How Do You Frame Your Financial Picture?

Admin - February 26, 2024

Pine Watt P F3 Bfa Lghqw Unsplash

Everyone loves a good story. 

But the stories we tell ourselves about our financial picture — how we frame our situation and experiences — can sometimes hold us back from enjoying our wealth. 

Taking time to reflect upon how (and why) we see our finances through a particular lens can provide valuable insights to help us strategize how to spend and save our money. 

Take a look at how stories might shape perceptions of our finances  in this narrative by another of our Wealthcare Capital Advisors:


There’s an old quote that goes something like,

“Economists have predicted 9 of the last 5 recessions.”

And while it pokes a little fun at our collective inability to predict the future, it’s also the basis for a story we might begin to tell ourselves.

A frame through which we look at the world.

This is just one small example among a gazillion others.

As humans, we’re wired to cling to a narrative.

A story.

This is how we make sense of the world around us and frame our lives.

The stories we tell ourselves can be helpful.

But they can also keep us stuck. Or be harmful to our overall well-being.

Imagine you’re standing on a street corner at a busy intersection. There are 20 strangers standing around you.

As you wait for the crosswalk signal to turn green, there’s a collision right in front of you.

A Toyota makes violent and noisy contact with a Jeep.

Thankfully no one is hurt.

Four minutes later the police show up and start asking questions about what you and the people around you saw.

How many eye-witness accounts will perfectly align with one another?

I suspect very few.

Some will say it’s the Toyota driver’s fault. Other will blame it on the Jeep.

While some witnesses will claim the traffic light was green, others will swear it was red. And at least a few will say the light was yellow.

How fast were the cars traveling?

Did either car have their turn signal on?

Were either of the drivers looking at their phone instead of the road?

How many of the eye-witnesses were staring at their own phones and didn’t really see what happened?

Now, let’s carry this thought exercise over into the world of personal finance…

As I’ve shared previously, clients often ask me how they stack up or compare to other clients.

This is impossible to answer for some obvious reasons. But also for some not-so-obvious reasons too.

Sure we can line up two women of similar age, income, savings, and more side-by-side and measure quantitatively how one looks relative to the other.

But what about qualitatively?

If one woman has more mortgage debt than the other, does that automatically deduct points from her financial standing?

Of course not.

There could be reasons and circumstances for the higher debt that make perfect, rational sense to her. And for her situation.

Likewise, what if the other woman has accumulated a significantly higher portfolio balance?

More money is always a good thing, right?

Not so fast, buckaroo!

Maybe she’s over-saving out of fear or anxiety and will later have trouble actually spending and enjoying her wealth.

Maybe she has trouble spending and enjoying her wealth today.

I think it’s important to, in the words of Paul Harvey, consider “the rest of the story.”

In this recent Morgan Housel article, he shares his definition of “Frugal vs Independent.”

And while the article provides a thought-provoking read about how we might think about our spending, this is simply a story that Housel is telling himself about one aspect of money.

You might read his article and wonder how or why you’d apply words like “frugal” or “independent” to how you spend your money.

You just spend money (or not) like you’ve always spent money, right?

But it might a polar-opposite approach to how your Mom & Dad spent money.

Maybe they were frugal with money, and you told your self (unconsciously) that you weren’t going to be like that when you were an adult.

The opposite could also be true.

Or maybe you saw your parents or grandparents as shining examples of financial responsibility and you’re following in their financial footsteps today.

Where is your portfolio today compared to this time last year.  

What story do you tell yourself about that?

We tell ourselves stories constantly.

And it’s rooted in our survival instincts from our earliest days as a species.

Was that noise I just heard the wind, or is that a saber-tooth tiger getting ready to make me their dinner?

In today’s modern world, many of the stories we tell ourselves are still firmly rooted in our survival instinct.

And that’s OK, but only if you acknowledge this and make appropriate accommodations in your decision making.

Elizabeth and I recently returned from a week in Portugal.

It was a wonderful trip and we met some great people, had some fantastic meals, and saw some amazing sights.

Here we are at a Christmas market in Lisbon:

In retrospect, we were telling ourselves stories throughout our trip.

Stories about where to eat, where to explore, how safe we felt walking around in a strange city after dark, and much more.

99.8% of this storytelling happens silently in our minds.

But we were telling ourselves stories nonetheless.

And you know what? You’re telling yourself a story as you read these words.

You might think anything from “what a skilled writer this guy is” (I’m not) to “more rambling nonsense from Russ” to who knows what else?

I suspect without stories to interpret and navigate our lives and the world, we’d probably go insane.

With the investment markets at new highs, will they go higher?

Or have they risen too far, too fast, and there’s going to be a quick and significant market drop?

I don’t know what will happen, but I’ve told myself a story and created a narrative that makes sense to me.

How about you?

What’s a story that you tell yourself?

Photo credit: Pine Watt