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Cultivating the Ideal Investing Temperament

In my last post I proposed that we aren’t necessarily at the mercy of our emotions when investing.  It’s often assumed that only a lucky few are born with the even temperament that’s ideal for investing, and we’re helpless to change that.  However, there are far too many examples of great, but ordinary investors to assume that only a few freaks of nature have access to the emotional stability needed to invest wisely over a life time.  It’s much more likely that most of us have at least a trace of the necessary emotional stability.  And if we have a trace of it, we can strengthen and use it to improve our investing outcomes.  But how do we strengthen our emotional stability?

Bad Habits

Unproductive investing emotions are like a bad habit you want to break.  I’m talking about bad habits like:

  • Always worrying about the next market crash
  • Panic selling after the market goes down
  • Fear of missing out when the stock market is rising
  • The greedy desire to somehow “beat the market”
  • Chasing after the best performing funds month after month
  • Arrogantly trying to pick a few winner stocks out of the haystack of losers.

Similar to the idea that we’re at the mercy of our investing emotions, the common assumption is that most folks are inherently incapable of breaking bad habits.  It’s a popular narrative on the internet, likely because it attracts clicks.  Here are a few examples:

But you don’t have to look very hard to find details that refute this narrative:

Starting New Habits

While it’s true that many people fail to break bad habits in any given attempt, it’s equally true that many people successfully adopt new habits after repeated attempts over the long term.  Instead of concluding that it’s nearly impossible for us to break bad habits, we should conclude that by continually repeating new habits, we become ever more successful at maintaining them.  This is why John C. Maxwell observed:

  • “You’ll never change your life until you change something you do daily.  Success is found in your daily routine.”

This fact should bolster our confidence about cultivating new and better habits, but how do we go about it?  Some useful techniques from “habit expert” James Clear include:

  • Develop an action plan with specifics like when and where you will do something new or different from your old bad habit.
  • Make a back up plan for when things inevitably go wrong on occasion.
  • Use reminders to keep to your action plan.
  • Reduce the options and decisions involved with your new habit.  More options have been shown to decrease self-control.

Others suggest these additional techniques:

  • Create a reward, even a small one, for each time you complete the new habit.
  • Set small incremental daily quotas or steps to reach larger long-term goals.
  • Avoid blaming yourself if you skip the new habit one time.  If you skipped a day, instead focus on the fact that you successfully completed the habit 6 days in the last week.
  • Share the new habit with a buddy or group.

You can find many real world applications of these techniques in the above links.  Research indicates the time it takes for a new habit to become routine varies by the habit and the person involved.  But research also indicates that, through repetition, a new habit becomes more established and takes less mental effort over time.  The relapse statistics above are good examples.

A Habit to Increase Emotional Stability

While it’s easy to see how these techniques might apply to something simple like flossing your teeth, it’s perhaps less clear what new habit would replace your existing emotional instabilities*.  Mindfulness is a habit that promotes and supports emotional stability.  When we’re mindfully observant of the current moment, and not judging it or fantasizing about the past or future, we are more emotionally balanced and less reactive.  I’ve written a lot about how and why mindfulness works this way, so I won’t repeat it here.  Here are a few articles, if you want to delve into the subject:

If we want to replace existing emotional instability with more emotionally balanced mindfulness, we must practice the daily habit of meditation.  I purposefully use of the word “practice”.  That’s because mindfulness is not something you can just decide to do.  Meditation literally practices a state of mindfulness and emotional balance, just as we practice to become proficient at a sport or a musical instrument.  Without regularly practicing meditation, your chances of ignoring the next stock market crash are about the same as your chances of playing “Purple Haze” the first time you pick up a guitar.

The habit building techniques I’ve mentioned are highly relevant to practicing meditation:

  • Develop an action plan with specifics like when, where, and how long you will meditate.
  • Make a back up plan to meditate at night, if something interrupts your normal morning meditation.
  • Put a meditation cushion where you will trip over it during your typical morning routine.
  • Choose one specific type of meditation and stick to it for a few months.
  • Congratulate and celebrate yourself for meditating each day.
  • Start with shorter meditation sessions and increase the session time as you’re able.
  • Focus on how many times you meditated that week, and not whether you missed a particular session.
  • Meditate with your significant other, join a meditation group, or attend a retreat.

Reality Check

My core contention here is that by regularly practicing meditation you can make “riskier” investment decisions that have historically performed better.  Think stocks instead of bonds for a classic example.  But how do you know, when the time comes, that your newfound emotional equilibrium will stop you from acting recklessly?

First, there are no guarantees with meditation or any other technique.  Even with the same amount of diligent meditation, one person might balk and panic sell in the next market crash, while another person might resist the temptation.

Second, this is not a pass/fail test.  As you practice mindfulness through meditation, you’ll likely experience a steady improvement in your emotional equilibrium and your ability to resist old bad habits.  We’ve seen that more repetition of almost any new habit reduces the frequency of relapses.  Perhaps, after meditating daily for a year, you’ll be able to weather a 20% market crash.  And perhaps, after two years of meditation, you’ll be able to weather a 30% or even 40% crash without panic selling.  What ever the improvements you reap, it probably won’t be that quantitative.  But the important point is: the more you practice meditation, the less emotionally reckless you’ll likely act in any given future situation.

Third, most meditation involves some form of objective observation of your own thoughts and emotions.  So, the more you meditate, the better you’ll be able to judge your own tolerance for various levels of investing risk.

Expect the Unexpected

I’ve experienced first hand that the daily practice of mindful meditation can cause some surprising incremental life improvements.  I took up meditation with the vague sense that it might help me feel more “balanced”, though I wasn’t sure exactly what that meant.  While this turned out to be true, meditation also helped my life in many other unanticipated and concrete ways.

For example, I used to take Ibuprofen four to five times a week for general muscle soreness, headaches, and the like.  I took it so regularly that I used to call it “Vitamin I”.  Now I usually take pain relievers a few times per month at most.  For me, meditation didn’t take away my pains.  But now, I don’t dwell on them or augment them with an internal dialogue about “how much it hurts”.  When I can be mindful about it, I realize that most of my pains are less substantial and consequential than I used to assume.

If mindfulness can improve something as seemingly tangible as pain, imagine how it might help with those whiffs of anxiety when your portfolio’s value declines by 5% in a single day.  If you suspect I’m some sort of oddity, you can find all sorts of remarkable stories like this at Everyday Mindfulness.  Through mindfulness, many people have found comfort and help in dealing with mental illness, depression, mourning, chronic pain, cancer, imprisonment, drug addiction, violence, sexual assault, and much more.  The goal of being a calmer investor is pretty trivial as compared to most of these success stories.

