Finding Internal Measures of Personal Finance Success

Recently, in the midst of an exchange with someone who was considering some major life changes, I wrote the following almost-completely-off-the-cuff comment that I wanted to share here:

“Feeling “average” comes from using external measures to judge the quality of your life and not internal ones. Guiding my life by internal metrics rather than external ones has literally been the best thing that’s ever happened to me in terms of how I feel about myself and my place in the world. What’s important to ME? How do I build THAT and be better at whatever THAT is? Am I better at whatever THAT is than I was a year ago or five years ago? The amount of money you make is determined very, very much by factors outside of your control, so basing your personal value on your net worth or income isn’t going to bring happiness.”

This launched a completely different route in the conversation and led to a bunch of useful and interesting observations that I’ve been reflecting on deeply for the last several days.

External Measures of Success

I think that the biggest reason that the first several years of my professional life were troubled (to say the least) was that I subscribed to external measures of success for the first time in my life. Let me explain.

When I was young, most of my measures of success were internal ones – in fact, almost all of them were. Did I feel like I was a good person who lived up to my values (or the ones I was learning from Mom and Dad)? Was I learning something new? Was I treating other people in the way I would like to be treated?

My own internal sense of how well I was doing those things steered my own sense of worth and success. For the most part, those things steered my external measures of success, too. I had a healthy number of friends, especially for someone who was (and still is) pretty introverted. I got good grades in school. You get the idea.

Over time, though, I slowly began to put more and more value on external measures of success. I remember that transition starting in high school, when I began to care more about the grades than about learning the subject. It began to really take off in my college years, when I began to worry about inherently pleasing others with my actions. Rather than doing the right thing because it was inherently the right thing, I’d often try to do it because I knew it would please or impress someone else, and their reaction to what I was doing would tell me how worthwhile my choice was.

By the time I reached my early professional years, I was almost entirely subscribed to external measures of success.

My “success” was judged by the clothes I wore and the vehicle I drove and the gadgets I owned and how casually I paid for things and how fat my wallet was at the moment. The last real internal measure of success I held onto was some of the creative work I did in my career, and over time, even that slipped away as I constantly strove for numbers that would impress others.

I judged my worth by how many people applauded my talks and how many people gave me public kudos. I judged the value of my output entirely by how many people read it or used it.

It was no longer about what I thought was good or right, but what I believed other people thought was good or right.

Where did that leave me? It left me on the precipice of financial ruin, as I had spent tons of money chasing the idea that people would respect and value me if I just had this thing or that thing. At the same time, it left me with a social circle full of people that honestly didn’t care that much about me – I really only have one or two friends from that era of my life.

I was constantly spending money and time and energy chasing some kind of external validation that was never, ever going to come. There were never going to be enough people applauding. There were never going to be enough oohs and ahhs at my latest gadget. There were never going to be enough looks of appreciation at my wardrobe.

Why? External validation and external measures of success go away at the blink of an eye, and you’re left with just you. If my sense of success comes from the applause of a crowd, what am I left with when I’m all alone? If my sense of worth is based on others ogling my watch or visiting my website, what am I left with when I’m sitting alone on a hill somewhere?

The truth is, I’m not left with much at all.

Internal Measures of Success

The solution, I’ve found, is to live life by internal measures of success. It is only through doing this as much as possible that I’ve found good personal, professional, and financial results.

This might seem like a strange solution, particularly on a website that talks about personal finance. After all, isn’t a person’s net worth a pure measure of their external success, that they’ve made enough external choices to accumulate wealth?

Bear with me for a little bit, though. We’ll get around to answering that question.

An internal measure of success starts with one simple thing: what matters to me? In the absence of anything else in the world, what matters the most to me?

My first inkling of a new direction regarding that question came from having a child. The experience of holding an infant in my arms and realizing that Sarah and I were fully responsible for the care of this helpless little guy and ensuring that he grew up to be a functional member of society and able to care for himself on his own knocked me for a loop.

What I came to realize over the next few months is that raising this child to the absolute best of my ability was something that I wanted more than anything. My boss didn’t want it, and I didn’t really care that he didn’t. My social circle didn’t want it, and I didn’t really care that they didn’t, either. Being the best possible parent I could be mattered to me, and it mattered whether there were 500 people applauding or no one applauding. It mattered whether all of my friends were on board, or none of them were.

