To begin a financial conversation about the future with a new client requires first that we establish the starting point, simply, where are we at today. For many people this can be a painful exercise of bringing up all the emotions surrounding prior decision making and the related feelings of guilt and remorse for potentially not making the right decisions in the past. This can be especially difficult for people with large amounts of credit card debt, student loan debt, or other past financial mistakes that we all feel the need to explain. However, in our rationalization of prior events, we find ourselves right back in the trap of telling a compelling story to justify our decision making and that is not helping to shape a better future, it’s a continuation of the same story.
This is often the case for people who have large amounts of credit card or student loan debt. If you have listened to all of our podcasts on student loan debt and how to avoid it, but these came to you after you have already accumulated large amounts of debt, it can make you feel as though you have made poor decisions and therefore you are not smart, you don’t get it, or one that I hear a lot in the world – “I’m just not good at finances”. As the old saying goes, if you think you can or if you think you can’t, you are right.
This is true not just in finance but in any part of our lives. We hear other people’s opinions about us, and we can start to believe those things are true. I was told by many people that I was not a good enough basketball player to play in college, and certainly not good enough to get a scholarship. Looking back, its easy to see that most of the people saying negative things were projecting their own insecurity – it wasn’t that I wasn’t’ good enough, it was that they did not believe they were good enough and misery loves company. I used other’s opinions as motivation, and when I did get a college scholarship after spending two years at a junior college, a large part of me wanted to just throw that back in the faces of those who had said it. But here’s the catch, they did me a favor by motivating me, so if I’m going to tell you – see, you were wrong, I can and did do it - then I might need to follow that up – and thank you for helping motivate me to succeed. That’s a strange conversation to have, and doing things only because people tell you that you cannot is also not healthy, but there is one great takeaway from this that I learned and that is to not place great value on other’s opinions because they are likely just projecting and don’t know what you will do in the future. Playing basketball in college was a result of my determination, effort and love of the game. How could anyone else have measured that unless they knew me intimately and were around me all the time? They couldn’t. So validating other’s opinions when they don’t intimately know you is a lesson about whose opinions we decide to validate and how that changes the stories we tell ourselves. What we tell ourselves is very important and changing that internal conversation is a key to changing our behavior.
When we continue to tell ourselves the same stories, we also project back onto ourselves our lack of feeling as though we deserve a better future. Changing this paradigm is the foundation for creating a better you. To start to change this behavior it is often necessary to change our language, both what we tell ourselves and what we say to others. Language can often be the starting point for our story, and therefore changing language can be important to begin to change the story we tell ourselves.
When it comes to our financial situation, the story and the words we use are very important. Not only may the words show that we need to be kinder to ourselves with softer language, but we often need to change the words so that stop limiting ourselves, which is often our biggest hurdle. Before we start working on trying to change our language, I’d like to return to some of the familiar sayings that we all need to hear over and over again – You Are Not Alone, and You Can’t Change the Past. But we can’t just say these things and have them ring true, we need to hear other people’s stories. The most common thing I hear from people when we talk about finance is, “no one ever sat me down and talked to me about money”. Unfortunately, this is very true statement for most people and one the main motivators for me to start helping others.
So if you were not taught finance, why would you expect yourself to be an expert and to have made good financial decisions your whole life? You cannot and you should not have this expectation, but something inside of us keeps telling us we should know better and that is where we need each other. “You are not alone” is not to make you feel better, it is just a true and factual statement. You wouldn’t expect yourself to be good at a task at your job if you received no training. If we gave you a uniform and put a basketball in your hand you’re not ready to play basketball – you don’t even know the rules. But if you see everyone playing in front of you, you could feel that you are inferior and don’t belong when really you just haven’t had any training. Then maybe you find out that you missed that training on the rules of the game while you were on vacation and you are sent to the next training and voila, you learn how the rules of the game and now you can participate. At this point you finally allow yourself some compassion and you need to do the same with your financial life.
It’s not your fault that you don’t know – they should have been required to teach you all of these things in high school, the system we live under is capitalism and that is more important to learn about than European history for your future. Why you are paying way too much for school or a car is probably more important to your life than knowing when Napoleon ran the royal family out of Portugal (yes, that happened, they escaped to Brazil). So allow yourself some compassion and know that, truly, you are not alone.
Reviewing the current financial situation with these two sayings in mind can make it easier for us to move forward and have a discussion about the current state of your financial affairs without having to relive all its emotional baggage. But it is also important to begin changing the language we use to talk to ourselves.
