We humans have honed our survival instincts over thousands of generations, starting from when our distant ancestors dodged sabertooth tigers and hunted wooly mammoths. While in this day and age we’re not going to be hunted by giant predators, this instinct of being singularly focused on what we need to do to survive is still very much ingrained in us.
Now, instead of looking for fire and sustenance on a daily basis, we survive by going to our jobs day in and day out. We know that as long as we repeat the process, there will be money coming in and our living expenses will be paid.
So we keep doing it because we know it works for sure. Or we are so busy with other parts of our lives that we don’t have the bandwidth to think of another way. Eventually we get to a point where this routine becomes the default state of existence, not unlike water around a fish. While this lifestyle can feel simple and straightforward, the trade off is that when we get set into such a routine, it makes it hard for us to see and consider things outside of our routine that could make our lives better.
But there are always other choices. It just takes a change in mindset.
Why We Have “Siege Mentality”
Why are we so fixated on just being able to “pay the bills”? When we hear about negative financial events occurring, it often serves to reinforce the subsistence/survival state of mind. It could be a major world event that affects the economy as a whole, or it could be an ongoing concern such as inflation. Or it can be as minor as our company taking a hit to its stock price.
Regardless of their actual impact, these events, along with the media’s general tendency to focus on negative news, serve to build an aura of negativity around us. They reinforce our fear of negative scenarios and push us deeper into a siege mentality of “doing what we need to do”.
When we think in this manner, we are thinking in terms of avoiding a negative outcome—losing our money. While that’s never good, what if we were to instead think in terms of positive goals? What if we stopped worrying daily about what we don’t want, and focused instead on what we do want?
Gaining A Positive Financial Mindset
As a financial life planner, my job is to help my clients accomplish their goals via financial wellness. It should go without saying that that already includes “not running out of money”. Once I know what my client’s goals and priorities are, we build a financial plan together. But in order to get to the goals, we first have to get out of the mindset of what they don’t want and into the mindset of what they can have and want.
Take An Objective Picture
I sometimes get clients who worry about running out of money. I listen to them to understand their concerns, take an objective look at their actual assets and monthly expenditures, and calculate what they have and what they spend each month.
Together, we look at the scenarios that could cause them to run out of money, and determine the actual likelihood of each happening. In most cases, we find that the likelihood of actually running out is very small. But if there are realistic threats, we then come up with strategies to mitigate those threats.
If the question is more a matter of spending rate (for example, “Could I retire tomorrow and maintain my current standard of living?”), I come up with a set of scenarios that show what the client can and can’t do. Maybe they can retire now, but with a lower spending rate in retirement. Or they might have to work a few extra years. Sometimes, a transition to a part-time or consulting role can aid in the equation.
Once I present the future possibilities and potential scenarios to the client, it’s often a great conversation starter for giving them even more ideas and choices they might not have previously considered.
I use my experience in motivational interviewing as a technique to help with switching into the mindset of what they want. I go in depth to learn the values and priorities that drive their goals. I’ll also have them prioritize what is most important to them versus what might be less important. I’ll then drill down a bit to gain insight on their concerns, uncertainties, and fears.
From there we can go into goals—actual things that reflect their values and priorities. Then, details. What do those goals actually look like? Do the goals truly make sense with the values and priorities?
If the goal is retirement, what does retirement look like? Is it a house on the beach, travel around the world, or something else? If the goal is a good college for the kids, what does “good” entail? Public or private? Will it be nearby or long distance? Financial goals are wide and varied, but these are just examples of the level of detail needed.
Once we have these details, we have the foundation for building the plan to get there. And we’ve now exchanged the “avoid running out of money” mindset in exchange for the far more positive “what do we want” one. We’re now on the path towards financial wellness.