I’ve always done things my own way. That’s worked to my advantage a lot of the time and it’s also been not so good. Anyways, more about that in a later post. This week’s post is going to focus on one area I do things my own way, and that’s personal finance. I consider myself a money contrarian, which I see as a positive quality.
What is a Contrarian?
Before we get into being a money contrarian, it’s important to establish what a contrarian is. For the purposes of this post, a contrarian is someone who does things their own way. It doesn’t matter what others are doing, they are going to do it their way. Someone who goes against the grain.
Money Contrarian Defined
A money contrarian is someone who does their own thing with their money. All their money decisions are based on what works best for them and their family (within the rules and laws of course). A money contrarian doesn’t follow the typical money advice, but will if it suits their needs. Some examples of money contrarians:
- Members of the FIRE community
- Many business owners
- Rental property investors
- Anyone who goes against the status quo
Why Be a Money Contrarian?
There are lots of reasons to be a money contrarian. What the typical person is doing with their money isn’t working.
According to The Ascent, the average American can’t cover a $400 emergency expense. Business Insider reports that the average 401(k) balance for someone 65 and up is $255,151 with the median being $82,297.
These numbers aren’t good enough. There is something inherently wrong to me that almost half of Americans can’t cover a $400 emergency or that someone can work their entire life and have less than $300,000 (and less than $100,000 if looking at the median) in their 401(k).
Of course I realize there is social security and other retirement accounts like an IRA, Roth IRA, money market accounts, etc., but for many people, the 401(k) is their primary investment vehicle. Some people like myself get into non-traditional assets like real estate, but that’s not the majority.
These numbers don’t even include the number of people in consumer debt, which makes things even worse. Or that a large number of people live paycheck to paycheck–one emergency away from major financial trouble. Or that as soon as many people start to get ahead, they buy cars and houses they can’t afford, putting them back into debt.
The fact that the status quo isn’t working is reason enough for me to be a money contrarian. It’s also a reason I wrote my book Cash Uncomplicated, and a reason I’m writing this post.
How to Be a Money Contrarian
Fortunately, you don’t have to be the average or the status quo. There are things we can all do to be a money contrarian, six of which I will highlight here.
Number 1: Determine Your Values
Number one is simple on the surface, but requires some thought. Determine your values. What you want in life, things you want to spend your money on, what you want life to look like 10, 20, even 30 years from now.
This has nothing to do with what others are doing, or what others think you should do. It’s all about you and your family. What do you want?
Are there certain financial decisions that are best for you and your family? A concept that helps with this is value-based spending, a concept that every financial decision you make has to align with your values.
A value-based spender only spends their money on their highest values and necessities. All the other stuff doesn’t matter.
Related: Value-Based Spending: How to Create Budget Around What You Value
Number 2: Ignore the Noise and Stop Comparing Yourself
I write about this a lot in my book–money is easy to fake. Someone with a halfway decent paying job can finance a really expensive car and appear wealthy. The person then posts the new car on social media and they look rich.
The reality is that nobody has any idea how that person is really doing financially. We’re not privy to their bank and investment statements or credit card bills. Yet a large number of people compare what other people are posting on social media with our everyday lives. It’s an unfair comparison and makes little sense.
Follow these two examples of different families to illustrate my point.
Family A
- Net income of $110,00 per year
- Contributes $2,500 per year to investments
- Just bought a brand new car valued at $50,000 and posted on social media
- Six weeks after purchasing car they posted a family photo of a tropical vacation
- $14,500 in credit card debt
- Net worth: $43,800
Family B
- Net income of $170,000 per year
- Contributes $45,000 per year to investments
- Both parents drive vehicles between five and eight years’ old
- Infrequently post on social media, last post was a picture of the family at a local park
- No consumer debt
- Net worth: $895,400
OK, so who is doing better financially, the first or second family? On the surface, the first family appears to be doing a lot better. Flashy social media posts, new cars, etc. The second family isn’t flashy but they have a net worth of almost a million dollars and are on track to far surpass that.
Don’t worry about what others are doing or posting. The picture doesn’t always match the reality.
Number 3: Don’t Play the Keeping Up With the Joneses’ Game
A money contrarian doesn’t play the keeping up with the Joneses’ game. Just like in the last section, it’s not fair or productive to compare yourself to others. Number one, you don’t need know what the comparison is because you’re likely comparing your daily routine to their highlight reel.
Secondly, even if it is a fair comparison, there is absolutely no need for it–it’s an exercise in futility. A simple comparison of you versus others does nothing to further your goals, get you in better shape, make you more money, or have a better relationship with your significant other.
Imagine your neighbor a few doors down gets a brand new car. If you go out three weeks later and buy a new car because your neighbor has one, it isn’t going to advance your cause at all. It might make you feel temporarily good, but it’s just surface stuff.
There is no deep meaning to it. Worse, it might set you back on your goals because it’s taking away financial resources you could have used to build real wealth.
Number 4: Follow Positivity, Ignore Negativity
There’s a lot of negativity in personal finance. Ever heard anyone say one or more of the following?
- I can’t get ahead with all the taxes
- The system is rigged
- It’s impossible to invest
- That doesn’t work for the average person
These are examples of excuse language. It’s language that gives you permission to make excuses and not seek solutions. It provides a temporary good feeling but doesn’t move you forward.
When we (I say we because I’m guilty of this too from time to time) make excuses, we are shutting ourselves out to new and creative solutions. However, when the excuses stop, the creativity flows and we develop solutions and ideas.
Following positivity naturally eliminates a lot of the excuses. Positivity isn’t mindless optimism, but it’s an overall “can do” attitude. When challenges present themselves, positive people are ready to handle them and come up with great ideas.
There’s an inner confidence that comes with positivity. It’s knowing that you have seen challenges before but always find a way to develop a creative solution.
Number 5: Get the Right Mentors
There’s a famous Jim Rohn quote in which he says we are the average of the five people we spend the most time with. Who you spend time with matters. Hang out with a group of people who complain and are in bad health, and you are likely to complain and be in bad health.
Hang around successful and goal oriented people, and you are likely to become that. Spend time with a money contrarian, or a group of them, and you are headed in that direction.
That’s why it’s so important to get the right mentors. A mentor can take many different shapes and sizes. It might be a parent, relative, friend, acquaintance, business partner, or someone you pay for coaching. Whoever your mentors are, carefully choose them because like it or not, they are going to be major influences on your success.
Number 6: Do What Works for You
Simple, but powerful idea. Do what works for you. Don’t buy something because your neighbor has it. Buy it because you want or need it. Just because your cousin bought a new house in the trendy part of town doesn’t mean you need to do the same thing.
Being a money contrarian means making all of your personal finance decisions based on what is best for you and your family, not anyone else. It’s not done to impress anyone; it’s based on your needs.
This attitude of doing what works for you is easier said than done. We are naturally social people and seek others approval. Going against the grain takes a little practice and training, but it’s definitely achievable.
Conclusion
It’s not easy to be money contrarian, but it’s also not that hard with practice and discipline. Follow the tips in this post:
- Number 1: Determine Your Values
- Number 2: Ignore the Noise and Stop Comparing Yourself
- Number 3: Don’t Play the Keeping Up With the Joneses’ Game
- Number 4: Follow Positivity, Ignore Negativity
- Number 5: Get the Right Mentors
- Number 6: Do What Works for You
These tips will help you to become a money contrarian and hold your values. The numbers and stats tell us that there are a lot of people struggling with their personal finances. Don’t be like everyone else because it feels right to fit in.
Differentiate yourself from the herd and do what works for you.