Being the best possible parent I could be for this child mattered to me. It didn’t even really matter that much how my child turned out (because I understood that nature and nurture both play a role in the process), but that I did everything in my power to be the best possible parent by my own internal sense of what a good parent is. If I succeeded at that, then I didn’t care what other people thought. I also didn’t really care that much about the exact nature of my child’s life in adulthood – even if he didn’t have the perfect life in adulthood, I would still know I did my absolute best to guide him there, and I couldn’t ask myself for more than that.

My sense of whether I am succeeding as a parent doesn’t come from whether my children express love for me or whether they get good grades in school. It comes from whether or not I’m listening to them when they speak or whether I am there for them when they need me, or whether I am striving always to find meaningful ways to nudge them toward good, sound internal principles for them to live by. Am I doing those things with my whole heart? If I am, then I’m succeeding as a parent, no matter the outcome.

Of course, part of that success comes from having the time and resources to be the best possible parent I can be. Am I providing them with quality nutrition? With shelter and safety and security? Am I able to be present in their lives without distraction and with minimal stress on my shoulders? Do I ever have to doubt whether or not I can provide those kinds of support?

Thus, in a secondary but quite important way, a certain level of financial success plays strongly into being the best parent I can possibly be. A certain level of financial success enables me to provide the core things they need without any question. It enables me to be present in their lives with a minimal level of stress and worry, and that enables me to give them focus and attention and thought and care when they need it.

So, let’s roll forward a few years. Let’s assume that I’ve spent those intervening years doing everything I can to be a good parent. I’ve done everything I can to provide shelter for them and care for them with as little stress as possible. I’ve made good financial choices so that they can have those things without much question.

Then, suddenly, calamity strikes. My net worth is wiped out. What now?

If I judged my success by that external measure – net worth – then I would feel like a failure. I had failed my children. I had failed myself. I had failed at life.

On the other hand, if I rely on my internal measures of success – have I done everything I can do to be a good parent? – then I’ve still succeeded. An unexpected event may have flattened my net worth, but that doesn’t change the fact that I have spent those years being a good parent, giving them my attention when needed, imparting principles into their life, providing shelter and nutrition and care. That doesn’t go away just because an external metric collapses.

Internal Versus External

There are three big ways that I like to use to describe the difference between an internal metric of success and an external one.

First, is this something that I care about myself with no input from others, or is this something that is heavily connected to what I think others care about? For example, I genuinely care about being the best possible parent for my children, not because of what the neighbors think, but because I want my children to have a good life on their own terms guided by solid principles where they have the tools they need to find joy and navigate through their inevitable missteps. That’s what I care about, thus it is an internal metric. It is entirely centered around my own values and principles, not trying to match what I think the values and principles of others are.

Second, am I judging success by the process – the steps that I’m taking along the way – or by the end result? Often, the end result of a long process is something that functions as an external measure of success. “I climbed Mount Everest!” looks amazing and is a good external measure. However, if you ask any mountain climber what tells them whether they’ve succeeded at their passion of mountain climbing, they’re likely to tell you about the day-in-and-day-out process of training that made a climb of Everest not only possible, but a reasonable outcome of their training. A huge success is amazing, but the true internal measure of it is whether or not you’re truly working toward it, day in and day out.

Third, could an unexpected external event definitely harm my sense of success? It is much, much harder for an external event to wipe out a sense of internal success. For example, an unexpected event could gobble up tens of thousands of dollars tomorrow, but that wouldn’t change the fact that I am a success at being a wise steward of my money. I just wouldn’t be a person with a high net worth. My external measure of success might not look good, but my internal one still does.

A measure of success that’s oriented around something that you care about without the input of others, that’s focused on the consistent process of getting there, and can’t really be derailed by a big unexpected event is an internal metric of success.

Finding Internal Measures of Success for Finances

So, how does all of this translate to finances?

Finances are a tricky thing to tie internal success to. After all, there’s almost nothing more obvious as an external measure of success than a person’s net worth, right?

However, if you look at your financial state as the outcome of a lot of wise choices and you also look at it as a foundation for almost everything else you want to do, then it’s much easier to make it an internal measure of success.

I want to be financially successful, not so that I have a big fat bank account, but so that I can give my daughter my full attention with minimal worry and stress hanging over my head, so that I can provide my son with the shelter and nutrition and care that he needs to grow well, so that I have the free time and space to reach my other son and help him build some strong internal principles. Financial success helps me find the space to do those things and many other similar things. While financial success can seem like a big external measure of success, it can also be seen as a strong foundational internal measure of success.

So, how does one measure it?

