Growth isn’t a fun thing. It sounds fun. The results are fun. Growing isn’t fun. Have you ever heard the term ‘growing pains?’ They don’t call it ‘awesome growing feelings’ for a reason. Growth is painful.
Just like physical growth is painful, financial growth is painful. It’s also not enjoyable. I’m not sure what stage of financial growth you’re in, but I can guarantee it gets better.
STAGE 1: Childhood
The childhood stage of personal finance brings along excitement. In this stage we learn a little about money. We learn that having it is awesome and not having it sucks. At this stage, perhaps we start making a little money. Think of your high school job. You weren’t spending that money on mortgages, utilities, or renter’s insurance. You were spending it on dinner with buddies, movie tickets, video games, or other fun things that kids do.
In this stage of our financial life, we learn some tough lessons. We learn that money isn’t easy to get. We learn that working 7 hours a day at the local Dairy Queen feels like it should be worth more than $186 a week. The pains in this stage are due to our desire to have more money. Some of us never make it out of this stage in our personal finances. We all know someone stuck here. They are a 30 year old couch surfer. They have a pager. They drink Busch Light… or even worse- Natural Light. They are stuck in childhood and they don’t know how to get out.
This stage is really hard to get out of. It requires learning. That’s right, good old-fashioned book reading and podcast subscribing (or blog subscribing? It could work- you should try it). Think of your physical growth from childhood into high school. How did you get there without peeing in your pants, riding a tricycle, and watching Barney all afternoon? You got there by learning things. There’s no way around it. Breaking the funk of Stage 1 requires you to get motivated to take control of your financial life. Get a job and keep it. Find a place to live (even mom & dad’s basement) and pay rent. Buy food. Get consistent. Then start learning.
Stage 2: Know-it-All
Between the ages of 7 and 10 something changes in a kid. All of a sudden, the parents become stupid. How does this happen? When you’re 4 years old, your parents are superheroes. They are geniuses. Then, out of nowhere they become the dumbest people alive. They aren’t as smart as your 8th grade Algebra teacher. They aren’t as smart as your 10th grade Chemistry teacher. They aren’t as smart as your Varsity Football Coach. They are just so dumb… not only that, but as a Middle School/High School aged kid you are now the smartest person you know. You know it all!
I know how dumb that paragraph sounds, but it’s 100% true. At some point in those Middle School years, kids, all of a sudden, know everything. We get to this point financially as well. We read a Dave Ramsey book and all of a sudden we’re a master of personal finances. “Ok, I know I should be doing the debt snowball and taking the steps to financial freedom, and I will. Eventually. But for now, all I want to do is spew my newfound knowledge into the world so that everyone can know that I’m smart and they’re dumb.” (They don’t actually say all of those things… directly).
Getting out of this stage takes a brand new level of self-awareness. This is the most difficult stage to get ourselves out of. The phrase “I don’t know what I don’t know” comes to mind. When you get to this stage, you feel like you’ve read enough. You’ve learned enough. Maybe you’ve even tried a couple of things. So, now you’re an expert.
Typically, it takes something bad happening to get us out of this stage. Maybe not something as bad as a foreclosure, a layoff, or a repossession. Sometimes it just takes a little thing like not being able to negotiate your way out of a $20 late fee on your cable bill. This let-down wakes us up. It allows us to be brought back down to earth. It reminds us that we don’t know it all. Once you realize you don’t know it all, you can move into the 3rd Stage.
Stage 3: Focused Learning
I’m on the boarder of this stage. This stage is the equivalent of going to college. Realizing your lack of intelligence through self-awareness brought you here. You are now grabbing at every piece of information you can find. You read books. You study. You listen to podcasts. You read StopBeingDumb.net. You love it. It’s so insightful.
You enjoy learning.
The best part about this stage is the application. You can try a Ramit Sethi method if the James Altucher method didn’t work. You can try a Tony Robbins method if a Zig Ziegler method didn’t work. You don’t care about being the smartest anymore, all you care about is learning. You want to read a book every day. You want to learn something new all the time. You probably even have a word-of-the-day calendar on your desk.
When you get to this stage, you feel like you’re done. You will just be learning forever. The problem with this stage is the “paralysis by analysis” conundrum. You’ve taken in so much information from people so much smarter than you. Now you don’t know what to do. Should to take a new job like Ramit says? Should you quit your job and start a tech company like James Altucher says? Should you stick it out in your job with new tactics and motivations like Jon Gordon says? You get stuck. You look for more and more information and you end up getting stale and stagnate.
To break out of this stage takes time. It takes energy. But most importantly, it takes decisive motivation. You have to make decisions based on yourself and your gut. You got here through self-awareness. You move onto the next step by self-realization.
Stage 4: Adulting
Adulting is a new fun buzz word floating around. You get here when you’ve read all the books. You get here when you’ve subscribed to all the blogs and podcasts. You get here when you’ve realized that no one really knows what they’re doing. This is the case in both life and personal finance. Adulting is the self-realization that you don’t know what you’re doing AND NEITHER DOES ANYONE ELSE.
This stage of life becomes the auto-pilot stage. You’ve found some things that work. You might have a spouse, a kid, a house, and even a career. You’ve read enough and started action on automating your life.
Financially speaking, Stage 4 is really big. If you’ve made it here, you’re amazing. Like a said, most people don’t even get to stage 3. At Stage 4, you’re saving for retirement through a 401k or an IRA. You’re paying down debt. You’re cutting frivolous expenses. You’re Adulting!
I’m almost to this stage. I think I’m stuck between 3 and 4. I still study a lot. I still get some paralysis. But, I also “pull the trigger” on things a lot quicker than I used to. I make decisions. I do things. AND, I know that the guys writing those books aren’t doing brand new things- they are just really great writers. They did the same thing I did in Stage 3, then they wrote a lot better than I do. They marketed themselves a lot better than I do. And… ok fine, they are smarter than me. What can I say? I’m dumb.
I honestly don’t know how to get out of this stage of life or finances. But I know there’s another stage because I’ve seen people in it. I call them the Grumpy Old Men.
Stage 5: Grumpy Old Men
My father-in-law is one of the people in Stage 5. He’s a nice guy, don’t get me wrong. He just doesn’t care about much. He drinks beer, he eats steaks, and he plays golf. He doesn’t really care to learn much else, but if you catch his interest he will listen to you. He doesn’t really care to invest, but if you can give him a money-back guarantee he’ll think about it. He’s done.
I don’t know if this is a good stage or a bad stage of life or personal finances. I’d hope that by the time I figure out Stage 4 I’ll be able to live the life like my father-in-law. AND, I hope I get there a lot earlier than he did…
Sum it up
Personal finances are tough to learn. There are times when it hurts a little. Putting money away for retirement isn’t fun. Saving money for a vacation rather than charging it isn’t fun. Paying down your mortgage instead of buying a fancy new toy isn’t fun. These are the growing pains of financial freedom.
What I want you to get out of this is: it’s not over. Keep learning, keep trying things, and keep pushing forward. Good things are coming.
If you made it this far, I appreciate you. Leave a comment below and let us know what stage you’re in and how you’re getting out of it.