I always like to say that financial wellness is a lot like weight loss. When I came across this article in Vox about “surprisingly simple tips from 20 experts about how to lose weight and keep it off,” I realized just how true that is. Here are the weight loss tips and how they apply to financial wellness:
1. There really, truly is no one “best diet.” Scientific studies have found that all of the various diet plans have about the same modest long term results. What matters is finding one you can actually stick to. The same is true of money management systems and asset allocation strategies.
2. People who lose weight are good at tracking – what they eat and how much they weigh. They tend to count calories and weigh themselves at least once a week. In the same way, you need to track or otherwise limit spending, continually re-balance your investments, and periodically run a retirement calculator to make sure you’re still on track.
3. People who lose weight identify their barriers and motivations. Like with diet and exercise, we usually know what to do with our finances. The hard part is actually doing it. Start with knowing the “why” that motivates you. Then look for the barriers that are standing in your way of taking action.
4. Diets often fail because of unreasonable expectations. People tend to overestimate what they can achieve in the short run and underestimate what they can achieve in the long run. Don’t try to save too much too fast. Instead, set big long term financial goals that motivate you and then see how much you need to save to achieve them.
5. People who lose weight know how many calories they’re consuming – and burning. Similarly, you need to know how much income is coming in and going out. Making sure the latter number is lower than the former is the only way to increase your wealth.
6. There are ways to hack your environment for health. For example, don’t surround yourself with unhealthy foods. Simple things like where your food is served from and what size plate it’s on can also affect how much you eat. For your financial life, don’t put yourself in situations where you’re likely to spend more and try to automate your savings as much as possible.
7. Exercise is surprisingly unhelpful for weight loss. More accurately, exercise alone isn’t very effective since people often eat more to compensate for the calories they burn. Earning more income can have the same effect when we automatically spend more as well.
8. Weight loss medications aren’t very useful. Neither are “metabolism boosting” supplements. Complex, sophisticated, and high-fee investments are the weight loss medications and metabolism boosting supplements of the financial world. Stick to the basics.
9. Forget about “the last 10 pounds.” If they’re that hard to lose, people generally gain them back. Most of the health benefits came from the other lost pounds anyway. Likewise, trying too hard to save more can backfire if it starts to feel like too much deprivation. Allow yourself to splurge now and then too.
So what’s the main thing that weight loss and financial wellness have in common? They are both about making small changes over a long period of time. Instead of looking for the quick fix, find an approach that you can stick with.