There’s a post today on WiseBread entitled “6 Ways that Dieting and Budgeting are Exactly the Same.” This money-food analogy is remarkably common. It’s in the title of the blog. Several personal finance books (e.g. Dave Ramsey’s Total Money Makeover) are openly modelled on weight-loss books. And there’s that old quip that you can’t be too rich or too thin. (Which, let us remember, was once meant as a joke.)
To an extent, it is a valid analogy. A generic instruction for losing weight might be “Eat less, exercise more” which could easily be translated into “Spend less, earn more.” Neither is likely to inspire a fat/poor person, but the inescapable underlying truth is there in both cases.
That said, the analogy is far from perfect and can lead to some unfortunate money behaviors.
The biggest difference between dieting and increasing wealth is that successful dieting comes from winning most, but not all, of many small battles, and successful personal financial management comes from winning a few big ones.
If you fall off the wagon one afternoon and have a big meal, you may feel terrible about it but it’s still only one meal. It will not sink your weight-loss program. The goal is to keep from eating big meals almost all the time. On the other hand, if you succumb to temptation and buy that hot new convertible instead of the used sedan that you went into the dealership to look at, you really have done damage to your get-rich program. You can maintain a frugal lifestyle for a very long time and still not make up for one big financial sin.
The other big difference is that eating is a biological imperative. When you are hungry, your body creates hormones that have a physical effect on your brain and your judgement. You may feel that you desire the latest iPod in the same irrational way as you wanted that slice of pie, but it’s really not the same thing.
Both of these differences, if ignored, can lead to serious problems. Living a frugal lifestyle but then making mistakes in the handful of financial decisions that really count is a tragic waste of effort. (Although you do get to feel good about yourself as you wash your Hummer with bucket and hose instead of taking it to the car wash.) And treating spending as an uncontrollable compulsion just makes the problem worse. The truth is that not spending is not exactly like not eating. It’s easier.