Financial FOMO: What, Why and How To Avoid It.

Financial FOMO

What is Financial FOMO?

You’ve probably heard of regular FOMO, which is the fear of missing out. It’s when you worry or have anxiety about missing out on fun and memorable experiences in life. What about Financial FOMO?

Financial FOMO is a little more specific. It’s when you worry about missing out on financial success or profitable events in life. You constantly research ways to make money, save money, and get ahead. You are excited about finances, but this feeling of excitement is matched equally with a feeling of disappointment from “not doing as good as everyone else seems to be doing”.

Personally, I don’t suffer from FOMO, financial or otherwise. I believe FOMO is an unhealthy mindset that makes people their own worst nightmare. Not only is it poisonous to let fear and anxiety occupy your mind, it leads you to do things you usually wouldn’t do.

It might sound cool to have Financial FOMO, but it can actually be detrimental to your financial success. It’s the opposite of cool!

Example of Financial FOMO:

A week in the life of Steve…

Monday:

Steve wakes up at 6am and is very motivated. He goes for a morning jog while listening to his favorite podcast, The Entrepreneur Expert McMillions Secret Strategies Show.

The podcast features a guest speaker who built a $200,000/y business buying and selling raw land. He outlines 6 easy-to-follow steps for young and hungry beginners to start their own land flipping business. Truly inspiring content.

Steve is fascinated by what he hears! He gets home from his jog and writes down “land flipping” on his goal board for the year 2020.

Tuesday:

Steve goes out for drinks after work. His buddy, Tom, is at the bar bragging about his latest Bitcoin trade. Tom has been buying small amounts of Bitcoin ever since it was $30 per coin, and holds about $350k worth of Bitcoin today.

Steve feels a little bad that he never bought into Bitcoin back in the day, but Tom assures him he’s not too late to enter the cryptocurrency market. Tom’s advice is, “just throw 1000 bucks into bitcoin every month or so. It’ll be worth millions some day”.

That night Steve goes home and spends 3 hours reading news articles and watching YouTube videos about Bitcoin price predictions. Not ready to commit yet, he goes to bed without purchasing anything.

Wednesday:

Someone emails Steve a news article written about Mark Zuckerberg. The article explains how Zuckerberg and his wife started a foundation to fight diseases, and they donated 30 Billion dollars to the charity. Zuckerberg was 31 years old at the time.

Steve thinks about his own life. Steve is 36 years old and only donates $1000 a year to charity. He feels horrible about this because it’s only a tiny fraction of what Zuckerberg does. Steve goes to bed that night feeling like he’s made no impact on the world.

Thursday:

Steve needs some inspiration, so he goes back to his favorite podcasts. He listens to 3 episodes back-to-back. In these episodes, experts talk in depth about rental property investing, recession proof stock picking, and passive income via blogging. These are 3 more strategies that Steve is ‘missing out on’ and 3 more reasons for Steve to feel crap about himself.

Friday:

Steve wakes up to a text message from Tom, the bitcoin guy. The text reads: “Bitcoin just went up 22%! I told you it’s a good investment!”. Steve feels like a real loser. If only he bought Bitcoin on Tuesday, he would have made 22% in 3 days! Dang, he missed out!

Trying to feel better, Steve goes on the ChooseFI Facebook page and starts reading some of the group posts. One of the posts reads: “My husband and I just hit FI and we are quitting our jobs next week to travel!”. Steve is happy for the couple, but secretly feels shit because he has 6 years of work left before becoming financially independent himself.

Saturday:

It’s been a week of “bad luck” for Steve, or so he feels. Everyone around him seems to be getting rich, becoming financially independent, and doing it all in a fun and interesting way!

Steve is left feeling anxious and worried. Everyone is moving forward and Steve is being left behind. How can he keep up with what everyone else is doing? Is there some secret to success he is missing?

Steve goes to the library and borrows 6 self help books to see if there are any answers there. The more Steve searches, the more lost he feels. The cycle continues.

Financial FOMO

Here’s a little graph I drew that shows the development of FOMO. Starting with a simple bad feeling, and growing all the way to a chronic problem of feeling constantly crap.

