047 | The Problem with Traditional Personal Finance Advice

There’s no shortage of personal finance advice out there.

If you want to learn how to manage your money and build wealth, there are plenty of resources available to you.

But many of those resources have the same thing in common. And it’s a problem.

In this episode, I share the problem I have with traditional personal finance advice and the best money advice I received over 10 years ago and have taken with me ever since.

Lightly edited transcript appears after the show notes.

 Topics Discussed

• my issue with traditional personal finance advice
• the best money advice I’ve ever received

Listen to the Episode

Resources mentioned

Lifestyle Freedom Starter Guide

I Will Teach You to Be Rich (2d ed.) by Ramit Sethi

Episode 17: How to Budget Using the Zero-Based Budgeting Method for Lawyers

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Email: hello@rhothomas.com

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Lightly Edited Transcript

Hey friend. Welcome back to the show. How are you, I hope you’re doing well. So I am sitting here, re recording this episode, I don’t know what’s going on with the weather in Atlanta, but we had this crazy storm, and there was a tornado, and then I recorded the next day after the tornado, but it was storming again, and I thought it would be okay, but there were definitely times where the thunder was like competing with my voice. And so I was like okay let me just re record this. So here we are. But today, I want to talk about the problem with traditional personal finance advice. So, we hear all the time that we should stop drinking lattes, like if you saved the money from your latte and invested it then you would have you know a million dollars in 80 years or you know whatever the metric is, Or you know, if you stop eating avocado toast that’s where all your money’s going, and we’ve got all of this advice coming at us about the things that we’re doing wrong, right, that advice is always focused on cutting back and deprivation, and you’re doing this wrong and it’s like a lot of this, this shame. Is this list of things that you can’t do if you want to be good with money and if you’re doing these things, then you’re not good with money. And I think a lot of times people are almost dissuaded from getting started with trying to improve their money. Right. People don’t get started because they’re envisioning this deprived life, this thing where they can’t have the things that they want, they’ve got to just cut everything and save. I can’t buy this or do that because I’m on a budget. And so you’re seeing this life that you don’t want, because you don’t want to be deprived and only eat ramen noodles and cut out all the fun things. So you just decide not to take action at all, or maybe some people will start taking action on their finances, and there’ll be trying to follow all of that advice. And then feel guilty, and shame themselves for wanting things or buying things or doing things that don’t fit into that traditional, You know narrative or mold or you know whatever of what it means to be good with money. But when we are surrounded by all these lists and rules about what we can do and can’t do, and what you should do and shouldn’t do. If you want to be good with money, and you know people shaming you for making mistakes, or for doing something that you want to do with your finances, that’s not quote responsible. What do you think comes of that. Right, if there’s all of this guilt that you feel because you’re not following the strict rules about what you’re supposed to do. It’s not going to lead to you taking the actions that you want to take to improve your finances, guilt and shame don’t lead to productive actions, they’re not going to lead to the results you want. A lot of times when people are feeling bad about money. They either give up altogether, right, you think, well, what’s the point I’m never going to get this. Or maybe you try to make yourself feel better. And for many of us that leads to spending more money. A lot of us you know when we’re feeling bad, the spending the money makes you feel good in that moment. If we can move away from the shame and the guilt and the beating ourselves up and you can’t have this and you can’t have that, then we can actually make the progress we want to make with our money. When you’re constantly feeling deprived or you feel like the things that you want are wrong, and you shouldn’t want those things. That’s a surefire way to fail, right that’s why diets don’t work. We can stick with it for a little while but it’s really hard to stick things out for the long haul when you feel like you’re depriving yourself, and you shouldn’t want this thing or you can’t do that thing. But being with it for the long haul is how you get the results that you want. Right, that’s what’s required to really see the success that you’re looking for. So for me, over 10 years ago, I read my very first personal finance book. It was I Will Teach You To Be Rich by Ramiz Satie. It’s an amazing book he actually updated it within the last few years or so, but it has definitely shaped the way that I think about my money and my spending habits. One piece of advice in particular that roommate gave and that book that has always stuck with me. Is he says, spend extravagantly on the things you love, and cut costs, mercilessly on the things you don’t. And if that sounds familiar, it’s because I always tell you to spend on the things you care about, and cut the things you don’t. A lot of that has stemmed from those early foundations of my personal finance education and reading that book because it makes so much sense and it appealed to me so much more than all of the cut everything deprive yourself, you shouldn’t want those things if you want to be good with money. Rather than cutting out everything and saying you can’t do anything. That’s fun. And don’t spend any money and hoard it all. Instead of doing that we say okay, I care about this, So I’m going to spend on this. I don’t care about that so I’m not going to spend on that. And the thing I love the most about this advice, and why I always pass it on, is just this idea of spending on things you care about, and not spending on things you don’t leave to you making your own personal decisions about spending. You’re the one who’s in control. So it’s not Rho telling you. Oh, you shouldn’t buy this or you shouldn’t buy that you make that decision for yourself. And so rather than cutting everything and feeling deprived, you spend on the things you love. And you cut the things that you don’t. And what you love may be different from what I love, but there’s no right or wrong so there’s no shame. It goes back to Episode 17 We talked about budgeting and making sure that you include a category like some sort of line item for entertainment or fun or things that you enjoy. You don’t have to cut them out you just plan for them. So in my own life, I’m big on personal development. I spend money on coaching and therapy and personal development books and all of those kinds of things, and then on another front, I love shoes and I love makeup and fashion and so I spend on those things as well. But I don’t care so much about some other things, like for a long time my laptop I’ve upgraded it now, but my laptop, you had to hold the lid a certain way, to make it close without breaking it. Because I don’t care that much about electronics. So, that is just an example in my life, and I want to note that this isn’t to say just go out and spin your way into an even worse financial position. That’s not what I’m about, I always say that you make sure you take the time and plan, so that you know what you’re going to spend, and you make what you want. Fit the plan. You give your money and assignment. Right, that’s what the zero based budget that we talked about back in episode 17 is all about making sure that you plan out how you’re going to spend each dollar, and that could be related to, you know, a bill or expense, some sort of financial goal but it could also be related to fun, but just don’t feel like you can’t buy things that are fun, or things that you enjoy. Just because you’re trying to improve your financial situation, you absolutely can do that. And I think it’s a way for you to stay on track so you don’t end up just giving it all up, Because you feel like it’s too hard. So if you are ready to improve your finances if this is something that appeals to you, we can make progress on your goals, but still have fun along the way. Head to rhothomas.com/coaching, and let’s chat about you and your situation and your goals and how we can work together and all the things. I hope that this was helpful for you to see a different way of looking at personal finance it doesn’t have to be all deprivation and cutting back, right, you make sure that you make a plan for the things that you want, and spend on those things, those things that bring value to your life and you can cut other things that you don’t care about. So that’s it for today’s show. If you haven’t already take a second and subscribe on whatever platform you’re listening on so you get new episodes as they’re released, please also leave a written review those reviews help more people find the show and I greatly appreciate every one of them. Share the episode with a friend who you think would get value out of it. Come connect with me over on social media, I’m on Instagram. My handle is at I am rho Thomas, you can also find me on LinkedIn. Okay friends, so as we close out, I pray that you will take a second to consider what you actually want in your life. I pray that you will think about what you’ve been taught about personal finance and decide if those things that you’ve been taught, are things that you want to keep believing. And as always, I pray that you continue to take steps to regain control of your time, build wealth and live the life of freedom and choice, you deserve. Talk to you later.