If I surveyed the average young professional with the question, “Are you good at managing your money?”, the answer would probably be a variety of “No, not so much, or ha good one”. It’s always a bit surprising to me how many colleagues or friends a) don’t have a budget b) aren’t taking advantage of tax favorable accounts c) aren’t saving/investing and d) are in some type of debt (and not the good kind) without a solid plan to get out of it. 

I oddly think a lot about why we’re not super great at managing our money, probably one of the reasons that I’m still blogging 9 years into it. Although I haven’t figured it all out yet, here are a few of my best guesses (many taken from my own life!): 

Good information is hard to come by 

Although it can be quite simple; Income = Expenses + Saving/Investing (which is one of my Cardinal Rules), it’s actually pretty hard to stick to and once you get that figured out there’s a ton more out there to learn and figure out. I’m still learning to this day! Should you put money towards debt or towards investing? How should you actually invest your money? 

In a world that is full of information and a world where there’s a ton of noise from people trying to tell you how to get better at managing your money (YouTube, old school email listservs, Tiktok, people at work, people in your personal life), it’s really hard to figure out if the advice you are getting is quality or just noise. Of course I’m a little biased in thinking that I give good advice on this blog (Things you MUST do with your money). 

I’d recommend doing a bit of research on any source you’re following – make sure they’re not peddling ‘snake oil’ – i.e. a get rich quick scheme or some secret investment opportunity that you are super lucky to find, also figure out if they are being paid to post on this topic (which may not be a bad thing but should raise your spidey senses a bit), and before making a major financial change, cross reference what this source is telling you with other sources of financial advice. 

Finally, don’t give up on finding good information. Achieving financial independence is a worthwhile cause and it’ll take time, effort and some trial and error along the way!

Less can actually be more 

Although you wouldn’t think it, I’ve come to believe that financial success comes from a) having your money in fewer places and b) investing in steady but boring investments. If you’ve followed the site much you’ll know that I’m a big believer in index funds; which are essentially a basket of most of the stocks on the stock market and are lower cost with about the same if not better returns than buying ‘winning stocks’ (which is much harder to do even for the best of the best). 

The problem is that index funds are boring and putting most of your money into a Total Stock Market Index Fund isn’t going to be something you can brag about to your friends or tell your colleagues about or post about on Twitter. I’ve felt this personally – I crave the excitement that comes with a new shiny investment that might go way up and let me get rich quick. I’ve opened a few new accounts when I probably shouldn’t have, as I’m deviating away from what I believe to be a proven track record of index funds and I’m also keeping my money in more places instead of fewer, and that feels riskier for me to be able to adequately watch out for. 

Although it’s not as much fun or exciting, sometimes keeping your money management simpler is better. 

Budgeting feels like work

I realize that I’m probably in the minority here but I actually really enjoy budgeting. I think it helps me feel balanced and more in control. For many others, budgeting probably feels like a lot of work, to the point that people just don’t do it. I meet a lot of young professionals that don’t really have a good grasp on their spending and don’t particularly know how much money is coming in vs going out. I personally feel quite passionate about budgeting and think it’s one of the most important pieces of advice you should follow if you want to achieve financial success in life. 

The solution is to find a budgeting tool that works code you. I personally utilize a good old fashioned Excel doc (jk, I did upgrade to an online Google Sheet). I’ve got one for download here on my site if you wanna give it a go. For those looking for more high tech solutions, you can find tools like Mint.com, YNAB, or EveryDollar. Your bank may also have some budgeting tools and insights that can serve as a budget. 

Find something that works for you. Budgeting doesn’t have to be hard or time consuming, and by adopting a good budget you’ll be able to be more in control of your money, set financial goals and better work towards them! 

We like things now and don’t dream as much

In today’s world we’re used to getting things quickly. Amazon can basically deliver anything to our doors in <2 days, Streaming services allow us to watch basically any movie or TV show to our phones and Food delivery services bring us virtually any type of food in under an hour. 

Unfortunately bcoming financially successful doesn’t happen overnight, you’re unlikely to get rich quick and (at least IMO), the best way to increase your odds of success is to have small growth over a long period of time. 

The secret to overcoming this challenge is to adopt a better mindset. At various points on my journey I’ve dealt with this too – FOMO leading me to jump out of my proven investment strategy or getting anxious and frustrated over the lack of growth in my portfolio. I have to remind myself that I’m on a path of slow and steady growth and that I’ve got a plan (mostly index funds) that I should stick with. 

Another problem I’ve seen is that because we’re more focused on the here and now, we’re not that great about dreaming of the future. Retirement seems like such a long way off, being debt free just isn’t something we can fathom that well, and it’s hard to imagine financial independence when we’re so paycheck to paycheck. Because it’s hard to dream about the future it’s hard to make sacrifices today for a tomorrow that’s so uncertain or unknown. 

We don’t have a lot of money

The last big hurdle I run into holding us back financially is the fact that we don’t have a lot of money. It’s hard to save for retirement, pay down debt or put money into a healthcare spending account when you’ve got rent (or the mortgage) due along with all sorts of other bills. 

I know this might not be what you want to hear but I’ve always said that if you can’t manage a little bit of money then you’ll likely find it difficult to manage a lot of money. I’ve learned that your lifestyle has a funny way of growing with your income. There always seem to be more bills to pay and more things asking for your money. 

I believe that if you can figure out how to manage money now, you’ll be setting yourself up for success in the long run. Find a way to make ends meet; spend less or earn more. Pickup a side hustle, say no to eating out or other splurges, and focus on progress that you’re making no matter how small it may be. I’m a big believer that forward progress no matter how little is still forward progress! 

Summary

There are lots of reasons we’re not super great at managing our money. I hope by calling these out my name and providing some perspective on how I’ve tried to overcome them will help you out in your own life!