Creating mindfulness through your bank account
If you’re anything like me, you’ve probably had to learn some harsh truths about what it takes to create good habits when it comes to saving money. If you’re a lot like me, you’re still learning them.
Morgan Housel is a partner at the venture capital firm, Collaborative Fund. In 2020, he wrote a book called ‘The Psychology of Money’, which has gone on to sell over 3 million copies worldwide.
This isn’t a book about what stocks to pick, or whether you should invest your life savings in crypto (don’t), or choices between retirement annuities or pension funds.
It’s a book about human behaviours. It tells the story of 19 different people and their stories. Because ultimately your daily actions and choices are far more likely to have a significant impact on your long-term financial wealth than anything else.
In my 20s, and being totally honest, my early 30s, the process of reviewing my bank statements was a painful one. And, as a result, it was one I would frequently put off and ignore.
A representation of my bank account in my 20s.
Why was it painful? Because regardless of a few positive financial behaviours (pension investing, credit cards paid off, occasional ISA investments), the prospect of combing through my financial transactions on a regular basis forced me to confront the truth about my spending habits. This process makes it harder to lie to yourself, because there is a paper trail of your pub-dominated actions.
Keeping track of your spending is widely regarded as one of the best ways to start achieving a financial goal, because it helps you to stick to a budget. This isn’t a revelatory concept, for most.
“Singer Rihanna nearly went bankrupt after overspending and sued her financial advisor. The advisor responded: ‘Was it really necessary to tell her that if you spend money on things, you will end up with the things and not the money?’”
- ‘The Psychology of Money’, Morgan Housel
But it can be a painful concept.
When you review your monthly financial transactions, there are no stories in there - just facts. I was choosing to spend a large portion of my money on beer, food, and expenses associated with socialising. And, as a result, I was also actively choosing not to save that money for Future Chris. Whilst some of these decisions created fun memories, many I’ll always cherish, the reality was that many of them didn’t. And facing that reality hurt. It forced me to reflect on the decisions I was making, and how they were impacting on potential future financial goals I might like to achieve.
What could I do to start working towards those goals? Well, it was simple. Even if it was painful. I started tracking my monthly expenses, and forcing myself to be more aware of the regular decisions I was making by holding myself accountable.
I could still choose to make those same decisions. But armed with this information I now had more conscious consideration when contemplating another beer. Perhaps I might pause and ask myself ‘is this worth it compared to the goals I’m setting for myself’? Sometimes the answer is still yes. But, these days, it’s also sometimes no. Tracking the behaviour creates the awareness of it. And this creates an opportunity to change it.
It’s helped me to become more intentional about my behaviours, which in turn allows me to consider my decisions, and therefore provide me with small, regular opportunities to move towards a goal.
The great Roman philosophers of 2,000 years ago, the Stoics, thought a lot of what it means to be intentional. They thought about it because they were obsessed with understanding what it means to live a good life. What it means to achieve the goals that we want to in life. One of the leading Stoic minds, Epictetus, said this:
“First say to yourself what you would be; and then do what you have to do.”
It’s important to have goals that we want to achieve in life. Goals are what keep us moving forward. They give us a sense of purpose.
But unfortunately we also all have behaviours that might be working against us moving towards those goals.
Perhaps it’s a social media scrolling addiction first thing in the morning that stops you from exercising. Or it’s choosing the latest Netflix reality show instead of picking up that book you’ve heard so much about. Or it’s having that extra glass of wine that means you won’t sleep as well as you’ve always wanted to.
The point is not to berate ourselves for these behaviours. The point is simply to be aware of them.
We need to create intentionality around our behaviours in order to change them. This means being aware of, and taking responsibility for, the fact that our behaviours are choices that we are making.
“Learn to ask of all actions, ‘Why are they doing that?’ Starting with your own.”
Working towards our goals - creating a purpose for ourselves - is built on a series of long-lasting behaviours.
Our behaviours can either take us towards or away from our goals.
But we can only identify the direction that our behaviours are taking us, if we keep track of them. If we are constantly aware of them.
We need to regularly review the transactions of our lives.
When we simply ignore our behaviours, we are choosing to run the risk of running down our bank balance out of ignorance - leaving us feeling empty.
Monitoring the transactions of our lives can be painful. We see trends and actions that we’re not proud of.
But by being aware of them, we have the option to change them in the future. To make different decisions.
Seeing the fruit of these new decisions can be incredibly re-affirming. We see the return on the investment of our changed behaviours in a very real way. Physically, mentally, in our relationships with others and ourselves.
Moving towards your goals starts with creating intentionality.
How to track the transactions of your life:
Journalling: Set aside time and space with a physical pen and piece of paper to quietly reflect on your behaviours and actions. Write down what you liked about your actions, and what you didn’t. This paper is for you, and you alone.
Talking with a friend: Ask a friend, family member, co-worker, to reflect on your recent decisions or behaviours, and ask for their honest take on your actions. Listen, but don’t react.
Talking with a professional counsellor: The benefits of talking to a professional are that they are truly impartial. You can state your habits freely, knowing that you won’t be judged. And you are paying them to keep a watch of your habits, so they can help you to spot patterns in your behaviours.
Meditation: Find a quiet space, and try to focus on ‘watching the thoughts in your mind’. Don’t react to any thoughts, don’t delve deeply into them - simply watch them as thoughts that drift above you, like passing clouds. And let them pass.