What’s the Problem?

Perhaps you already feel that you’re pretty emotionally stable, so this all seems unnecessary.  After all, you probably don’t scream at co-workers for not refilling the coffee pot or live in mortal fear with every twitch of your portfolio’s value.  But that’s a pretty low bar for emotional stability.

Set an alarm for half an hour after you finish reading this.  When the alarm goes off, stop and think about what was just going through your head.  You’ll probably find that your current bad habit is to engage in a near constant self-barrage of thoughts that are laden with positive and, more often, negative emotions.  If you could handle that barrage of emotions better by practicing some simple techniques, don’t you think you could be even calmer than your already stoically bad-ass self?

Another reason you might be resisting meditation is because it’s yet another time commitment that sounds difficult to keep up.  I won’t lie, most regular meditators will tell you that meditation is difficult to fit in at first, and it sometimes feels like hard work.  If calmer investing were the only benefit of meditation, then it might not be worth all that effort.  But of course, I’ve already given some examples of how meditation will likely bring you many more wide-ranging life benefits.

Not Deciding is Still A Decision

Moreover, changing your emotional investing habits is probably easier than finding the “best” investment strategy, mostly because the “best” strategy doesn’t even exist for reasons I’ve explored in past articles:

Yet most people ignore these facts and instead concentrate on fiddling with their investment portfolios and tweaking their asset allocations.  They attempt to match their portfolios to their “risk tolerance”, when they can’t really predict how they’ll react to future changes in their “optimized portfolio” values.  Meanwhile, they almost unconsciously assume their emotional habits are “impossible to change”.

Finally, let’s compare mindfulness to the conventional alternative for dealing with unproductive investing emotions.  We’re commonly advised to make “rational decisions” today to protect against your emotionally reckless selves tomorrow.  The most common “rational decision” is to add relatively poor performing, but historically less volatile “ballast” to your portfolio, with the prime example being government bonds.

But is this “ballast” approach really likely to reduce your emotional recklessness tomorrow?  Consider the maximum draw downs since 1972 of a 100% stock portfolio as compared to the often recommended, and less volatile, portfolio of 60% stocks with 40% bonds as ballast:

  • 100% U.S. Stocks – 50%
  • 60% U.S. Stocks/40% U.S. Bonds – 31%

I think a lot of investors probably sold when the draw down reached 30% and didn’t wait for it to get anywhere near 50%.  The conventional wisdom of adding ballast to portfolios simply ignores the reality that many people will panic and make emotional mistakes anyway.  The advantage of mindfulness is that it works just as well in concert with these more standard approaches, if you wish to use it that way.  So, mindfulness might help you make it through the next market storm with less ballast than you might have otherwise needed.

You may have been able to avoid emotional investing mistakes like panic selling and chasing performance in the past.  But for many investors, the worst conditions the markets will produce in their lifetimes lies in the future, not the past.  So, the more you work on your emotional stability, the less chance you’ll make expensive emotional mistakes in the unpredictable future.

*Don’t be offended if I assume you have “emotional instabilities”.  I use this term to describe a near universal human condition that is categorically different from being “crazy” or even “neurotic”. 

Are Investors Really at the Mercy of Their Emotions?

You may have noticed that a great deal of investing advice focuses on our emotions as investors rather than the mechanics of investing.  Here are some example articles:

Articles like these often include quotes from Warren Buffett.  Two of the most common are:

  • “The most important quality for an investor is temperament, not intellect.”
  • “The key to [investing] success is emotional stability.”

Because Uncle Warren is such a legendary investor, it’s assumed he must have been born with the ideal investor’s temperament, while every investor who’s not a multi-billionaire must have been born an emotional moron.  So, we’re advised not to invest like Warren Buffett because we don’t share his innate temperament.  This sort of advice seems to assume that our emotional instabilities are genetically determined and immutable, which prevents us from ever becoming a great investor like Buffett.

However, if you look closely, this conventional advice is contradictory at its heart.  We’re being told that we should make rational decisions today (like buying bonds and dollar-cost averaging) to guard against our inevitable emotional recklessness tomorrow.  But if we can be rational today, don’t we have at least a trace of the character needed to be rational tomorrow?

If you’ve read any of my articles, you know that Mindfully Investing is about taking concrete steps to moderate the role of emotions in our investing decisions.  So, I certainly disagree with the conventional suggestion that, because of our emotions, the most direct avenue to prudent investing is full of self-imposed traffic barriers and speed limits.  Guarding against unproductive emotional states that may arise further down the road clearly has some value.  However, I see no good reason to completely abandon more straight-forward options like deciding to drive prudently in the first place and then driving prudently in actual practice.

Great Investors Live Among Us

Warren Buffett was apparently born with the ideal temperament of a great investor, but how common is that?  Here are a few examples of ordinary people who saved and invested consistently in the stock market and retired as multi-millionaires.

Grace Groner – One of the most famous of the ordinary, but great, investors was covered by a Wall Street Journal article, which starts this way:

 

  • “She lived in a tiny one-bedroom cottage in Lake Forest, Illinois.  She bought her clothes at rummage sales, didn’t own a car and worked most of her life as a secretary for a pharmaceutical company.  Yet after her death at age 100, Grace Groner left Lake Forest College a gift of $7 million to be used for scholarships.”

What was Grace’s investing magic?  In 1935, she bought three $60 shares of Abbott Laboratories stock and never sold them.  She reinvested all the dividends in more of the same stock.

The Wall Street Journal article treats her accomplishment as either a mistake, saying she shouldn’t have “concentrated her wealth” in one company, or as luck, because she could have just as easily picked a company that eventually went bankrupt.  But I think the article glosses over the most important points about Grace Groner, which are:

  • Her initial outlay of $180 was not a huge gamble.  Adjusted for inflation, it’s equal to investing about $3,300 today.
  • She held the shares through thick and thin.  I’m sure there were many times when Abbott Labs looked like a dog stock, and if she had sought advice, plenty of “experts” would have told her to sell.
  • She relentlessly reinvested the dividends regardless of market ups and downs.
  • She didn’t prematurely spend the growing investment, even though that was surely tempting.

Grace Groner is an excellent model of good investing practices described here at Mindfully Investing, except for the fact that she invested in a single company instead of index funds, which weren’t even an option in 1935.

