2017: Financial Advice is Broken, Not You

Typical financial advice only works for a small percentage of people.

If you've already broken your money-specific New Year's resolutions, I've got good news: It's not your fault. Typical financial advice only works for a small percentage of people. I started DailyWorth in 2009 because I was frustrated that so many of us, and women in particular, blame ourselves for feeling financially overwhelmed.

Most financial advice counts on reason alone to motivate you, but humans aren't always rational decision-makers. We're driven by emotion, and the complex feelings that tend to swirl around money can undermine the best plans and intentions. You'll have an easier time with money if you understand this and don't view holding yourself to an oppressive austerity plan as proof of whether you're "good" with money or not.

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credit: Jordan Matter

If you've created New Year’s resolutions around budgets and goals, but already fear or experience "failure," consider a different approach:

Budgets Aren’t Magic

Budgets work for some people, but not most. According to a 2013 Gallup poll, only 32% of Americans maintain a household budget. If you're part of the other 68% percent, know that successful budgeting isn't the only way to get control of your money.

Do this instead: Focus on saving. As long as you’re saving enough every month, and not generating debt, it doesn’t matter how you categorize your spending. Instead of budgeting, focus on moving cash from your checking account to your savings account. Why? Not only is it important to have a cash cushion for emergencies, saving money can be motivating in its own right. When you actually experience having more money in the bank, you start to change your own money story from “I’m a spender” to “I’m a saver.”

To save more, check out Digit.co, an automated micro-savings app, or join the waitlist for WorthFM, DailyWorth’s affiliated savings and investment platform, which offers a simple visual emergency savings tracker.

Goals Motivate Some, Demoralize Others

Know this drill? You set a goal of saving $1,000 by a certain date. When the time's up and you've only saved $600, you feel bad, blame yourself, and quit. Goals, like budgets, make sense if you're the type of person who responds well to goal-setting in general. The problem is that if you’re not one of those people, goals can feel oppressive and so demoralizing that you give up completely.

Do this instead: Take MoneyType, our free financial personality assessment, to learn what inspires you when it comes to money, then set a new resolution or intention based on what you learn.

For example, if your primary MoneyType is "Independent," your primary motivator is freedom. To you, setting goals won’t give you a comforting sense of structure, it will feel like building your own prison. Instead, Independents should resolve to automate the payment of all their bills along with a regular transfer to savings or retirement. Rather than feeling constrained by sticking to a plan, this action sets Independents free to focus on other things. Even better, they’ll experience more financial success because they’ve aligned their money management with what is normally motivating to them.

amanda steinberg worth itOn a personal note, I’m so happy that you're a part of DailyWorth. This is a big year for us. My first book, Worth It: Your Life, Your Money, Your Terms, comes out on February 7th, and I’ll be coming to the hometowns of many DailyWorth readers on my book tour. I’ll also be opening WorthFM, an automated savings and investing platform designed to match financial guidance to what motivates you, to everyone. For now WorthFM is in beta, but all DailyWorth readers can join our waitlist for early access.

You might also like:
5 Ways to Actually Enjoy Saving Money
Money Goals You’ll Actually Stick To
Ditch Your Budget — 5 Alternatives to Managing Your Money

Tagged in: Saving, Amanda Steinberg