Progress, not perfection, in your finances and in your life

Setting high standards for ourselves is good. We are motivated to do well in school and in our careers. It can lead to self-confidence and high self-esteem. However, if we morph into becoming a perfectionist, we will likely feel stress and anxiety. Perfectionists are often highly critical of themselves, and they have an extreme fear of failure. Their sense of identity may be contingent upon the constant approval of others.

Brené Brown, PhD, is a sociologist who studies shame and vulnerability. In her book, “Daring Greatly,” she states:

“Most of us fall somewhere on a perfectionism continuum …. For some folks, perfectionism may only emerge when they’re feeling particularly vulnerable. For others, perfectionism is compulsive, chronic, and debilitating …. Regardless of where we are on this continuum, if we want freedom from perfectionism, we have to make the long journey from “What will people think?” to “I am enough.” That journey begins with shame resilience, selfcompassion and owning our stories. To claim the truths about who we are, where we come from, what we believe and the very imperfect nature of our lives, we have to be willing to give ourselves a break and appreciate the beauty of our cracks or imperfections.”

While researching thousands of individuals, ranging in age from 18 to 87, Brown noticed that roughly 20 percent of the participants were different from the majority, and she labeled them as “wholehearted.” She described them as people who believe in their worthiness, practice mindfulness and set strict boundaries in their lives.

Brown clearly admires the “wholehearted living” folks in her studies, and she has worked to emulate many of their traits in her own life. Some of the traits she considers wholehearted living include practicing selfcompassion and including creativity, play, rest, laughter and joy in our lives. Practicing gratitude (which is different from just occasionally being grateful) is also a trait, along with cultivating authenticity and a resilient spirit. Many of these traits are discussed in her book “The Gifts of Imperfection.”

Perfectionism in our personal lives

I embrace Brown’s effort toward “wholehearted living” and recognize that we can make small changes to improve our lives. Being a perfectionist is not conducive to being happy. Alternatively, taking small steps to try something new can lead to big rewards.

Perhaps you decide you would like more laughter in your life, or you want to become more creative. Plan to meet with some friends who make you laugh, or call a family member and reminisce about funny experiences. To nurture creativity, start writing each morning in a journal (Julia Cameron, author of “The Artist’s Way,” recommends three pages a day), or sketch a picture, or sing in the shower. If you want to practice gratitude, write a note to someone you love, and tell them how you feel about them. This will make you feel good, and the recipient will be thrilled.

Perfectionism in our finances

Managing your money wisely requires time. It does not happen automatically. You may feel overwhelmed by the task, because you don’t feel you have the knowledge or the time to do it “perfectly.”

Feeling intimidated because you cannot do it perfectly often causes people to neglect their finances.

The financial industry has many “talking heads” that make individual investors feel inferior.

I feel strongly that perfectionism does not need to be a part of managing your finances. If you choose one or two tasks and focus on small steps, you can ultimately make tremendous progress. As a starting point, I recommend the following three steps, which I consider the basics:

1. Prepare a net worth statement.

2. Establish a six-month emergency fund.

3. Write down your financial goals.

A template for a net worth statement is available on my website under “tools” at donnaskeelscygan.com.

If you have already completed the three steps above (with your financial advisor or on your own), consider focusing on one or two of the following:

1. Calculate your savings rate.

2. Research the meaning of stocks, bonds, mutual funds and exchange-traded funds.

3. Determine your tolerance for risk.

4. Determine your asset allocation.

5. Analyze your current investments. What would you like to change?

6. Research and choose new investments.

7. Set up your savings to be automatic.

8. Research whether you want to do any taxloss harvesting in taxable accounts. For 2023 tax year this must be completed by Dec. 31.

9. Open and contribute to a Roth IRA. For 2023 tax year this can be completed as late as April 15, 2024.

10. Increase your contribution to your employer’s retirement plan (401(k) or 403(b)).

11. Consider whether you want to do a Roth conversion (in 2023 or a future year). For 2023 tax year this must be completed before Dec. 31.

12. Decide what changes you want to make to your investment accounts. Follow through and make the changes.

Additional information on the topics listed above can be found online. If you accomplish only one or two of the tasks, you will make progress. Our mantra — in our finances and our lives — needs to be progress, not perfection. If you have questions, contact me. I reply to emails and often schedule phone calls with readers. Happy Holidays!

Donna Skeels Cygan, CFP®, MBA is the author of “The Joy of Financial Security,” and her upcoming book “Women’s Playbook After 50.” She owned a fee-only financial planning firm in Albuquerque for over 20 years before recently retiring. She welcomes emails from readers at donna@donnaskeelscygan.com. Prior columns are available at donnaskeelscygan.com/insights/.