Managing Personal Finances: Balancing Focus and Optimization

Financial optimization should evolve from intense focus to strategic oversight, allowing for healthier relationships and greater financial independence.

### Navigating Personal Finances: Finding Balance Between Attention and Automation
* 💰 Hockey Halo raises an interesting question about how to **maintain a healthy relationship with personal finances** without becoming **overly obsessed with optimization**.
* 📅 One effective strategy is to create an **annual net worth statement**, typically done once a year around **December 31st**, which helps avoid the **stress of constant tracking**.
* 📊 Focusing on controllable behaviors, such as **savings rates and tax strategies**, allows individuals to stay grounded without getting lost in the minutiae of financial details.
* 👶 The analogy of personal finances being like a newborn baby illustrates that **initial stages require more attention and care**, but as one progresses, they can **gradually automate these processes**.
* 🎓 Eventually, as finances mature, the need for frequent check-ins should decrease, transitioning from **weekly to monthly**, and ultimately to just an **annual review**.
* 🔄 It's crucial to assess whether the effort spent on minor optimizations, such as **chasing slightly higher interest rates** or **meticulously tracking every expense**, is truly **worth the time and energy invested**.
* 💔 Over-focusing on trivial financial details can strain relationships, emphasizing the need for **balance** and the understanding that once a solid financial foundation is built, **constant scrutiny may no longer be necessary**.
* 📊 A poll was suggested to gauge how often the audience conducts their net worth statements, highlighting the **varying levels of engagement** among individuals in their financial journeys.

[Music] all right um we've got another question from hockey Halo. It says once this is a funny one honestly to me. He says once you start looking at your personal finances how do you stop. I find myself more and more distracted by optimization these days. This is a very deep Financial mutant question and I think you guys are the perfect ones to answer it. What do you have to say well I'll speak for me personally right um one of the things that I do hockey is uh I do an annual net worth statement. And when I say annual I mean literally one time a year. I do my net worth statement. It's always on 12:31 or thereabouts at the end of the year because I recognize my personality being a financial mutant loving this stuff so much. If I were tracking this stuff on a weekly or a monthly or quarterly basis I would literally allow it to drive me nuts. And so purposefully I try to not ignore it because I focus on my behavior. I focus

on the things I can control: my savings rate, my allocation, my tax strategy, and the fees that I pay, and those types of things. I focus on my behavior, but the outcome I try to let myself quote unquote be surprised by at the end of every year, so that I'm not focusing on the little stuff. I'm not majoring in the minors. I'm keeping an eye on the big picture. That's one of the ways that I stay not dialed in and not laser-focused and lose sight of the forest for the trees. I've made this analogy before, but I think it works out quite nicely, is that I think about when you discover personal finances in a lot of ways, and we'll make the analogy and tie it into the doing the net worth statement. It's like having a newborn baby. The fact that now you know where I'm going with this is that, look, in the beginning, your finances are going to need a ton of attention. You need to be getting those

those affirming things of like yeah pay attention to your finances, look at them weekly, look at them monthly CU. You need to be in there to kind of, you're doing all the triage to fix your situation, you're listening to our content, you're going through the financial order of operations, you're trying to absorb as much information that you possibly can. I think that's completely healthy. Plus, I remember for me when I first discovered, I still remember in the mid-90s when I got The Millionaire Next Door, The Wealthy Barber, and I was like holy cow, I feel like somebody has just opened up my brain and shown me the path. And I'm hoping that's what Millionaire Mission and the Money Guy Show were doing for you guys too. So, I want you to be energized and excited, and I want you, because you're like you said, you're in that infant stage where you can't stand on your own yet, you need a lot of attention, but you

will notice if you start making the right steps. You start learning the right things. You start automating the process. There's going to be less and less you're actually adding value by tinkering. And that's why I do think you graduate from updating your net worth statement and doing things within your personal finances weekly to maybe it turns into monthly, and then it turns into quarterly. Then hopefully, you get to a graduation point, kind of like where B is now, where you still need to be giving it attention, but you just don't have to do it as much because now your money and your army of dollar bills are not only feeding themselves and taking care of their personal hygiene on their own and bathing themselves. They're actually now graduating high school, going to college, and maybe once a year is still necessary so you can give them the little pep talk, your personal finances a pep talk. But it should be doing everything on its own at that point because you automated the behavior. You focused on the good steps.

