About 2 weeks ago, while scrolling through my twitter feed, I came across a book recommendation by one finance professional that I follow. The book is titled ‘The Psychology of Money’ by Morgan Housel. I was captured by the title and attracted to read it. However over the past 7 months or so, I have read two other books on personal finances, that is, Straight Forward Financial Growth (SFFG) by Moses Mukisa and Money Won’t Make You Rich by Sunday Adelaja.
At this point, I definitely felt like I had enough financial knowledge and I did not need any more knowledge. On top of this, I am an accountant by training and a certified Business Finance trainer. Still, I felt drawn to this book. So I acquired it and dived in, head first!
What I found out in the first pages of this book was quite profound and mind blowing. The premise of the book is that knowledge and logic are not enough in financial literacy. Knowing what to do and actually doing it are two separate things. Psychology or mindset is the make or break factor in financial stewardship and growth.
For example, the 4 key principles of financial growth in SFFG are Get it, Keep it, Grow it, Give it. Over my working life (over 10 years), I have not been terrible at earning (get it) and being generous (give it). However, where I have not done well has been in the ‘keep it’ part, which is, saving. Even with the knowledge gotten over the last 6 months, the immense benefits I know about saving and how it can accelerate my financial growth, I was still struggling in this area. When I analyzed my life to date, I realized, I have never been a ‘saver’ and that is why I was poor at it, even though I knew the benefits of it. I realized, I was never taught about money at home and we hardly talked about money at home when I was growing up. Earning, spending and giving have never been a problem for me but this wasn’t the case regarding savings.
One profound thing in the book that changed my mindset about money was the fact that saving buys you time or freedom. Because of the uncertain nature of life (none of us know what the future holds), spending all you earn is very risky because no matter how good your projections of future earnings are, there is no guarantee that things will go exactly the way you have planned. Therefore saving ensures that you are not wiped out in case things turn out otherwise regarding your earnings.
He also says that how much you save is more controllable than how much you earn. As the popular saying goes, “a bird in hand is worth two in the bush.”
The revelation that knowledge is not enough in bringing transformation in my financial life was quite profound. I have improved over the last month in my saving and hope it becomes a habit. I realized that for the areas where I am struggling to change despite all the knowledge I have, I need to check my beliefs/mindset/psychology about those things and eliminate any limiting beliefs if I am to have lasting change. This applies both to money and other areas where we seek change and improvement.
Indeed the Bible says in Romans 12:2 “.be transformed by the renewing of your mind.”
Worthwhile Musings 