions--a trip to Cancun with my mom.

Watching my parents get up early to go to the gym before work and eating healthy, it made me want to do the same thing. My dad would humor me: he would make a little extra of his healthy breakfast and leave it for me in the morning, and he gave me a light dumbbell to do exercises when I insisted on lifting weights. Little did they know the monster they would create; to this day I love eating healthy food and working out. It served me well through college too, even when my best friend and roommate subsisted primarily off the three main food groups: ice cream, pizza, and cereal.

Years later, I find the basic principles to be strikingly similar to the basic principles of financial success.

● It isn’t a sprint. You don’t go to the gym, work out like a fiend for a week, and see lasting results. If you aren’t used to it, you may even do more harm than good. Fitness is a practice in consistency. And financial success tends to be the same way. Most financially successful people treat the process like a marathon. They consistently save and invest over time, and they tend to invest in long term strategies. They don’t try to strike it rich overnight by making bets on speculative companies, and they also don’t try to save all at once! Those who do the former can wind up losing a lot of money, and those who try the latter can find themselves short on money for normal living expenses and ultimately break into their savings or take out credit card debt to make ends meet.
● It helps to have a plan. Have you ever been to the gym and seen that guy who aimlessly wanders? He looks around, unsure what he is going to do today, and defaults to his favorite seated bicep curl machine. After a set or two, he spies a friend at the gym and wanders over to talk for a few minutes. After his long set of jaw extensions, he ambles over to the treadmill. Walking at a leisurely pace and watching TV, he sees a commercial for a BBQ and spends the next 15 minutes researching on his phone. Before long, time is up and away he heads to work. He had no plan to guide his workout, his actions reflected it, and his results will probably reflect it too.

By comparison, someone with a specific exercise plan for the morning can walk in with purpose, get more done, and achieve better results in the end. Similarly, it is tough to act financially smart when you are flying by the seat of your money pants. When you have no idea how much to save or where it will come from, it can be difficult to make progress or understand if you are doing the right things. But if you know saving 11% of your income will help you retire at the age and income you want, you have a target to aim for. It gets easier still when you have a budget of some kind that guides where you spend and save your dollars. It does not have to be an iron clad, restrictive spreadsheet to the dollar, either. The budget is the financial equivalent of a meal plan; you don’t have to count each calorie, but having a general idea of what you are eating and how much can help create the results you want.

● Goals motivate us: for some, their goal might be to simply fit into their old jeans. Some set an arbitrary amount of weight they want to lose, a weight they want to be able to squat, a race they want to finish, or a body fat percentage they want to reach. Money-wise, the goal might be for work to become optional by age 60, to afford a daughter’s education, or to save three months of living expenses in a savings account. When you can attach something meaningful to the activity and see progress, we stand a much better chance at sticking to the process.

● Making it easy is key: when your pantry only has healthy food, or that exercise class is a couple clicks to sign up, or you always exercise at the same time of the day, you make it easier to follow through. Similarly, making smart financial habits easy is the key to success. Automating payments, allowing your 401(k) to automatically withhold money from your paycheck (and sometimes auto-increase savings slightly every year), and defaulting into a professionally managed portfolio can make things simple, effortless, and easy to stick to over long periods of time. As a mentor in college once said “Less effort, more result.”

● Progressively increasing resistance: I meet people who want to increase their savings dramatically after we meet. While the intent is noble, my initial reaction tends toward slowing them down a little. For example, shifting contributions from 4% of your income to 15% into a 401(k) can be a jarring adjustment if your income hasn’t increased. Instead, easing into 7%, 9% a few months later, and eventually 15% over the course of a year or two tends to be more effective. It is similar to weight training: you gradually increase the weight you use and allow your body time to adapt to the stimulus and get stronger. We see this with clients whittling down credit card debt too. As they pay off cards and free up cash flow, they can increase their savings and payments towards other things. Promotions and wage increases are also opportunities to increase savings in a sustainable way.

● Don’t overdo it. If you work out too much or restrict calories too much, you risk injury. You also don’t want your physical fitness goals to crowd out the other important parts of your life. Similarly, you don’t want to save too much money either--we need to live for today too. Sometimes we lose sight of our goals and get lost in the process. Unless you have a burning desire to leave money to a cause or person you care about, it does no good to finish your life journey with a mountain of money. Like our bodies need rest days from working out and our minds need an occasional meal splurge, we also need opportunities to enjoy our hard earned money along the way to avoid burning out.

● Accountability works. My wife and I are members of a CrossFit gym. In college and high school, we were part of sports teams. When you have friends and teammates who expect you to be present, positive peer pressure steers you into following through when you want to sleep in, skip a workout, or take it easy. In the personal finance arena, we can leverage this as well. Clients rely on us for advice and advanced knowledge, but many also rely on us for the gentle reminders and inquiries about the things they said they wanted to change or start. Accountability can also be a work colleague, friends and family, and your spouse.

The phrase “financial fitness” is popular for a reason! Both physical and financial health can be challenging, and while they are not the same, they could pass for siblings with very different interests. One thing they do share in common, however: working to improve both is absolutely worth it.


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