When I sit down with a client and we start this process of going through the current state of affairs, everyone wants to justify their actions, and this is usually done with words they don’t even realize they are telling themselves. These usually include statement such as: I’m no good with money or I’m not a good decision maker or some other character flaw, projected inwardly. The first step is to change the language. Preventing ourselves from labeling our future the way we label our past is very important to creating change in our financial lives. Your language therefore needs to change. Instead of saying, I’m no good with money, let’s change the future with your words. Instead say, up until now, I haven’t been making good financial decisions, but in the future, I’m going to make better decisions. This kind of language gives you someplace to go, someplace positive, where your effort makes a difference and where you have not stuck yourself in a place.
If we continue to tell ourselves we are not good enough, we are likely to turn those thoughts and works into a self-fulfilling prophecy.
When we use positive language that invites us to change and doesn’t limit our ability, we take our power back over our future actions. Future actions, whether financial decisions or physical development are made one at a time, not all at once. If we continue to tell ourselves we are not good enough, we are likely to turn those thoughts and works into a self-fulfilling prophecy. We do this not because what we are thinking and saying has to true, but because it is the story we have decided to continue to tell ourselves. The tomorrow you create for yourself is not based on your past unless you allow it to be.
This is true not just in finance, but in many areas of our lives. If you say you will never be able to do the splits, then you likely never will. But if you change that story into, up until now I haven’t been able to do the splits, but I’m going to stretch every day, and one day soon, I will do the splits. This story has a future. The old story just keeps you in the past. We need to do the same story telling with our financial lives. Just because your credit score is poor today, doesn’t mean it has to be for the rest of your life. It may be that your prior decisions resulted in you filing for bankruptcy. That does not mean you will need to file bankruptcy again in the future. But if you continue to tell yourself that you are “bad with money” and make “poor decisions”, then you probably will because it’s the story you are telling yourself.
So to start down your new financial journey and expect new results, you need to change the language you use to talk to other and to yourself. I recommend for anything negative in your past you start the phrase with - in the past or up until recently - then you can say the negative part and then transition it into a positive future. Instead of saying, I’m a bad saver – this can be changed into, Up until recently I good at saving, but now I’m working on getting better at saving. This changes your – cannot – from being you to identifying your prior behavior. You are not a bad saver, but if you haven’t focused on it and made it a priority than if you were a good saver that would be amazing. Your prior behavior does not prevent you from doing better unless you allow it to and using language that defines you negatively is the main way that we continue to act the same way we have in the past. It empowers you to change by not defining your actions as you.
Here is an easy example. If you have no savings – as they that 1 in 3 American’s do not, then that is just a fact. I have no savings. No attachment, no personality flaw, just a statement. But that’s not usually how we talk to ourselves. Instead we will say something like, I have no savings because I’m not good with money. In this way, we set up our future to be the same as the past because we have put the current conditions onto our personality and defined our ability to change. How could I possibly change this behavior? You’ve given yourself a personality flaw that will prevent you from ever even opening a savings account. But, if we change the language and the future story: in the past, I haven’t been good at saving, but I’m going to start tomorrow with $5. This gives you an unlimited future of saving, doesn’t attach the behavior to you as a person and changes the perception you have of your own abilities. If you only put away $5 per month you have changed the story. You are now a saver, making better decisions with money.
Jordan Peterson lays out this philosophy in his book 12 Rules for Life with the philosophy of “aim small”. In this case, change your entire perspective of yourself by having a small, achievable goal. We can apply that with a goal of saving $5 per month. In doing so, you’ve changed your story and hopefully your belief in yourself and your ability to learn new behaviors and not identify yourself based on your past. That a huge step forward. Once you do this, you change your belief system in yourself. If you start at $5 per month and make that a habit, how long before we can increase that amount to $50 or $100 per month. Before long you are excellent at saving and that is the story you can now tell yourself.
We can’t change the stories we tell ourselves if we don’t examine them. We all have to dive back into the past, often from times that we would prefer not to recall, to find out where our deepest fears and beliefs come from. This is THE WORK. You have to do your own work. You don’t’ have to do it alone, but only you can know where the work needs to be done and where it comes from. Once you begin to ask yourself all the tough questions and do The Work, you have started on the process and can create change. If you are resistant to doing The Work then you will continue to tell yourself the same stories, use the same language and continue to have the exact same problems you have today. If you confront the past, change the story, change your language then you can change your behavior and create a better financial future for you family and yourself.