How to Manage Personal Finances Book: Chapter 2- Obstacles to Learning About Personal Finance
Author’s Note:
I am posting a text version of this entire book on Substack, and video versions on YouTube. Email ken@stltest.net for details on the book’s publishing date in late ’24 or early ’25.
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Change- any change- is hard, and we all have too many choices.
Change is hard
“To improve is to change; to be perfect is to change often” – Winston Churchill
In 2017, Trinidad and Tobago (a country of slightly less than 1.4 million people) beat the US Men’s Soccer Team (325 million people) to eliminate the US from the World Cup soccer tournament. Back then, we Americans got all jacked up about a new coach, new team members- and we didn’t seem to make much progress in Men’s soccer.
Serious change was needed- more than the status quo.
The US Women’s Team, on the other hand, won the World Cup in 2015 and 2019- proof that the US could figure out international soccer.
The reason that people don’t diet, don’t exercise, and don’t resolve bad personal relationships is that change is hard. As a result, we don’t really, truly change and grow unless we’re in real pain. When we’re at that point, the pain of change is less severe than that pain of not changing.
But the fact remains- change is really hard.
Example #1.
Too many choices
All I needed was deodorant.
The exact type was: Dove Men+Care Extra Fresh, gray packaging with a light green square on the label. I’ve used it for years.
When I got to Target, I was faced with a tsunami of choices. Dove alone had dozens of deodorant options- and the differences in packaging were only slight.
I had to lie down in the aisle, take a nap, and then make a choice.
OK, I’m lying about the nap, but I’m sure you’ve experienced the same thing. We have far too many choices with everything: food, clothing, entertainment, business products, and tools..
Example #2.
Isn’t it all dog food?
According to an industry source: “The American Pet Product Association 2017-2018 Pet Ownership Survey found that 68% of US households own a pet and spend an average of $300 annually on pet food and treats. The US pet food market is expected to reach $30 billion in 2022.”
That’s a lot of Alpo- does anyone remember when Ed McMahon used to do live commercial spots on the Tonight Show for Alpo? They’d have a dog on set when he did the spots- here’s a video of a commercial.
Another quote from the same source: “Pet food and treat options available to US pet owners have exploded in recent years. GfK reports the number of brands has increased 71% since 2011 and now totaled 630 in 2018.”
Really? 630?
There’s a term that describes this issue: paradox of choice.
Lots of choices isn’t a great thing
If you listen to the Tim Ferriss Podcast (which I highly recommend), you’ll often hear about the Paradox of Choice. Here’s the definition:
“The paradox of choice stipulates that while we might believe that being presented with multiple options actually makes it easier to choose one that we are happy with, and thus increases consumer satisfaction, having an abundance of options actually requires more effort to make a decision and can leave us feeling unsatisfied with our choice.”
Deciding between multiple options requires more time and more distractions. The quote continues:
“When the number of choices increases, so does the difficulty of knowing what is best. Instead of increasing our freedom to have what we want, the paradox of choice suggests that having too many choices actually limits our freedom.”
Many people believe that having dozens (or hundreds) of choices is a good thing. Turns out it may not be.
Not sure if you buy the argument? Think about investing. (a topic in Chapter 3)