I have always loved the quote from Maya Angelou – “When we know better, we do better.” This had significance in my life because for so many years I didn’t have the knowledge that I needed to succeed in the area of money. I knew I was supposed to save and I knew certain things, but I didn’t have a deep knowledge of how to win with money. I wish I knew then what I know now.
But for many of us, just because we know better, doesn’t mean we do better. I teach people everyday, people read my books everyday, other teachers bring forth knowledge everyday through radio, television and other sources. Yet our personal finances are a disaster. Only a very low percentage of people in this country actually have money in savings and even fewer are saving for their future (retirement). But we know, don’t we? We know that we are supposed to live on less than we make, we know that we are supposed to save and invest, we mathematically know that debt is just throwing money away, yet we continue to do it.
Why? Why is it in the area of money that we know better but yet we do not do better? Simple – personal finance is 90% emotion and 10% math. You see, the knowledge is only 10% of the formula. It is the 90% that we have to get under control if we are ever going to have money. That is the knowledge that I have today that I am most proud of and that is why my latest book “The ABC’s of Personal Finance” is my favorite. Because it addresses the 90% as well as the 10%. I still struggle with the 90% – it will never go away – but knowing that it exists, knowing what the big monster is that I have to slay, helps me to fight it everyday and win in the end. Yes, my emotions still get the best of me, more than I am happy with, but knowing makes me stronger to fight the daily battle of emotions with my money.
If you feel like you are not winning in the area of your money, maybe this knowledge is what you are missing. Maybe you need to start doing what you know and not what you feel. Is living paycheck to paycheck making you happy? Is that huge mortgage or car payment bringing you joy? You shouldn’t work as hard as you work and be miserable. Here is one more kernel of knowledge for you today – the 80-10-10 rule – give 10%, save 10% and live on 80%. Using this formula, you will always have money. Start there – start somewhere – you do know better – you just need to start doing what you know.