Willpower Not Required

Written by John D. Buerger, CFP®.


John Buerger

Let's be real for a minute.

The vast majority of Americans are not saving enough to ever be able to retire and we all spend money in ways that don't serve us very well - at least not in the long run (anything more than about 10 minutes). 

If you are like most people, you know you could make much better financial decisions on a daily basis. You WANT to make better money choices, too (at least in theory) ... and yet you don't.

Why? Because you have been indoctrinated to believe that making good financial decisions always has to involve pain, sacrifice and self discipline. It is HARD to be smart with your money - that means giving up the joy of spending money and having fun.



An article posted recently on the MintLife blog (How to Keep Your Willpower Muscle from Wearing Out) is a perfect example of how this lie permeates every article about personal finances. The article starts with the assumption that good money choices have to be difficult ... 

... but here's the second reality check. Good financial choices don't have to be hard at all. In fact, when you are making smart financial decisions, your life is better in both the short run AND the long run. Your decisions are easier and you wind up with more of whatever is most important to you - a better quality of life.


The first step to affecting positive change with regards to your spending is to accept your spending for what it is. That actually means you must KNOW what it is, not have some fuzzy idea about it.

Track your spending or use a financial tool to do the work for you, but don't try to put that spending into the context of a "budget." Budgets always involve pain and sacrifice. That means that while you might be tracking your spending, each transaction is also being judged as "good" or "bad."  

It is that judgment that causes the problems, not the tracking. Of course, the judgment eventually causes you to give up on the tracking.


Rather than focus on the absolute judgment of "good" or "bad," just work to make your spending decisions "better." Even if they are only a little bit better today, you are still making progress. A little bit of progress or a lot of progress is still moving in the right direction so there is nothing for you to beat yourself up over.

Even if you don't make any progress today or even make a slip, it's not the end of the world. The work you did yesterday and the day before still has you on track. Just make an effort now to move back in the right direction.


It's not willpower that you need to take the first (and most important) step towards better financial decisions. You simply need to pay attention ... and be nice to yourself and accepting of the situation for what it is.

Doesn't that seem a lot easier and less stressful than mustering all this self-discipline and willpower to resist the temptation to do what you are naturally wired to do (seek short term pleasure)?


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Pain Without Gain

Written by John D. Buerger, CFP®.


John Buerger

A few weeks ago I posted "Gain Without Pain" with a small rant against the "No Pain, No Gain!" mantra and the wrong-headed implication that people should seek "more pain" in order to guarantee "more/better gain."

Making good daily spending decisions doesn't require a budget or the pain, sacrifice or self-discipline that comes along with it. You DO need a good cash flow management system - one that focuses on Substitution - and I created the Cash Flow Hydrant™ and our unique Wealth Health process to do just that.

That's all well and good, but there is another potentially disastrous mantra that permeates the mainstream financial media (what I like to call Financial Pornography). According to them, the only way to build wealth is through stocks, bonds, mutual funds and maybe some real estate.

That's ALL they talk about and that is just plain wrong.


Cash Flow

The surest and fastest way to build wealth is by doing a great job with the money slipping through your fingers every day.

No brokerage account is required.

What's even better about focusing on cash flow rather than Wall Street is that you have complete control over your results with cash flow. You have no control over what the economy or the stock market does. You can ignore all those wild swings in the market (in both directions) and cut down on the needless stress in your life.


I have purposely avoided using the term "invest" so far in this post because Financial Pornography outlets don't provide news and information on investing. They just serve up the latest gossip on speculation.

There is a huge difference.

Investing is the act of committing a resource to an asset with expectations that the asset will become more productive because of those investments. Speculating is the act of buying something today with the hope that the price people are willing to pay for it will be higher tomorrow. (Read Warren Buffet's 5 Rules for Investing for more). 


The Speculation Cycle is endless in it's delivery of pain through stress.

The markets go up and you become anxious that they've gone too far, or giddy with anticipation of how you're going to spend your paper profits (not a good idea, by the way). It feels good in a way, but it is sensational and does create stress, especially since human nature is to compare personal performance with everyone else ... and somebody else is going to be doing better than you are.