Anne Scheiber – Another example is Anne Scheiber, who started investing in her 40s and turned a $5000 investment starting in 1944 into $22 million by the time of her death 56 years later at 101.  She worked for the IRS for 24 years and never earned more than $3,200 a year.  Unlike Grace, Anne held stocks from over 100 companies, which is about as close to index investing you could get in those days.  Just like Grace, Anne consistently reinvested dividends and rarely sold anything, even through the tumultuous bear markets of the 1970s and 80s.

Ronald Read – One more example is Ronald Read, who was a janitor and gas station attendant that accumulated $8 million dollars by age 92 through classic dividend stock investing.  He started investing somewhere around the late 1950s, which means he was investing for at least 55 years.  Like Anne, Ronald held stocks in over 90 different companies, and like both Grace and Anne, he rarely sold stock and reinvested all the dividends.

The other obvious advantage for wealth accumulation that all these folks share is living a long life, which is something we can’t control completely.  But just remember that a long life span alone is no guarantee of anything.  If you don’t apply prudent investing methods along the way, you can still easily die in debt, even if you live to 120.

A Rare Flower?

It’s assumed that people with a good investing temperament are rare flowers; only a few of us have the emotional stability to be great investors.  But the above examples show that the Ghost Orchids* of investing are more common than normally supposed.  They live and invest quietly among us discreetly disguised as common daisies.

I’d suggest that the vast majority of great investors live, invest, and die quietly and are never written up in a newspaper article or make it on to the evening news, exactly because people like this are almost invisible.  They don’t consume conspicuously or trumpet their investing successes, and they live frugally on modest salaries.  Most of their neighbors and friends probably think these folks are barely making ends meet.

My father was one of these great, but ordinary investors.  So, it makes me wonder how many other fathers, uncles, aunts and sisters are out there quietly and slowing building substantial fortunes.  My father worked as an engineer for about 45 years and consistently saved and invested in large well-known companies.  He retired without much effort at the age of 65.**

My father liked to say, “I buy the stocks of widows and orphans.”, meaning stocks that consistently pay dividends and are relatively safe.  When the value of some Bank of America shares I was holding dropped by more than 80% in 2008, all he said was, “Well, you’ve taken the hit now, you might as well ride it out.”  Both these statements reflect the tenants of great investing, which should be starting to sound familiar: buy valuable stocks, consistently reinvest the dividends, and almost never sell.  My father bought stocks in mostly humdrum but valuable companies like AT&T, Proctor and Gamble, and Wells Fargo and held them pretty much forever.

And you might assume that my father was born preternaturally rational.  He was calm and patient most of the time, particularly with people.  But he was also one of those guys who would scream and cuss like a sailor when trying to make simple home repairs.  We all knew that if my father had gone to fix the toilet upstairs, we would soon be hearing shouts of frustration and the sounds of random toilet parts being thrown around the bathroom.  A great investor doesn’t have to be an emotionless robot.

As Warren Buffett likes to say, methods of the great investor are simple to describe but hard to execute.  Except somehow, all these ordinary investors were able to successfully execute these simple methods, which gives me faith that you can too.

Nature versus Nurture

You can interpret these stories about ordinary investors one of two ways.  You can take the conventional view that these were all rare flowers who were born with the ideal temperament for investing.  Or you can take the view that most people are able to learn a few relatively simple investing methods and cultivate the emotional stability needed to execute them correctly.

What’s your answer when you turn this nature versus nurture question on yourself?  You can either decide that you weren’t born with the “right stuff” and stop trying to invest prudently, or you can decide you have the raw material to become a great investor.  Use this question as an opportunity to start nurturing the emotional changes in yourself that will allow you to become a great investor.  As the Mindfully Investing website makes abundantly clear, I believe that almost everyone was born with at least a shred of the ideal investor’s temperament, and that almost everyone is able to cultivate and strengthen their emotional stability.

To be realistic, no one should expect to become the next Warren Buffet, if for no other reason than most of us aren’t in the finance industry.  Most of us have jobs and lives more like Grace Goner, Anne Scheiber or Ronald Read.  But turning a routine job into $22 million is certainly a realistic goal.

In my next post, I’ll detail some specific ways we can cultivate the necessary emotional changes in ourselves and join the not so elite club of great but unknown investors.

————

* A nearly extinct flower found in just a few places in the Caribbean Islands and Florida.

**In case you’re wondering, I inherited exactly zero when my father died.  So, my investing success is not directly a result of his investing success, other than I’ve tried to consistently imitate his investing behaviors and methods.

The Self-Improvement Myth

Now that we’re nearing the end of January, it seems like a good time for a status check on those New Year’s resolutions.  Or were you one of those people who decided to call them something softer like “goals” or “targets” this year, because that felt less likely to immediately careen into failure?  Some have suggested that people fail in their New Year’s resolutions 92% of the time, although I had difficulty verifying that statistic.  If you’ve already backslid on a New Year’s resolution or two, I suspect the whole “goal” thing isn’t quelling that slowly rising sense of defeat.  I used to repeat this pattern of resolution and failure year after year, until I realized I should just stop making resolutions.  It was my last New Year’s resolution; one of the few that I ever kept.

Drunken Expectations

New Year’s resolutions are the Silenus of the self-improvement pantheon.  Silenus was a minor Greek god of drunkenness and wine making.  He was the step father and mentor to Dionysus, the god of wine.  He was also the champion drinker of all the satyrs.  According to Euripides, Silenus said, “The man who does not enjoy drinking is mad.”

Silenus. The Greek God of Drunkenness and Wine Making (possibly by van Dyck, National Gallery).

New Year’s resolutions are born in a metaphorical, and often literal, drunkenness instilled by the threshold of a new year.  Like an intoxicated pirate crossing the international dateline, we hope sailing into the next calendar year will somehow magically imbue us with a new understanding of our foibles and better self-control.  Our New Year’s Eve inebriation temporarily convinces us that we share the supernatural powers of Silenus, who revealed deep wisdom and even foretold the future, but only when he was drunk.

The Self-Improvement Industry

While New Year’s resolutions can seem comical, do the other gods in the self-improvement pantheon deserve any more serious consideration?  As an example that’s close to home, most of what you read in the personal finance world can seem like just another self-help deity of questionable wisdom.  We’re urged to budget, save more, spend less, track spending, invest more prudently, plan for retirement, optimize our taxes, and more.  And I sometimes feel that my website is just piling on more self-improvement chores for everyone.

And that’s just the god of personal finance self-help.  We’re bombarded everyday on social media, websites, magazines, and television with new ways to eat better, get more exercise and sleep, do better at work, improve relationships, be more time efficient and productive, be more charitable, be happier in general, and achieve “success and wealth”.  My favorite self-help god is “stress reduction”.  Aren’t all these action items part of our stress in the first place?  (By the way, the deity presiding over stress is actually a goddess: Oizys.)

