Rows of consistent trees

Nav.It with roooted: Psychology of Consistency and Money

by roooted (Yes, that’s spelled correctly) | 3 November 2020

I recently came across this quote and knew I had to share it with you:

“People often overestimate what they can accomplish in one year. But they greatly underestimate what they could accomplish in five years.”
-Peter Drucker

Why is it so hard to follow through on habits we know will make us better?

Here’s the answer, I think…

Our need for quick results. We want big change, now. And if we don’t get it, we quit. It’s the kind of thinking that makes grand plans for you on December 31st but completely forgets about them by January 27. As humans, we tend to overestimate short term results and underestimate long term ones.

Our relationship with money is no different.

We need to acknowledge our obsession with rarity. As we’ve discussed before, there are virtually no actionable lessons we can learn from the Jeff Bezos and Bill Gates of the world. Yes, they’ve accomplished some admirable things— depending on what you consider admirable, @jeffbezos  — but their stories are extremely rare. We need to shift our focus from rarity to consistency.

Mindset

Shifting that focus is hard because of something called the Narrative Fallacy. That’s why abstract statistical information doesn’t tend to light our fire as much as a good story does. 
In order to compromise, I think we should find a middle ground and explore a good story about consistency.

An Example: Grandpa Buffett

Here’s an excerpt from one of my favorite books, The Psychology of Money, that demonstrates Warren Buffett’s rare ability to be consistently consistent:

Consider a little thought experiment. Buffett began serious investing when he was 10 years old. By the time he was 30, he had a net worth of $1 million, or $9.3 million adjusted for inflation.

What if he was a more normal person, and by age 30 his net worth was only $25,000?

And let’s say he still went on to earn the extraordinary annual investment returns he’s been able to generate (22% annually) but quit investing and retired at age 60 to play golf and spend time with his grandkids.

What would a rough estimate of his net worth be today?
Not $80 billion.
$11.9 million.
99.9% less than his actual net worth.

Effectively all of Warren Buffett’s financial success can be tied to the financial base he built in his pubescent years and the longevity he maintained in his geriatric years.

Warren Buffet’s skill is investing, but his secret is time and consistency.

WAYS TO GET CONSISTENT WITH YOUR MONEY

Luckily, it’s 2020 and your friendly banking app can do all of this for you:

1. Find wasted money every month.

Print your transactions, grab your favorite highlighter, and mark the services you don’t use. For example, none of us use cable anymore, right? If you’re still paying for it call your provider and cancel that subscription— better yet, if you can’t imagine life without it… mention you’re thinking of canceling and they’ll usually give you a discount.

Pst: Did you know the Nav.It money app consolidates all of your transactions?

2) Automate your savings.

Immediately after you close this email, set up a monthly auto-deposit to your savings account. When done, keep searching for wasted money every month and you’re golden 🥇

3) Be flexible.

Be compassionate with yourself— and remember that consistency is virtually impossible without flexibility. It’s okay to cancel your auto-deposit if you had an unexpectedly expensive doctor appointment this month. As Aldous Huxley wrote in Do What You Will, “Consistency is contrary to nature, contrary to life. The only completely consistent people are the dead.”


We’re changing the narrative around money but change can’t happen with a one-sided conversation. That’s why we’re excited to bring different voices and experts to share their wisdom. Send us an email and let us know what you think. And remember the nav.it money app offers you free tools for checking in and managing your money moves.

You can download it at Google Play and the Apple Store.


What does being “roooted” even mean?It means being aware of the immense impact money has on my life and on the world around me. I think the trickiest part is putting that awareness into practice. Save, spend, and invest in ways that align with your values.

What is roooted anyway? We’re a newsletter and community dedicated to making money cool. For most people, when thinking about finance, “cool” is not exactly the first word that comes to mind. We’re trying to change that.

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