Last week I read a very interesting article about obesity: “Everything You Know About Obesity Is Wrong” (clearly the writers also thought, hey that Young FI Guy thinks he has big titles on his webpages, hold my beer). The gist of the article is that society and the medical profession have got into a dangerous habit of ‘fat shaming’ and recommending extreme counter-measures to obesity that end up being counterproductive.
It got me thinking though about the link between Financial Independence and dieting. I think there are lots of parallels and lessons we can learn.
Spending and obesity
Most of all, I perceive a strong parallel between spending and obesity.
Looking at spending, many people are spending today at the expense of their future selves. We know that people do not save enough for retirement. We know that having no savings is bad for all manner of reasons. We know that people not saving is very costly to society, with a smaller young working population picking up a growing welfare tab.
Taking obesity, there are many parallels. An increasing number of the population lives an unhealthy lifestyle at the expense of their future well-being. We know many people eat unhealthy food. We know many people do not exercise enough. We know that these lifestyle choices are very costly to society, with a smaller, healthier, young population picking up a growing healthcare tab.
The common ‘fix’ for obese people is for them to go on a ‘diet’. The scientific evidence is almost universal (and that’s saying something when it comes to nutritional research!): diets don’t work. People start, it works for a day/week/month/year or two, then it stops working and you end up heavier than before. The more extreme interventions also appear to have the worst outcomes.
Instead, the advice that appears to work best is very simple: eat more fresh foods like fruit and veg, eat fewer processed foods high in artificial ingredients, continue to eat in high-calorie foods if you enjoy them – but in moderation. Don’t expect to watch the pounds fly off: instead, focus on a sustainable long-term diet that you can stick to for life.
That advice is remarkably similar to the best advice on spending:
|Eat foods that are healthier for you.||Focus spending on the things that bring you true joy.|
|Eat fewer processed foods that are unhealthy for you.||Avoid spending money on expensive things that cost a lot but bring little value (flashy cars, expensive clothes etc.).|
|Still eat high-calorie food you enjoy but in moderation.||Continue to spend money on things that make you happy, like your hobbies, but don’t go overboard, find ways to reduce frivolous spending.|
|Focus on a sustainable life-long diet that will enable you to significantly lose weight over the long-term.||Focus on a life-long sustainable budget that allows you to save significant sums of money over the long-term.|
The other common ‘fix’ is to tell obese people to get exercising, often as much as possible. Sometimes, the recommendations are quite extreme (such as crazy things like ‘fat camps’ or ‘boot camps’). Again, the evidence suggests that the best forms of exercise are often the simplest: walking more, sitting down less and simple exercises that are easy to do. Like with dieting, the best exercise for a person is the one that works but is sustainable. For example, marathon running is an incredible way to get and stay fit. But I couldn’t think of anything worse. I’d rather somebody did something terrible to my nipples.
The advice again is remarkably similar to the best advice on personal finance:
|Exercise regularly.||Spend consciously.|
|Find enjoyable exercises that you can adopt as a life-long habit.||Find ways to cut your spending that you can adopt as a life-long habit.|
|Avoid extreme exercises to the extent that they won’t work for you.||Avoid drastic cost-cutting (extreme frugality) unless it’s right for you.|
|Be wary of quick fixes that will get you ‘beach ready in 5 weeks’.||Be wary of finance tips that will promise to make you a financial guru in 5 weeks.|
The overall ‘cure’ for obesity seems to be remarkably simple. Consume fewer calories than you burn off for a long period of time. The overall ‘cure’ for bad finances is remarkably simple. Spend less than you earn for a long period of time.
For obesity, this means going without bad foods today and doing moderately unpleasant exercises such that you avoid a life of very unpleasant healthcare problems in the future. For finances, this means going without expensive items today and moderately unpleasant cost-cutting such that you avoid destitution in retirement.
Financial Independence Retire Early
Perhaps you can see where I’m getting to here. Financial Independence Retire Early (FIRE) is a spectrum of personal finance habits that aim to take control of your finances and improve your long-term financial and overall health. Some of those habits are quite extreme – such as “very early retirement” (whatever that means). Some of those habits are simply common sense – spend less than you earn. They form a spectrum.
For a few people, marathon training, an extreme form of exercise, really works. For a few people, extreme frugality really works. I think it’s important to find the right balance for you. Pull on the Three Levers, earning more, saving more, investing wisely that best suits your personal circumstances.
The pushback against FIRE is that it is unrealistic to the ‘Average Joe’. And I would agree with that. In the sense that advocating extreme financial measures to somebody who isn’t inclined (yet) to that thinking can be dangerous and counter-productive. Just like telling a morbidly obese person to starve themselves and start lifting very heavy weights is dangerous and counter-productive.
But the stuff that works for both combating obesity and a lack of saving: the basic, simple, universal advice is undeniable. It works, incredibly effectively. Those messages are out there. But they are deliberately drowned out. By the major food companies, big pharma and advertisers for tackling the obesity crisis. By the major retailers, big banks and advertisers for tackling our savings crisis.
[Thank you to Wephway, for inspiring me to add this section, see in the comments]
An important element in gaining control of your finances is by tracking your spending. And the same applies to dieting – it hard to stick to a diet or healthy lifestyle regime if you don’t know what you’re eating. There are now lots of good apps for tracking your calorie intake (and the calories you burn through exercise). Likewise, there are lots of ways to track your expenditure (including my own expenses spreadsheet). Often you’ll find it’s the little trickle of small things we eat that end up with us putting on weight (the snacks, the odd alcoholic beverage, the treats). And it’s similar with spending – thus the ubiquitous ‘Latte Factor‘.
That said, there’s nothing wrong with these indulgences – as long as they are in moderation. Equally important, we should try to consciously enjoy those indulgences and get joy out of them. When we consume them on autopilot, we lose the value but still count the cost – in pounds and pounds.
Going back to the article I linked to about obesity, one of the common themes is ‘fear’. A fear of becoming fat. Perhaps many people are afraid of becoming fat. But if that’s the case, it isn’t working. Likewise, the fear of poverty in retirement isn’t scaring people into saving more.
Fat-shaming doesn’t work either. Though bizarrely, when it comes to finances it’s the frugal types that are ‘shamed’ (you need only look at the comments on any mainstream article on FIRE). To that end, we know then that shaming ‘spendy’ types will likely not work either.
So how do we solve such a challenging problem? It’s a question far smarter people than I have wrestled with for years. Education appears to be one answer. But it can’t be the answer alone. Building life-long habits from an early age is another answer. One I can personally testify to. I think the best tool we have is to inspire people. To show them the metaphorical light. I can’t help but feel you’d need a heart of stone not to be inspired by Ken’s at The Humble Penny amazing story. Or any of the other fascinating and inspiring tales amongst the FI Community. For me, it’s those stories that have the most powerful potential to improve the way we as a society live with money.
I’d love to hear your thoughts on how we can we make an improve the way we make, manage and live with money.
All the best,
Young FI Guy