The obvious problem, pointed out by many observers (see here, here, here, and here for starters), is the huge money to be made in helping people become new and better.  The self-help industry has been estimated to bring in $10 billion in annual revenue.  Some self-help advice is clearly absurd and bound to be totally ineffective.  A good example is the “wish for it” method popular in the last decade.  But if the self-help gurus can make it “sound” plausible enough for you to buy the book (or the whatever), that alone propels the industry forward.  None of it needs to work.  It just has to sound like it might work, and that’s sufficient to spur a whole new wave of self-help ideas and programs next year and the next.*

Desire and Suffering

From the perspective of Buddhist mindfulness, ego and desire drive the self-help industry.  Increasingly, it seems like society is pressuring us, particularly through social media, to be more, to be better, to be perfect even.  Becoming better means we’re flawed now, which ignites the desire to correct those flaws.  As I’ve written elsewhere, Buddhists believe that desire is the root of all suffering.

While researching about Silenus, I ran across this article from H. Sanchez on a website called The Ivory Tower.  Frankly, it’s a weird website, and I certainly don’t agree with everything written there, but it contains a compelling non-Buddhist (as far as I can tell) description of the cycle of desire and suffering.  It starts with a Greek myth told by Theopompus where King Midas asks Silenus what the best thing for humankind is, and Silenus answers:

  • “What is best of all is utterly beyond your reach: not to be born, not to be, to be nothing.  But the second best for you is—to die soon.”
Silenus, Dionysus, and King Midas (from left to right) by Poussin.

Like a first reading of Buddhism’s four noble truths, this can sound suicidally pessimistic.  Sanchez’s analysis of Silenus’ answer might also leave you a bit depressed at first.  (I took liberties to paraphrase this a bit to make exactly my point here.)

  • We seek to make things better, but where is better to be found?  Does not every failure to achieve bring us suffering?  That bitter taste of knowing that the world was, once again, too much of an obstacle for us to achieve what we wanted?  And if we are gifted with the fortune to achieve such pursuits, how long will it take until we are no longer satisfied?  Is it not only when we have lost what is good that we know to acknowledge it?  Is it not only when we again feel suffering that we become aware of what we no longer possess?  Will not the pursuit of that which is better, when finished, simply be replaced by a new pursuit, thereby never giving peace to our quest?  Is it, therefore, not clear that suffering is the only constant we can ever expect?

It’s the constant cycle of striving and failing, or alternatively, succeeding and then losing satisfaction with the success, that drives most of the suffering from the self-help craze.  Cut off the cycle at the point of desire, and you have an opportunity to experience something new.

Acceptance

How do we cut off desire?  The mindful solution is cultivating acceptance of the current situation and acceptance of yourself as you exist right now, flaws and all.  Consider any of your problems, and you can easily imagine them being worse.  Perhaps your doctor says you need to lose some weight.  But if you’re 40 pounds over weight, that’s better than being 100 pounds over weight.  Being $40,000 in debt is better than being $100,000 in debt and losing your house to the bank.  In reality, if you’ve avoided the worst situations, you can’t be a total basket case.  We all have low points, and some of them are indeed very low.  But the low points can only exist relative to many other higher points.

Mindful acceptance comes from compassion for yourself and others.  For an explanation on the the linkage between mindful acceptance and self-compassion, see this article at Greater Good Magazine.  In brief, while you may think your “terrible” for being 40 pounds overweight, the only thing that makes you “terrible” is your own judgment and criticism of yourself.  Mindfulness is about letting go of judgment, which allows you to better appreciate and like yourself.

You’re probably thinking, “I will certainly be better off when I try to improve myself versus simply giving up.”  The Buddha is supposed to have said that if a man comes and cuts off all your limbs, you should love him in return.  Personally, I’d run away if some guy approached me with a saw and an evil look in his eyes.  I would take action instead of giving up.  Compassion for yourself and others is the best gauge of when to take action, particularly when acting will reduce suffering.

Here’s an example from my life illustrating this utilitarian type of acceptance:

  • Relatively early in my career, my then employer offered to pay my full tuition for a master’s degree within two years.  They said that after I got the degree, I would be promoted two levels, but I had to continue working full-time as well.  They made the same offer that year to another guy at a similar level in a different department.  Though the offer was tempting to me, working full-time, going to classes at night, and studying on weekends sounded like a miserable existence.  I turned the offer down.  This was well before I practiced mindfulness, but I felt I could accept wherever my existing career path might take me.  The other guy took the offer.
  • Over the next two years,  I continued to work hard, but not crazy hard.  I was promoted two levels anyway because of my performance, and I got two healthy year-end bonuses.  The other guy was indeed miserable, and he didn’t hide it well.  Distracted by getting the degree, his work suffered.  So, he didn’t get any promotions or bonuses in those two years, and he eventually quit in frustration.  I don’t know whether he ever got the degree or had to pay for the rest of the tuition.

Of course my story echos the myth of King Midas and his golden touch.  Be careful what you wish for, because it’s hard to predict the future.  Striving for something is no guarantee you’ll obtain it or that it will produce the desired result.  Striving less may produce less misery along the way and may also have a positive outcome, but likely not the outcome you first desired.

King Midas by Tournier

Less striving alone is not enough; the key is acceptance.  If you decide not to strive, but can’t accept your current situation, you’ll have the added misery of regret.  Mindfulness practice leads most people to paradoxically conclude that “improving” yourself is easier after you accept the current situation and compassionately accept your existing flaws.  With acceptance, the decision to change some aspect of your life is less permeated by anxiety and the fear of “bad” consequences.  Maybe you “succeed”, or maybe you “fail”, but your mental health doesn’t hang in the balance.

Self-Help by Any Other Name

I’m well aware that the idea of mindful acceptance sounds exactly like one of those self-help bromides.  However, I think there are a few important differences between mindful acceptance and your typical self-help advice.

First, the idea of avoiding desire through mindful acceptance started 2500 years before the self-help industry ever existed.  The problem of self-improvement was not created by recent cultural developments, it’s just a very old problem of human nature in a new form.  And in my view, no one in 2500 years has arrived at a better solution than mindful acceptance of your current situation, yourself, and your existing flaws.

Second, you most definitely don’t have to purchase anything to become more mindful.  There are more than enough free resources on the internet to guide you to a much more mindful existence.  You don’t have to join a cult, or a religion, or even a club.  If mindfulness is just another form of self-help, it’s the worst kind possible for folks in the self-help business.

