Facing the Enemy
Behavioral finance experts have made it crystal clear that when it comes to managing money, we're irrational. Our decisions are influenced by deep-rooted emotions and perceptions that are hard to overcome. I've seen this while working with people in debt, and what I've learned is that one's lack of financial empowerment has a great deal to do with his or her personal insecurities, fears, lack of confidence, overconfidence, false perceptions, and misguided goals. As Napoleon Hill wrote in the classic book Think and Grow Rich, "Both poverty and riches are the offspring of thought."
Searching for answers as to why personal finance is so difficult to digest, so tough to triumph, has been a preoccupation and intellectual pursuit of mine for the past couple of years. Almost immediately after my first book hit the market, the economy went into a fetal position. We slid into a recession, and many of us felt we had gone back to the drawing board. We didn't just lose money. We lost our bearings. Many of the goals we had identified, chased after, and hoped for, vanished. For me, it was an extremely busy time, fulfilling editorial assignments, answering people's questions on- and offline, and going on TV to break down the stock market crash, the housing debacle, and to offer shreds of positive news in this wretched economic environment. I interviewed economists, fund advisors, investors, entrepreneurs, cab drivers, therapists, and, most important, everyday Americans for their insight into where we went wrong, what they wish they'd known, and their hopes for the future.
Sure enough, consumers could tell you exactly where they went wrong. They hadn't paid enough attention to the "signs," they trusted the wrong people, they didn't work hard enough, they got scammed, they were lied to, they had too much optimism, and so forth. But why bother with the past? Putting the pieces back together was the main issue at task now for most people.
To do this, you need to understand the behavioral and disciplinary commitments needed to build a financial foundation based on reason and personal aspirations. At this stage in one's life, years after college and working the grind, making plenty of mistakes, learning the hard way, and experiencing the real world first hand, your financial curiosities have evolved and tend to be more philosophical and open ended than technical. It's not so much about definitions or calculators. You're wondering how to move into a more elevated world of managing your money to bring security for today and the rest of your life. It is about money, but it's more about you.