Throughout my years working in the personal finance space, I have been asked for the silver bullet many times, as if there's an simple way to handle all of your financial problems. The question is not generally framed specifically as the “silver bullet,” but the intent is there.
The question may be for the current hot stock tip, or other pseudonym for the silver bullet they’re seeking. They’re looking for the easy way out. The one thing that will make their financial life or financial future better.
The silver bullet, however, is not a one-time thing; it’s a process. Personal finance’s silver bullet is improvement.
Perfection Is the Enemy
Seeking a one-time silver bullet is seeking a perfect solution, the perfect investment, the perfect tax strategy, the perfect vehicle to accomplish a goal.
In a changing world full of risk and uncertainty, perfection does not exist. There are appropriate choices; there are no perfect choices.
Perfectionism is rooted in fear. It may be the fear of not achieving something, or of not looking a certain way, but perfectionism can’t exist without fear. Cut off the root of fear and perfectionism withers and dies.
If we cannot have a perfect investment or a perfect solution, then what do we do?
The answer is that we improve. Instead of looking for a simple solution to our finances, we try to do our best, to select what we expect will work out the best for us, then we monitor and try to improve.
Improvement over time will get us as close to perfect as we can get. Improvement is where we should focus.
Improvement in Spending
Overspending, often accompanied by mounting debt, is a common financial problem. It is also a problem for which people tend to seek a quick fix. They want an immediate cure for a problem that took years to build. The solution tends to be neither easy nor quick. Not for a big spending problem.
Improvement can make things better. Improvement can get you headed in the right direction. Continuous improvement across time can solve any problem.
Sometimes drastic measures are necessary. If you are spending far more than you make, then big changes are needed. That’s not the most common problem. The more common problem is that people don’t know where the money goes or how the debt slowly builds, and they don’t know the solution.
The solution is to get a little better, to improve. Then to repeat, and improve a little more, again and again.
You might start by finding one way to cut expenses. Put that in place. Then find another.
You might start by improving your income, perhaps getting a better job or adding a side hustle.
The overspending problem has two sides to the equation. There is what comes in, which is the earnings side. There is what goes out, which is the spending side. If they are out of balance, you can cut the spending or increase the earnings or a combination of both until they are where you need them to be.
You can improve the situation, then improve it some more. Repeat until it is no longer a problem.
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The Disorganization Problem
Many people don’t know what to do with financial records. A common solution is to do nothing. That’s not a good solution, but it is a common one.
An improvement could be to start keeping all records in one place. That’s a simple change, but also a big improvement for your finances.
Another improvement could then be to sort those into categories, perhaps things you might need for taxes in one file, vehicle records in another, etc.
You don’t need a revolution to have a good system. You may need to improve what you are doing, little by little, until you have a good system.
Not on Track for Goals
A common approach to not being able to fund goals is to do nothing. Some people think they can’t afford to save enough for retirement, so they save nothing for retirement. Some people think they can’t afford to save enough for their children’s educations, so they save nothing for their children’s educations.
In reality, saving half of what you need for retirement will give you a much better retirement than saving nothing will. Ideally, you would know what you need to save and save at least that. Oftentimes, the start has to be at a lower level.
Doing something — improving — is the place to start. If you can’t afford to be on track for retirement, save something systematically. Save $20 per pay; anything is better than nothing.
Likewise for other goals. Save something, but do it systematically.
Many people who “can’t” save also get sizable tax refunds. They have already saved via their taxes, but then they do something else with that savings. Too often that money is gone with nothing to show for it, when it could have made a difference for a future goal.
You get on track by making a small start, an improvement from whatever you are doing.
Then you make additional improvements until you are where you want to be.
The Bottom Line
Personal finance isn't simple; it can be challenging. There are many things competing for a finite amount of resources. It is not always easy to get ahead in today’s world.
But there is no situation that cannot be improved. None. Not the worst, not the best; all can be better.
We don’t get better by making one perfect decision in our imperfect world. We get better by improving, over and over again. We get better by making improvement a habit, and use improvement to build financial habits that build for us a better financial future.
If you want the one thing that will make your financial future brighter, make a small improvement. Then make a habit of making small improvements. Your future self will thank you.