Third, if taught properly, mindfulness is never held up as a panacea or a cure-all.  There’s no illusion that your desires and suffering will completely cease.  Mindfulness does not let you spike the ball in the end zone of “success”.  Most self-help guides play down the limitations of their techniques, because limitations don’t sell books and seminars.

Most importantly, mindful acceptance can be usefully applied much more broadly than most self-help techniques.  Acceptance helps with even those things you have no control over.  There are simply some problems in the world that you can’t improve your way around.  Disease, catastrophe, and accidents, are just a few of the problems that no self-help guide can solve, although they may try.  Steve Jobs, for all his self-control, ambition, success, fame, and fortune, still couldn’t avoid dying of cancer at the young age of 56.  The practice of mindful acceptance will equip you to better manage (not solve) the hardest problems in life in a way that’s completely foreign to most self-improvement methods.

Taking the “Self” Out of Self-Help

Contrary to the roar of social media and the internet, not everything is about you and whether you succeed or fail.  The world will still revolve if you decide to expend all your intellectual and emotional energy on your goals, your feelings, your success, your failure, and your everything else.  The grapes will still ripen, and the planets will still wander.  And until your last day inevitably comes, you’ll still be here in the world regardless of all these desires and concerns for your future self.

Because you’ll be here regardless, why not nudge yourself out of the way and enjoy the view?  Mindful acceptance allows us to turn our mental gaze away from ourselves.  If you’re not so busy judging yourself all the time, you can turn your attention to other things, some of which may be more productive.

The Self-Improvement Myth

Theopompus also wrote that Silenus, in his drunken wisdom, told King Midas about a far continent called Meropis.  Among other things, Meropis was:

  • A land where there are two rivers, one named Pleasure and the other Grief with trees along the banks of both that bear fruit of contrary qualities.  Those that grow along the river of Grief cause anyone who eats them to shed so many tears that he melts into laments for the rest of his life until he dies.  But he who tastes from the trees growing by the river Pleasure loses all his desires.  Then he is slowly rejuvenated, going through the stages of life in reverse order and dying after becoming an infant.
Midas’s Feast in Honor of Dionysus and Silenus (by Valckenborch, Pushkin Museum). Silenus Reveals His Drunken Wisdom to Midas.

Eating the fruit from either the trees of Grief or Pleasure sounds less than ideal.  I’d prefer not to lament for the rest of my life, but I don’t want to grow into a baby either.

I interpret the myth as saying you have to choose one river or the other.  The self-improvement craze wants you to forever navigate the river of Grief consuming fruit that causes self-centered striving to improve, regret when you haven’t improved, and eventually, dissatisfaction with your accomplishments.  At least navigating the river of Pleasure involves ending your desires, which will free you from the miserable cycle of striving, and if Silenus is right, perhaps rejuvenate you.

Many scholars think that Theopompus was using Meropis as a parody to ridicule Plato’s earlier story of Atlantis.  Theopompus may have been showing that Plato’s story of Atlantis was too idealistic to be relevant for the real world.  More complex interpretations exist.  We may wish for a land where our decisions are as simple as navigating exclusively the river of Grief or the river of Pleasure.  But nothing is that clear-cut in real life.  We can try to avoid desire and stay on the river of Pleasure, but we may at times surprisingly find ourselves transported to the river of Grief.  We may choose to strive for improvements for a while on the river of Grief, only to find we’ve lost our appetites, and we gently return to the river of Pleasure.

We can’t completely eliminate all our desires and suffering.  Further, we have to pay at least a little attention to ourselves and where we are going, which is easy given the ready supply of self-concern in the world.  Yet, by cultivating mindfulness and acceptance, we can avoid much of the self-inflicted misery and pointless striving that is so often promoted by the self-help industry.

 

* Rest assured that Mindfully Investing isn’t making any money from you.  I put a few ads on my Guide to Personal Finance Blogs, mainly to learn how it all works and in an attempt to pay for some of the software I’m using on the guide.  But I’m well shy of the traffic levels needed to receive an actual payment from those ads, and I have no plans to try to monetize the primary Articles and Blog at Mindfully Investing.

The Mindfully Investing Score Card

I started the Mindfully Investing website mainly because a lot of widely available “conventional wisdom” or “standard advice” offered to individual investors seemed suspect or even downright dangerous to me.  By applying mindfulness principles to my own investing approach, I often came to conclusions that were at odds with much of this standard advice.  Now that I’ve generated nearly a hundred articles and posts on a wide range of investing topics, it makes sense to summarize some of the Mindfully Investing findings that depart from key concepts of the conventional investing cookbook.

It also seemed like a good excuse to work on my infographic skills, which I’ll admit are still pretty dismal.  So, I created the Mindfully Investing Score Card shown below.

It’s important to realize that this Score Card comprises just 11 of the most important, and perhaps surprising, Mindfully Investing conclusions that conflict with commonly offered advice on the internet and in the media.  (I guess I could have made a “top 10” list, but I couldn’t bring myself to further prune this list of topics.)  There are many other aspects of the Mindfully Investing approach as detailed throughout this website that runs counter to some common investing assumptions and approaches.  And as importantly, there are many additional conclusions in my website that are consistent with or support some of the commonly available advice out there.  Trying to “summarize” everything from nearly 100 pages would be pretty futile, so I kept my list to these 11 key antithetical findings.

You may be wondering how in the world I reached some of these conclusions.  The supporting articles of this website provide copious evidence supporting all these conclusions as shown in the “Mindfully Investing Verdict” column.  If you have good reasons to disagree with any of these findings, I invite you to comment on this post.  I’m always open to new ideas.

Ride the Virtuous Cycle of Mindful Personal Finances

As a successful small business owner and early retiree, my life is a good example of the cause and effect between the daily practice of mindfulness and personal finances.  From my perspective, it seems strange that the mental and physical health benefits of mindfulness are routinely celebrated, but the “financial health” benefits of mindfulness are hardly discussed.  Perhaps some people feel that bringing up the topic of money cheapens the role of mindfulness in a fulfilling life.  Or perhaps discussing money immediately raises the distracting concern that something is being marketed.  But in the reality of our society, healthy finances are a bedrock foundation that supports almost all other aspects of a fulfilling life including physical health, mental health, relationships, and even our capacity to love.  Let me assure you that I’m not trying to sell you anything, other than an idea.  That idea is:

  • Mindfulness and healthy finances create a virtuous cycle, where 1) mindfulness improves your finances, and 2) improved finances gives you more freedom to pursue a more mindful, compassionate, and fulfilling life.

