Financial Responsibility – what does it really mean? When it comes to investing, there are 2 common myths that can get you into trouble. Do either of these sound familiar?
- I have to be in total control because I don’t trust anyone else (Jack of all trades, master of none)
- I will trust someone else (the government or my financial advisor) to do everything for me, so I don’t have to do anything (victim mentality)
These are two opposite extremes and neither works. Let’s look at how financial responsibility affects the outcome of your investing decisions.
If you fall into either of these categories, the good news is you can learn how to change your thinking. But first you have to be willing to identify what’s holding you back and then make a decision to do something about it.
The Control Freak – Too Much Financial Responsibility
Let’s look at the first aspect of taking financial responsibility: Total Control. It is human nature to want to be in control. Certainly we can control some things, but not others. We can control our own choices, but we can’t control others’ choices. We can control how and where we invest, but we can’t control the markets, the government or Wall Street. We can change ourselves, but not others.
Do you feel the need to be in control of everything?
Thinking you can be in total control is a form of autonomy (self-law) and is simply not possible. For example, you cannot control gravity, no matter how much you might believe you can (if you jump, you will still fall to the ground, regardless of what you believe).
The Gravity of Economics
The same is true of economic laws. They may not be quite so “in your face” as gravity, but they exist just the same. Neither you nor I nor Wall Street nor the government can change laws of economics. Believing them to be something different than what they are doesn’t change them or the consequences of making the wrong choices.
I believe God has set up laws of economics that are clearly meant to produce good for everyone; i.e., a “win-win” situation or “give to get.” There are those that believe that wealth can only be “taken” from someone else, that their gain always comes at someone else’s expense or “net zero sum.”
Both of these can be true over the short term, but only win-win is sustainable over the long term. Win-win produces more wealth for everyone (not in the same proportions, though – there is no law saying everyone should get the same reward for different effort). The second (net zero sum) eventually produces poverty for everyone (or nearly everyone), like using up all of the natural resources and leaving the land barren and desolate.
Win-Win Starts with Trust
Being a control freak is a form of self-deception. When people realize that they really can’t control everything, they will retreat and give up, thinking that everyone is just a pawn and some are lucky while others aren’t. It’s a way of shirking responsibility for the things that can be controlled. It makes people feel comfortable with failure instead of doing something about it.
But you can learn to give up what you can’t control, to build trust in letting others help you get where you want to go and most importantly, to invest in yourself. It starts by taking financial responsibility for yourself and admitting that you can’t get there on your own (otherwise, you would already be there, wouldn’t you?).
The Passive Victim – No Financial Responsibility
The opposite myth is the totally passive mentality of trusting that someone else will do everything for you. Some expect God to do this, as if He is their own personal servant. Others shift the responsibility to either the government or to a Wall Street financial advisor, thinking that they will protect them.
Do you feel like investing is just too hard, so you give up?
These are just excuses for laziness. You and you alone are responsible for your own financial situation, whether good or bad. It is, with few exceptions, based on the choices you make (the exception would be from things totally outside of your control, such as an accident that leaves you dependent on others for your basic needs – we can’t lump everyone’s situation together, but most of us are where we are due to our own choices).
God is Not Your Butler
God will provide what you need if you trust Him completely, but this doesn’t make Him your own personal servant and it also doesn’t mean that He will shower you with wealth (a false teaching known as the Prosperity Gospel – beware of televangelists with big smiles and slick talk).
It’s like the joke about the man waiting for God to save him from a flood. As the water rises, he is stranded in his home and asks God to save him. Soon, someone in a rowboat comes by and offers to help, but he refuses, saying “Jesus will save me.” As the water gets higher, a police boat offers to take him to safety, but he again refuses. Finally, he is standing on the roof as his house is being washed away and a rescue helicopter hovers overhead with a rope, offering to pull him up. He refuses, yelling back “Jesus will save me.”
The man drowns and after meeting Jesus in Heaven, asks “Lord, why didn’t you save me? I prayed and prayed for your help.” Jesus replied, “I sent 2 boats and a helicopter. What were you waiting for?”
Put Your Resources to Good Use
The same is true of your financial situation. Are you waiting for a miracle when the resources you need are right in front of you?
People often give up and like to blame others for their situation. It makes them feel better about their failure, but the truth is, it is still your responsibility. You are the one that chose the financial advisor that lost 40% in 2008. Wall Street certainly doesn’t take financial responsibility for you – just read their disclaimers.
Putting responsibility for your finances on someone else is a form of victim mentality. What you are really telling yourself is that it is OK to be a failure and give up, because you can blame someone else for it. In truth, you are only a victim if you choose to be one.
Once you decide to take financial responsibility for yourself, you can start to learn how to do it. It’s not something you are born with. It requires some learning and learning first takes a willingness to be open to learning.
You can learn to make wise investment decisions and improve your situation. You can fire the incompetent “financial advisor” that continually gives you bad advice (you probably wouldn’t be here if they gave you good advice, would you?). You first have to take responsibility for your own financial situation and choose to invest in yourself. Learn what it takes to invest wisely and seek out help from those that have a track record of helping others invest wisely.
The Cost of Freedom
The average person wants freedom, but doesn’t understand what freedom really is or what it costs. Freedom is not free. It requires responsibility and the more freedom a person has, the more responsible they must be for their own actions.
What the average person really wants is autonomy, not freedom. Autonomy simply means “self-law.” It means answering to no one and doing whatever you want. But human beings cannot be autonomous. It results in anarchy and problems for everyone else.
The average person wants to be able to do whatever makes them feel good and not suffer any of the consequences. Such an idea is a myth, because someone will always suffer the consequences. This is the victim mentality in a nutshell.
Politicians love victims. They can step in offering an illusion of safety and false security for people with a victim mentality. The politician gets more power, but the victims never really get the security they are looking for. There may be some short-term benefits, but in the long run the victim will always lose.
Don’t Trade Freedom for False Security
A great case history on how people give up their freedom for false security is the decline of Germany after WWI. It started with uncontrolled government spending and money printing during the war. Then hyperinflation and deflation after the war left most destitute, with all of their savings gone. Finally Hitler moved in to blame everyone else for the mess and offer people false security. This may be an extreme case, but the course is usually the same.
Wall Street also loves victims. They want people to believe that they are their only hope and that if a person just hangs on longer, everything will be alright. Is the market going down? Wall Street tells you stocks are a bargain, so invest more. Is the market going up? Wall Street tells you to invest more, because if you don’t you’ll miss the rally. They are preying on people with a helpless, victim mentality.
Freedom takes some work and responsibility, but it is not impossible. Anyone can attain more freedom by learning a few simple things and taking action to implement them. The first step is to decide not to be a victim and take responsibility.
So whether you have been under the illusion that you can control everything or you can control nothing, all it takes is a simple decision to take financial responsibility and let go of false ideas that are holding you back. You can make your dreams come true.
Is the cost of freedom worth it to you? The decision is yours and yours alone.
You can take the first step here by reading about Investing Freedom.