Getting Rich and Losing Weight
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.
Frugality, PF Blogs | Frank Curmudgeon | 
January 27, 2009 9:36 am
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By notmoneysavvy, March 12, 2010 @ 5:08 am
Couldn’t agree more. But some meals are equivalent to that convertible. Trust me I know. After many very exquisite (read expensive) meals at some very fancy la-di-da restaurant that left my credit card seriously paralysed, I have decided that some $3 fish and chip meal warms the stomach with change for a sugar free Coke.
By getagrip, March 26, 2010 @ 9:27 pm
While I understand the point, that the finance/diet analogy isn’t perfect, the reality is in both cases a person needs to re-evaluate and change their lifestyle. Changing lifestyle does involve views and habits. So it is the day to day habits that get developed that determine long term success in either area.
The vast bulk of adults who are physically “in shape” are not that way because they are blindly lucky or genetically superior. They are in shape because they make time to watch their diet, pay attention to their health, and exercise reasonably over the long term.
Similarly, most people don’t get ahead financially without making time to watch their spending, manage their career, and investment reasonably over the long term.
While I agree that one good scam, one major spending weekend can trash years of planning, just like one serious illness or accident can devistate someone’s health, it’s unlikely that someone who has developed positive habits is going to make an intentional “impulsive” mistake. The overeating at one meal is more equivalent to deciding you’ll take the similar car with a few extra options, so you spend ten percent more, not 10 times as much. Someone who would spend 10 times as much hasn’t changed their lifestyle at all, they’ve simply masked it and have been waiting to bust out.
So I disagree with financing being about winning a few big battles only. Because it doesn’t matter if you saved ten thousand on a new car if you spent twenty five and didn’t need a car in the first place. Or if you saved five hundred on car insurance, and celebrate by taking a weekend vacation. If you don’t develop the habit of watching, at some level, what you spend so it’s less than what you earn, and don’t develop a means of saving/investing/planning for the future, getting a couple of big wins here and there won’t mean anything because they’ll get dragged down by the errosion of the bad habits.
By jim, October 12, 2011 @ 5:16 pm
It’s an old post, and the blog isn’t even active anymore, but I had to comment.
THe problem wit hthe analogy is that the generic advice “eat less and exercise more” is complete bunk! It’s based on the whole “calories in/ calories out” myth that allows thin people to congratulate themselves for their virtue and condemn fat people for their sloth and/or gluttony.
THe reality is the mechanisms that cause us to gain or lose fat are biochemical in nature. The body adjusts itself in response to the hormonal signals it gets. If your hormones are signaling to store fat, your fat cells will store fat even if the rest of your body is literally starveing. In this state, you probably won’t be exerciseing much – but it will be because you will literally have barely enough energy available to move. You will be hungry all the time because your cells will be screaming or sustenance.
In other words, people don’t get fat because they are lazy or gluttonous – they are lazy or gluttonous because they are getting fat.
Read Gary Taube’s short book “Why we get Fat”, or better yet his longer one “Good Calories, Bad Calories” for the details. Ih short – it’s not about changeing how much you eat – it’s about useing the foods you eat to change your biochemistry.
People aren’t slot