The steps in this virtuous cycle are shown in this graphic.

Let’s take a closer look at how this virtuous cycle works.

Financial Awareness

Mindfulness is all about awareness.  When you’re mindful, your internal and external senses perceive what’s happening and what you’re doing and thinking at the present moment.  Meditation is the practice that cultivates your awareness in everyday life, just as the concert pianist practices alone each day to prepare for on-stage performance.  Practiced mindfulness promotes awareness in every dimension of your life, and given that money plays some role in all of our lives, personal finances is no exception.  An analogy about financial awareness might be helpful.

In my second year of college, I bought an ancient pale-lime Buick Regal.  Beyond the weird color, I liked to think the car had a roguish personality from the combination of its powerful gas-guzzling engine, an array of failing and broken parts, and a distinctive interior odor.  The radio was held in place by styrofoam and duct tape, only one windshield wiper functioned consistently, and the radiator slowly leaked.  Over time, the instrument panel started to malfunction too.  At first, the gas gauge stopped working.  Then the tachometer and speedometer broke in quick succession.  Finally, even the odometer stopped turning, which I viewed as a plus from a potential resale standpoint.  And because my gas money was mostly sporadic coins from friends bumming rides, I usually had only a vague idea of when and how much gas I’d last put in the tank.  In short, the lack of awareness involved with driving that car was stressful, but it was still slightly better than walking.

Amazingly, a large swath of Americans drive a personal finance car that looks just like my stressful old Buick.  Money is the gas that makes your financial life go, and yet, there’s a startling lack of awareness of the most common money topics.

Emergency fund: Do you have enough gas to make it to the next filling station? – A Bankrate survey found that only 31% of Americans have enough saved to cover six months’ worth of expenses, which is a commonly cited acceptable emergency fund.

Spending: How much gas are you using? – According to a Gallup survey, only 32% of Americans track their household spending in even simple categories like housing, transportation, food, health care, entertainment, clothes, etc.  Most Americans have no “gas gauge” at all.

Waste: Could you get the same stuff done with a more fuel-efficient car? – In a survey by Hloom, 80% of the respondents admitted they wasted money on: eating out, unconsumed food, choices at the grocery store, credit card interest, etc.  While “waste” is in the eye of the beholder, this shows some awareness of the issue.  But this study did not ask people to define the amount of money wasted in each category.  And because few people track their spending, it seems unlikely that most people would be able to report where they waste the most money.

Income: When’s your next refueling and how much can you put in the tank?  Because most people get a regular paycheck and file an income tax return, income awareness in America is relatively high.  Even so, many people have a poor understanding of how their income might vary due to unexpected events such as: a layoff, work injury, sickness, other health issues, or pregnancy.  One study in the American Journal of Industrial Medicine found that for 10 years after an injury, injured workers had annual earnings growth that was $1,200 to $3,700 less than for uninjured workers.

Budget: Are you using more gas than you put in the tank?  According to an NFCC survey, 61% of Americans don’t have a household budget of any kind, which means they have no clear idea of their balance (or imbalance) of income and spending.

Saving and investing for retirement: Do you have some extra gas stored for later?  (Admittedly, my analogy is breaking down a bit because most people don’t store much gas at home.)  A Federal Reserve Study found that the retirement savings was less than $50,000 for 70% of American couples and was zero for 33% of couples.

Net worth: How much gas is in your tank? – In one survey by GOBankingRates, 40% of the respondents couldn’t correctly define personal net worth, which means they probably have only a poor idea of their true net worth.  This casts doubt on the accuracy of studies that provide U.S. net worth statistics based on surveys.

Because of this vast lack of financial awareness, most Americans carry a significant amount of debt and many use credit cards and other loans to maintain a negative net worth.  When I tried several times to drive with negative gas in my Buick tank, the laws of thermodynamics forced me to walk.

As you become more mindful, it becomes increasingly difficult to ignore basic financial parameters like how much money you’re bringing in, spending, wasting, and saving.  To the extent you’re not tracking these things now, mindfulness repairs your faulty dashboard instruments.  Or perhaps more accurately, mindfulness opens your eyes to the instrument readouts that were available all along.  In my experience, the increased awareness of your finances is a near automatic benefit of increased mindfulness.  You don’t have to maintain complex lists, do additional homework, or read a bunch of finance books to achieve this increased awareness, although a bit of record keeping and education is going to help too.

Financial Stress, Fear, and Desire

Have you ever wondered why so many people don’t track simple things like their spending?  Many commentators point to a lack of knowledge or laziness.  But that seems overly simplistic.  In college, I didn’t need an automotive class to know the benefits of a functional dashboard.  Driving blind, whether it’s in a car or steering your finances, is clearly a stressful hassle that most people would prefer to avoid.  Anyone living paycheck-to-paycheck will emphasize the stress involved with that life, and no one that I know accepts stress out of sheer laziness.

A much more likely explanation is that many people are simply too afraid to confront their true financial situation.  The Buddhist monk Thich Nhat Hanh observed:

If you track all your spending, compare it to your income, and prepare budgets and savings plans accordingly, you will relieve much of your ongoing financial stress and trade it for a more responsible new life.  It’s easy to fret that your new life might be one filled with deprivation and hard work.  It’s easy to fear potentially giving up things you desire (rather than “desire”, most people say, “want”, “deserve”, or “need”).  So instead, many people just continue to pursue things they can’t afford and settle for the suffering caused by their financial blindness.  It’s the blurred lens of fear that makes this myopic outlook appear justified.

Mindfulness and Handling Emotions

You probably already know that the birth of mindfulness more than 2500 years ago was sparked by the search for ways to address these sorts of unproductive fears and desires.  So, what is it about mindfulness that helps us get past these emotions and proceed to a more fulfilling life, both financially and otherwise?  Consider how fear and desire occur.

Mindfulness is About Now – First, although we often assume fear is about real and present dangers if you stop and think, most of the time we wrangle with fear it’s not because of something happening right now.  Sure, at some point a mugger may appear and demand your wallet, and you’re fearful in that moment.  But most of the time, we worry about things that might happen in the future, like that new life of potential deprivation and hard work.  Mark Twain was supposed to have said:

Similarly, you can’t really desire something you already have.  Desire is about something you might obtain in the future.  The desire to acquire new things and experiences in the future drives us to do things that are sometimes harmful now, like going into debt.  It’s like chasing a loose $100 bill blown by the wind towards a busy intersection.  Perhaps you’ll get to buy something new and shiny with that Franklin, or perhaps you’ll just get run over.