 

Problems Created by FOMO:

You may read the story above and think that Steve hasn’t actually done anything wrong. And he hasn’t, really. But there are a few (small) issues with Steve’s thought process that make him his own worst nightmare. Continuing down a path like his can lead to several (big) issues later:

  • Subconsciously comparing himself to others: While Steve loves hearing stories about successful entrepreneurs, in the back of his mind he’s comparing himself to each of them. Their age, their income, their net worth, their brilliant investing strategies. Since there is an unlimited amount of richer, smarter and younger people in the world, Steve is setting himself up to feel sub-par for the rest of his life.

 

“Comparison is the thief of joy”

 

  • Analysis Paralysis: Steve is eager to learn, so he thinks the more information he can stuff into his brain, the better. The problem here is if Steve doesn’t pick a specific strategy and take action, he will never get anywhere.
  • Impulse or Emotional Investing: (The opposite of analysis paralysis) One day Steve might just take Tom’s advice and buy bitcoin when he gets home from the bar. No research, no thought, just buying so that he doesn’t miss out. This is a big financial no-no!
  • Beware of False Profits: Steve’s FOMO alters his vision of reality. He only sees and hears winning stories. In his mind, every person (except him) is making sound financial decisions and big profits. This is definitely not real life. (Similar to browsing someone’s Facebook profile… People usually only post their good photos, good stories, and share good times. The ‘bad stuff’ is hidden, but doesn’t mean it’s not there.)

 

Can You Relate?

Does this remind you of anything you’ve experienced recently? Maybe you have a little Financial FOMO?

The fact is, everyone misses out on something. Nobody can do it all, have it all, learn it all, or know it all. You can’t control how quickly the world moves.

But what you can control is how you feel about it. You can control your reaction, your response, and your future. Let’s now talk about the antidotes to Financial FOMO.

 

Financial FOMO Antidotes:

 

1. Appreciation:

Think about all the things you do have, instead of all the things you don’t have. Financially speaking, simply focus on your existing investments that are already serving you well, instead of the other million strategies that you’ve never tried.

In Steve’s example… He actually already has $800k in a brokerage account invested in low cost index funds. He accumulated this the slow and boring way, via maxing out his 401k each year. Steve has more money than most people will ever have in their life, yet he still feels like a peasant.

Steve’s frustration and Financial FOMO will continue until he starts appreciating what he already has.

2. JOMO:

This is the Joy of Missing Out. For every financial upside, there is an equal invisible downside. Be thankful for the downsides you are missing out on!

Your friends own rental properties and you don’t? Instead of feeling bad, you should feel joy! You are missing out on the hundreds of headaches, tenant issues, broken toilets and trashed units that landlords have to deal with.

Missing out gives you more time to focus on other stuff that matters to you. Think “Less = More”.

3. Low Information Diet:

Limit the amount of stuff you let into your brain. Especially first thing in the morning! Cut down the amount of news you read, podcasts you listen to, and other people’s boasting stories/gossip.

Instead, fill your life with real experiences.

Good news! Steve eventually uses this tactic. He stopped listening to podcasts in the mornings and instead he spent 2 hours each day interning for his dad’s wealthy friends’ company. Steve is happier than ever, and getting hands-on experience.

4. Stop Comparing Yourself to Others:

Especially the Mark Zuckerbergs of the world!

It’s never going to be a fair comparison. When you study someone else, you are comparing their “outsides” with your “insides”. The outside appearance of people (namely rich/famous/millionaires/entrepreneurs) will always trump your inside feelings about yourself.

 

“YOU are the only YOU in this world,

and the only YOU that will ever exist.

There is no comparison.”

 

All Roads Lead to Rome

No matter what your path is up the financial mountain, everyone ends up at the top. Old, wise, wealthy, and happy.

Enjoy the road you are on. (Or switch to another road if you’re truly unhappy). Just don’t worry about everyone else’s trails. It’s impossible to climb a mountain via two routes simultaneously. Rest well knowing that you’ll see everyone up the top.

I’ll leave you with this video from one of my fav brewing companies:

You got Financial FOMO?….   No Mo!

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