and it allows you. That's why we gave you the financial order of operations and share all this is because I'm hoping by the time you get to step eight of the financial order of operations and you get to abundance goals and you start thinking about what is the why and how am I going to use this money. Um, it's a much more mature than and focus thing that from an abundance standpoint than when you're having to just think about your money as how it covers your bills because that takes away your ability to focus on owning your time, focus on what the purpose because you're just trying to survive and cover. And that's why I think it's perfectly fine hockey to be hyperfocused on it in the beginning because you're trying to affirm those good behaviors and those habits. But just know thyself to where you can graduate to where it stays on the healthy side of things and you're not um alienating your friends, your loved ones to the point that you're overfocused and not

thinking about what money can and cannot do. I'm curious, Megan, can you do a poll for me? If I ask you for a poll, can you? I want to know, like, our audience, how frequently are they doing net worth statements. And let's do it like this. Do you do it annually, more frequently than annually, or what's a net worth statement, right? Because I think that's interesting to see what our financial mutants do. The other thing, as you were talking, Brian, because what Hocky said is, I'm so focused on optimization. I've started paying attention. I'm so focused. You have to make sure, is the juice worth the squeeze, the hassle factor, is it? Because I was sitting here thinking, like, high yield. Oh my right now. I've got a high yield account paying 4.5%. But man, I saw another one was like 4.55. If you're spending a whole lot of time trying to go grab that, unless you're holding like an egregious amount of cash, I don't know.

if it's worth it. I put credit card rewards. Are you someone who every two weeks you're applying for a new credit card. You're rotating your categories. When you actually look at the benefits you're receiving. Is it worth it. Are you getting a ton of benefit for that. And then the third one I put was taxes. Are you someone who every time you like you're like riding down the miles every time you get out of your car. And you're tracking every single receipt for every single thing that you buy. While that can be valuable and and there's certainly some some of that you have to do some some of that. Well just I'm making the suggestion that if you're so laser focused on these like minuscule things. I would really ask myself am I really optimizing or is me trying to optimize actually causing me to be suboptimal. Because I am focusing on the little things that don't have big impact instead of the big things that have significant impact. I just as you were talking that was that was what was kind

of like ruminating through my mind. Yeah, it's back to 'cause I have shared on this show before that I had a dear friend whose marriage was under a lot of pressure because he just was too tight, you know, requiring the spouse to give every copy of every receipt and transaction. Um, and that was just too much, you know. Once you get to a point of a bu, you know, it's nothing wrong when you're in the beginning stages where you need discipline and accountability for you guys to be, especially with your spouse. You all be on the same page, and you have this common goal, but there can go too far when you've kind of built, you know, an automated wealth-building strategy. Why are you still hyper-focused on that? It's just not worth the hassle and the damage it does to relationships.

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The Money Guy Show

Managing Personal Finances Without Getting Overwhelmed

Tracking personal finances can be distracting, but focusing on an annual net worth statement helps maintain perspective.

By concentrating on controllable factors like savings rate and tax strategy, one can avoid getting lost in the details.

The analogy of a newborn baby illustrates the initial intense focus needed, but over time, it's important to step back and see the bigger picture.

Paying attention to finances regularly is crucial for fixing one's financial situation.

The author shares their own transformative experience with financial books in the 90s and hopes to provide similar guidance through their content.

With the right steps and automation, personal finances can eventually require less frequent attention, leading to a more independent and self-sustaining financial journey.

The Importance of Financial Focus and Goal Setting

The financial order of operations aims to shift focus from survival to abundance goals, promoting a mature approach to using money.

It's important to find a balance between being hyperfocused on money and maintaining healthy relationships.

Regularly assessing net worth and optimizing financial strategies should be done mindfully, considering the effort versus the reward.

Some people frequently apply for new credit cards and rotate categories for rewards, but it's worth questioning if the benefits are significant.

Tracking every small expense and mileage can be valuable, but being overly focused on minuscule details may lead to suboptimal outcomes.

It's important to consider whether the effort spent on small optimizations is detracting from addressing bigger, more impactful financial matters.

The Impact of Financial Control on Relationships

Excessive financial control, such as requiring a spouse to provide every receipt and transaction, can strain marriages.

While discipline and accountability are important in the early stages of wealth-building, being overly focused on finances can become damaging.

It's essential to find a balance and not let financial management negatively impact relationships.