Mindfulness is all about being fully aware of the present moment as opposed to dwelling on potential future events (or past mistakes).  If you focus on the present moment, it’s actually pretty hard to generate a lot of worry about potential future events or actively desire something that you could obtain tomorrow.

One of the key reasons that people are drawn to mindfulness is to reduce the daily stress related to these types of forward-looking emotions.  Mindful people generally report less fear about the future and more satisfaction with what they already have.  These findings are consistent with my personal experience, talks I’ve had with people who practice mindfulness, and similar reports from books I’ve noted in other articles.  However, you shouldn’t simply take the experiences of others as proof of reality.  The best evidence that mindfulness will help reduce your fear and desires is to try daily meditation for a while, and see if you feel less stress about the future in general.  Or if you already practice meditation, try insight meditation on specific fears you have about money or specific material desires.  I think you’ll observe that many of your money fears and desires assume the occurrence of future events that may never happen.  For example, you might buy a shiny new car assuming that you’ll be happy driving it, only to find it’s a lemon that’s constantly in the shop.

Mindfulness Is Non-Judgmental – Staying in the present moment certainly helps reduce the amount of time we spend worrying about and desiring things in the future.  But life inevitably presents us with unpleasant experiences that we have to address right now.  Mike Tyson is supposed to have said:

As difficult as we find not obsessing about the future, we find it even harder to stay calm when the future arrives in a nasty form.

Mindfulness is also inherently about accepting what is happening now without judgment.  Why is a barking dog a noise, but chirping birds sound beautiful?  It’s your judgment that differentiates.  It’s that internal dialogue about the “infernal racket” of the dog that likely represents 90% of the “problem” you have with the barking.  It’s your cultural conditioning (probably from all those singing birds in Disney movies) that tells you bird sounds are beautiful.  In reality, they’re both just animal noises.

Similarly, what if your car breaks down, and you have to walk on a muddy, slippery path through the pouring cold rain to get help?  (Let’s also say your cell phone is dead for the sake of argument.)  That’s a story of terrible hardship you will probably be telling your friends for weeks.  But when you’re actually walking through the cold rain, what makes it so bad?  It’s your internal dialogue telling you, “This is the worst experience ever!”, “I can’t believe how cold I am!”, and one of my favorites, “I don’t deserve this!”  Yet a multitude of people enjoy a nearly identical experience in the form of extreme obstacle course races.  These people pay entrance fees and find pleasure in navigating obstacles of icy water, mud, barbed wire, fire, and live electrical wires to the point of exhaustion and possible injury.  The key difference is they judge those experiences as fun instead of as a hardship.  When you are deeply mindful, a barking dog can sound like beautiful music!  Buddhism, the origin of mindfulness, is full of such paradoxes.

A story from Eckhart Tolle’s book, A New Earth, about a “wise man” helps to highlight a mindful suspension of judgment.  (I’m sure Tolle got this story from someplace else, but I didn’t try to determine the original source).

The wise man’s “maybe” signifies a refusal to judge anything that happens or may happen, even when most of us would judge these as very momentous events.  In refusing to judge the events, it frees the wise man from much of the emotional turmoil of daily life.

Going back to the Mike Tyson boxing quote, if you get punched in the face by a financial setback, the “trick” is to recognize the pain but not let your judgment about that pain overwhelm you.  If you’ve never been in a boxing match or a fight, this is almost impossible to do.  Good boxers know how to stick to their plan after the first punch is landed in part because they constantly practice for it.  It’s the same with the practice of mindfulness through regular meditation.

Mindfulness Promotes Healthy Personal Finances

Greater mindfulness can provide more tranquility in the face of even extreme financial events.  For example, if you lost all your money, you would likely survive and find some way to rebuild your life.  And mindfulness would support your rebuilding and help you recognize some happiness in that new life.  In fact, “losing it all” is a favorite fiction device, which allows characters to explore new horizons and to become more fulfilled than they ever dreamed of in their earlier lives.  Like most clichés, this idea originates from some deeper truth.  Not caring about losing all your savings surely sounds crazy to some folks.  But if you think of the life of Buddhist monks who forgo most daily pleasures and live in poverty, you recognize there is likely some fundamental truth here.  I’m not advocating giving away all your money.  I’m asking you realize through the help of mindfulness that your mostly exaggerated fears and desires about an uncertain future probably drive your financial decisions more than they should.

So, what if more Americans opened up their eyes to their dismal financial situations and faced their fears about the future?  As an example, let’s look at the first three areas of financial awareness again (emergency fund, spending, and waste) and see what types of changes mindfulness might promote.

Emergency fund:  To build an emergency fund, you’ll probably have to give up or reduce spending on something.  There are loads of ideas out there on where to look for the savings to go into an emergency fund.  One example is to save some gas money by taking a carpool, bike, bus, or train to work a few days a week instead of driving your own car.  Mindfulness will help you appreciate the merits of that new lifestyle.  Carpooling might yeild new relationships with and understanding of your car-mates.  Biking might improve your health.  Riding the bus might allow you more time to read or even meditate.

Spending: Mindfulness will help you be more aware of when you’re spending, what you’re buying, and why.  What if each time you bought something with cash, debit, credit, or check you first stopped and thought for 30 seconds about why you’re making that purchase?  Mindfulness practice can help you make that pause more often and more consistently.  Or imagine if you paused and thought for a while about the life circumstances that led to paying a late fee on a bill and how that could be avoided next time.  There’s a whole array of behaviors that can be curtailed by mindful reminders like this including: shopping for pleasure or to “treat yourself”, buying things that aren’t on a preset list, buying things because of a “sale”, or buying for convenience.

Waste: Mindfulness helps you step outside our culture of consumption.  Advertisers freely admit they constantly attempt to amplify certain emotions in us to trigger purchases.  Common ploys include eliciting greed, fear, altruism, envy, pride, and shame.  Mindfulness helps you become more aware of when this sensory overload may be stoking your emotions.  And have you ever actually taken an hour to study all your monthly bills and automated payments to see if your paying for something you don’t even want?  This often happens with things like internet apps and gym memberships that are used for a while and then forgotten, while the payments continue.  Similarly, bank account, insurance, credit card, cell phone, cable/internet, and even some utility bills can have hidden unnecessary fees or price increases that may have slipped past you.  And many people are eliminating the arguable waste of cable, or television entirely, and finding they enjoy the replacement activities more.