The approach I find most powerful is simply being mindful of my individual financial moves. If a dollar leaves my possession, I want it to be used in a wise way that brings some sort of genuine meaning into my life or provides a real foundational support for the things I care about.

I can do this whenever I please by simply reviewing all of my recent purchases. For example, I might pull out all of the receipts from a day that included shopping and paying bills and simply ask myself:

Did I spend every dollar wisely today?

I can ask myself that question at the end of virtually any day. It’s a guard against meaningless spending, and the more often I can answer that question with a strong yes, the more I inflate that internal measure of financial success.

People sometimes balk at a question like that because it seems to imply that incidental purchases and expenses are strictly a bad thing. I disagree. I have a line item in my budget that’s purely for incidental expenses, giving me the freedom to be spontaneous. A dollar spent out of that pool is wisely spent; it’s only when I start going out of that pool that it starts to become unwise.

If you dig into that question a little bit, you find that it nudges you toward being smart with your spending and really shopping around for the best value for your dollar. Paying your monthly cellular bill is probably a wise move, but isn’t it even more sensible to see if there isn’t a better cellular option out there for you, whether through your current provider or a new one? The same is true for all of your bills, from insurance to household supplies.

Of course, that question about the wisdom of each dollar is smartly paired with another one:

Am I wisely putting the rest of my dollars in a place where they can be used wisely tomorrow?

If you follow the first question closely enough, it’s likely that you’re spending less than you earn. If that’s true, then what are you doing with the leftover earnings you’re not spending? Ideally, you’re putting those earnings aside for the future.

Are you doing that wisely? Are you using your extra dollars to shore up an emergency fund? To pay off high interest debt? To save for retirement?

Just letting the extra dollars sit around until you can spend them on a big splurge rather undermines the decision to be wise with your spending. Doing something wise with those extra dollars now so that you can make wise choices with them later is a much better route to follow, one that helps support all of your internal measures of success over the long haul.

Just keep asking yourself those two questions:

Did I spend every dollar wisely today?

and

Am I wisely putting the rest of my dollars in a place where they can be used wisely tomorrow?

If you do those things day in and day out, week in and week out, month in and month out, and you really pay attention to situations where you don’t feel like you’re following through with this internal measure of success and figure out better ways of doing things, you will achieve financial success. These questions guide you slowly toward a very healthy relationship with your money, where it is just a tool to support the things that you most care about in your life, whether it’s parenting or marriage or learning or something else entirely.

A Funny Thing Happened on the Way to the Forum

The story of the last decade of my life has been a slow return to internal measures of success, which means a lot of figuring out what I truly value and then finding ways to live out those things in my daily life.

As time went on, for example, I went from a financial panic of not having enough money to pay my bills to the slow burn of eliminating debt and eventually to the point of realizing that money only held real value and meaning if it was serving some kind of genuine purpose in my life.

I went through similar changes in most aspects of my life. My parenting is about building the foundation of an independent and self-sufficient good citizen of the world, not a facade of a successful child. My marital life is about a deep and infinitely reliable relationship based on trust, not the “perfect marriage” on social media. These things are about what I want and what genuinely matters to me, not about what other people want or think. I started making an effort to treat others exactly how I would like to be treated, rather than excessively lauding some and looking down upon others.

Yet, a funny thing happened on the way to the forum. I now have more meaningful friendships than I think I’ve ever had at any point in my life even though I have less time for social activities than I ever have. Almost every day is filled with a long list of things to do, but they all feel like they have a reason behind them and that the eventual outcome of those things is going to be a good thing.

More than anything, I’m pretty happy most of the time. It’s not because I have lots of things and lots of things to show off, but because I know what I really want out of life and I’m stumbling in that direction, and every step in that direction brings a lasting sense of contentment and joy that exceeds almost all momentary pleasures.

Financial choices play a role in that. If I consciously choose to spend my money in ways that really further that stumbling toward the things I want most effectively and I smartly use what’s left to ensure I can keep gradually moving that way, then I’m pretty happy with where my money has gone.

I’m not perfect at any of this, don’t get me wrong. I make mistakes every day. I waste time. I stick my foot in my mouth. I waste money. I don’t do what I know I should be doing. I mess up and stumble backwards sometimes.

Overall, though, I’m heading to where I want to be, little by little, day by day, and that feels pretty good.

I just trust my internal measures of success, and my financial measure is definitely one of the big ones.

Trust me, you can find it, too. If I can find it, anyone can.

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