Then the market corrects - often by a substantial amount. That stress increases as all your paper wealth evaporates and you have to say goodbye to those things you were hoping to buy some day with your phantom gains.


When you add all the fees and transactions costs of traditional broker accounts to the inherent human tendency to get in and out of the market at precisely the wrong time (stress induces poor decisions, by the way), the net result for a vast majority of "investors" speculators is that they end up making very little (if any) money. Research from Dalbar and Morningstar (among others) confirms this tendency.

There is a better way. It starts with a focus on cash flow first. Then as you begin to have money that is saved up, you can and should invest it, not speculate with it. Turn off the TV and unsubscribe to all those financial pornography rags. They will only result in more pain without gain.

Instead, focus your time, money and energy on creating more of whatever is most important in life to you. Your family will thank you for it and you're likely to live longer, too.


We can help you prioritize your goals and scope your focus.
Learn more. Schedule a Free, no-obligation 20-minute consult today!

Call 805-476-0333 or use the "Book Appointment Now" tab on the bottom right of your screen.

Financial GPS 01

Written by John D. Buerger, CFP®.


John Buerger

Being strategic and intentional with your money is actually pretty simple .. and making great financial decisions can really improve your quality of life.

The first of the Five Planning Questions is to know "Where You Are" financially. There are hundreds of online tools, websites and software programs that are designed to help you with your financial GPS. Unfortunately, they all are missing the mark in a few critical areas. I'll discuss the biggest problem here and save the others for future posts.


The first, and biggest challenge you face is the framework you use to make almost every daily financial decision. Specifically one big, hairy number drives EVERY decision. That number is your annual income.

If you could just forget this one number and replace it universally with a different version of the same thing, your decisions (and quality of life) would be so much better.

Let me explain.



Let's say your family brings home $50,000 per year (median household income). You wear this $50k like a badge. Even though we've all been told that it's not healthy to let your income define who you are, you still let it define what you have.

Now let's also suggest that today you are faced with a $15 lunch decision: You woke up late this morning and are debating whether you'll take the time to pack a lunch for work or go out to eat instead.


While you probably don't think about it consciously (almost all your decisions are done emotionally and subconsciously), your brain still weighs both sides to make the decision.

It balances the cost of packing the lunch (10 minutes of your time on a morning when you're rushed) with the cost of the alternative ($15 out of your pocket to pay for the meal). You will choose whichever "costs" less.

But those cost calculations are warped by how they are framed.


The time it takes to make the lunch is at a premium. After all, you woke up late so there isn't a lot of time to spare [NOTE: you will likely also over-estimate how much time it will take] so the cost of this option is inflated.

On the other side, your brain needs something to which it can compare this $15 purchase. It picks the one number most readily available - your annual salary.

"I make $50,000 a year. Can I afford this $15 purchase? $15 versus $50,000? That's a no-brainer. Save the time and hassle and buy the lunch today. It'll be a treat ... and I can afford it."


Your brain just took a dangerous short-cut.

It disregarded whether or not you actually have any of that $50,000 of annual income left after all the other spending choices you've made. It over compensated for the cost of the time to make the lunch (partly because that isn't a whole lot of fun) and "rewarded" you (It'll be a treat) for waking up late.

Nice job!


There has yet to be an application or website on the market (yes, we're working on developing this - expect release later this year) that allows you to re-frame that annual income number. For now, the solution is simple even if it is rather old school.

Take your annual income and divide that number by 365 days. The resulting number is your Daily Income. For every $36,500 in annual salary, you have $100 a day that you earn. This is before taxes or any other obligations (like rent, car payments, utilities, etc.).

Generally speaking, for most people the amount of money they have control over for things like food, clothing or entertainment is less than 20% of gross income. So for every $36,500 in annual gross income, you only have $20 a day available. That's $20 for the whole day.

Take this Daily Control Spending number and write it down on flash cards, sticky notes or whatever you have available and post it where you'll see it every day. Memorize this number and try to forget your annual salary figure. 

That will change the decision you make the next time you wake up late and wonder if you should buy your lunch or pack it.


We can help you prioritize your goals and scope your focus.
Learn more. Schedule a Free, no-obligation 20-minute consult today!

Call 805-476-0333 or use the "Book Appointment Now" tab on the bottom right of your screen.

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