Without detailing the other personal finance areas, you can already see that if your spending and wasting less money, you’ll have greater ability to save, budget, and invest mindfully as well.  All of this will, in turn, increase your net worth.  The Mindfully Investing website is devoted specifically to the area of investing.  So, you can read much more on the particular interplay of mindfulness and investing here and here, if you’d like.  Beyond investing, I can say I’ve personally experienced the benefits of mindfulness in all these financial areas on an almost daily basis.

Healthy Personal Finances Promote Mindfulness

Then there’s the second half of the virtuous cycle between mindfulness and personal finances.  After mindfulness starts improving your finances, you start to reap the rewards of those improved finances.  Beyond the obvious monetary rewards, stable and predictable finances foster more meaningful rewards including:

  • Paying off debt will eliminate worries about wasting money every month just for the privilege of staying afloat.
  • Less debt, balanced income/spending, and more stable finances, in general, will decrease daily stress and worry about finances, which increases your overall mental health, which in turn, boosts your physical health.  This is the true meaning of “financial health.”
  • As you economize, you’ll almost certainly trade some unhealthy expensive habits (think cars, booze, and television) for some cheaper more healthy and fulfilling habits (think biking, water, and outdoor fun).
  • You’ll have fewer reasons to worry about the future in the first place.  For example, knowing you have an emergency fund will certainly reduce your worry about the impacts of unexpected emergencies.
  • You’ll spend less energy desiring things you don’t need or can’t afford.  With a spending plan and budget, you’ll have a clear idea of the trade-offs involved with buying something new.  And you’ll have sorted out more realistic material goals from distracting fantasies.
  • You’ll more readily accept and be grateful for your current material situation because you can compare it to your previous frustrating experience of accumulating junk at the expense of your greater well-being.
  • By saving and investing more consistently, you’ll eventually increase your net worth, which will allow more flexibility and a greater range of life choices.  You can start to contemplate things like: spending more time with family/friends, changing careers, starting a business, working part-time, devoting time to charity, an extended vacation, or perhaps even retiring early.
  • Having greater flexibility and life choices, in turn, allows more time for cultivating mindfulness, which will increase your capacity for compassion and help further improve your relationships.
  • And your greater peace of mind from all of this will allow you to apply mindfulness more deeply to your life, including exploring more fundamental questions about how you expend your financial resources.  This is where the virtuous cycle between mindfulness and personal finances really starts to ramp up.

Mindfulness is Not A Windfall

Mindfulness is not a panacea for all your financial woes.  It won’t magically put an extra $1000 in your pocket each month.  Certain events will set you back regardless of how mindful you are.  If you’re laid off for 6 months, you won’t have a fully stocked emergency fund, because that’s the whole purpose of an emergency fund.  But mindfulness will help you handle these sorts of setbacks and make you more prepared for life’s financial uncertainties.

Further, I think it’s important to note that mindfulness can’t overcome all the overwhelming effects of true poverty.  If you simply don’t have enough to eat and access to decent shelter, much of what I’ve discussed is essentially academic.  But most people reading this probably have adequate food and shelter, which means you have at least a few choices you can make about spending.  And the further you are from a true poverty level, the greater the likely rewards of riding the virtuous cycle of mindfulness and personal finances.

Mindfulness is not something you attain like flipping a light switch.  There’s a wide spectrum of presence in the now and non-judgmental mindfulness.  This ranges from people who occasionally meditate to those who meditate regularly and practice toward being mindful in everyday life, to those who spend huge amounts of time meditating and are mindful of nearly every waking moment.  This far end of the spectrum includes people like Buddhist monks.  Obviously, that level of mindfulness is probably not realistic for most of us.

Fortunately, it’s not an all or nothing proposition.  As you progress along the continuum of mindfulness, you can make incremental improvements to your personal finances and reap incremental reductions in your financial worry and stress.  The idea is to address what you can and work on mindful detachment about things you have no control over.

Further, the cultivation of mindfulness is not “easy”.  It requires regular practice and a recurring commitment as part of a lifelong journey.  I think this is the part that is most disappointing to people with financial troubles.  It’s like saying: to lose weight, just continually train to run a marathon on a moment’s notice.  It can seem like the mindful cure is harder than living with the disease of financial blindness.  I think this narrow view misses two important things.

One, it may seem like it would be easier to simply try to manage your finances better without all this mindfulness stuff.  But that fails to address the underlying emotional issues that contributed to whatever financial problems you are trying to correct.  Everybody has different financial issues that have different root causes.  Why does he splurge spend?  Why is she afraid of making a budget?  Why does she spend money on things that don’t seem to make her any happier?  Mindfulness can help you identify and moderate the emotional causes of these behaviors, which assists you with minimizing splurging, starting a budget process, spending less on frivolous stuff, etc.

Two, a mindful approach to improved finances reduces frustration and relieves stress along the way.  Perhaps you need to postpone a much-anticipated vacation to get your spending more in balance with your income.  Most folks will view that as a huge bummer that could cast a gloomy shadow over an entire summer.  That view and mood mean you’re less likely to stick to the no-vacation plan.  Mindfulness can help you reduce the impact of those emotions, highlight the value of what’s here at home, and plan for a financially prudent vacation in a couple of years.

Conclusion

Even incremental progress toward mindfulness will help you make incremental progress towards:

  • Recognizing harmful behaviors related to your personal finances
  • Correcting those behaviors to improve your spending and saving habits
  • Being more content with your material situation while making these improvements
  • Less catastrophizing about any “hardships” associated with improving your finances.

To the extent you’re able to make concrete changes to your finances, you’ll experience less stress from financial issues now and in the future.  And eventually, a long-term commitment to healthier finances will expand your future financial and life options.

The virtuous cycle of mindfulness and personal finances can seem self-centered.  As a process, it’s all about inspecting your feelings, your thoughts, and your actions and then improving your personal behaviors related to finance to put more money in your pocket.  But this ignores the result of the process.  If you stop at the point where you’ve only helped yourself, you’re missing at least half the benefit of mindfulness.  In my view, mindfulness is like the safety instructions on an airplane.  You must secure your own oxygen mask before trying to help others.  You’re never going to help anyone if you’re passed out from financial hypoxia.  Conversely, if you have healthy finances, you can devote more mental energy to compassion, understanding, and assisting your fellow human beings.  And once the virtuous cycle starts to ramp up, mindful contemplation of your new flexibility and a greater range of life choices will naturally lead you to choices that help others.  I’m not going to try to justify that last statement, because much is already written about how mindfulness leads to compassion and helping.  In my experience, once you become more mindful, helping others becomes the obvious thing to do.