The Investment Scientist

How to Achieve Financial Peace of Mind

Posted on: July 13, 2012

conscious and unconscious mind

What prompted me to write about financial peace of mind is actually something that happened to me recently that had nothing directly to do with the topic.

My iPhone failed to sync with my desktop calendar; as the result, I missed an important client meeting.

For a whole day and whole night, I had this nagging feeling that I missed something but couldn’t quite be sure what it was. Did I leave my keys in the gym? No.

Then, I woke up in the middle of the night and remembered the appointment that did not show up on my iPhone!  Apparently, some part of my mind was not resting during sleep.

Psychologists have theorized that human beings have two minds: the conscious mind and the unconscious mind. We may live our whole lives without being aware of the unconscious mind, but it is there to keep track of all unfinished tasks, unresolved issues, and unanswered questions.

The unconscious mind is also working hard to make sure our conscious mind picks up where it left off. It interrupts the conscious thought stream with bits and pieces of thoughts that something needs to be done. The unconscious mind is very persistent; it nags until the conscious mind does something.

When we have too many unfinished tasks, unresolved issues, and unanswered questions in our lives, the nagging could feel constant. We may feel like we don’t have a moment’s peace. Researchers have found that when you are in that state of mind, you get less done and your health suffers, physically and mentally.

When I meet new people, I often ask them: Do you know how much you need to retire comfortably and how much to put aside now? These are very important questions, all agree, but few know the answers.

Financial questions and issues like these do not just disappear like salt in water if you actively ignore them (like so many people are doing now). Your unconscious mind will keep nagging you until you find resolution, so much so that you lose financial peace of mind.

But there is encouraging news. Researchers have found that you don’t have to have all the answers and resolutions to have peace of mind; you only need to take the first step, such as setting aside a block of time to study the questions or scheduling an appointment with a financial advisor. As soon as the conscious mind starts to do something, the unconscious mind stops nagging because it does not need to.

The first thing I did in the morning was to call the client with whom I missed the meeting. I apologized, and we rescheduled the meeting. The meeting will be next week, but that’s OK, I already have peace of mind today. What can you do to restore your financial peace of mind? Could it be scheduling a discovery meeting with me?

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2 Responses to "How to Achieve Financial Peace of Mind"

I run as much as possible of my retirement planning and investing on autopilot. My 401k and IRA investments are deducted automatically from my paycheck and savings account, respectively. Most of my investments are in “lifecycle” funds that automatically re-balance. For the rest, I check percentages and rebalance when the financial is going crazy (either crazy exuberant or suicidal). I do check my balances more often, but most of the time everything is left alone. I don’t assume that I will ever see any money from my pension and Social Security. Given Congress, that’s a safer assumption than the other way around. Worst case scenario is that I have invested a little too much and be able to splurge a little. I’m fortunate enough to be doing okay financially right now, so I don’t feel deprived. Then again, I never felt “entitled” to a huge house or fancy car, nor do I “need” everything I see in stores now-now-now. Financial peace starts with the realization that one needs clean air, adequate nutrition, clean water, and shelter from the elements (and love), but the rest are negotiable luxuries.
My teenager says he feels “deprived” sometimes, but I’ve told him he can buy everything extra he “needs” out of his woefully meager pitiful allowance or get paid for extra chores, aside from the food, clothing, movies, recreation, and toys he normally gets from us. It’s amazing how fast that “need” becomes a delayed luxury or forgotten when he has to pay for it himself. Oddly enough, some of my adult neighbors and acquaintances don’t seem to have picked up on that idea.


I do the same thing. I try to make my personal finance as simple an automatic as possible.

About the “need” you mentioned, I could write a post about instant gratification and its irresistible pull. Researchers have found that kids who can resist instant gratification (such as eating the sweet right away) are most successful in life and finance.

Personal finance, when boiling down to the core of it, is balancing between instant gratification and delayed gratification.

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Michael Zhuang is principal of MZ Capital, a fee-only independent advisory firm based in Washington, DC.


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