A few months ago we spoke about the luck gap, the distance between feeling financially unlucky and just missing context. That issue was about the context we can’t control when it comes to money, and how global events heavily influence our personal budgets.
But what we can control when it comes to getting financially lucky vs unlucky comes down to understanding your first financial domino, because it creates a second-order effect.
A first order effect is the obvious result of doing something, but the second order effect is what that result then causes, and so on it continues to many numbered effects. And while researching this more, I found that apparently, most people never get past the first order. I then formed the ultimate conclusion: I had to make this an FHG’s core principle, because getting past the first order is basically financial lucky girl syndrome.
So let’s learn how to get financially lucky.
𝜗ৎ In this issue:
Your first financial domino
Why some opportunities go to waste
Creating financial luck by season
✦ Your first financial domino
Most of what I see as financially lucky behaviour is an outcome that stands out more than the very very long chain of decisions that drove it. I.e. the second-order effect and beyond.
For example, say you start tracking your spending:
First order: you know where your money goes
Second order: you feel less avoidant about opening your banking app
Third order: money stops being something that revs up your anxiety
Fourth order: you decide faster, because you are literally less anxiety-ridden and can think clearer
Fifth order: 6 months later, you’ve got enough put away to say yes to something you’d previously turned down
Or… say you start walking first thing every morning.
First order: your body is moving more
Second order: you have a better mood and more predictable energy
Third order: you procrastinate less
Fourth order: you finally send the scary email
Fifth order: because you shot your shot, someone said yes, and you double your income that month
It’s easy to see all the fifth orders out there (the promotions, big savings accounts, beautiful homes etc) and forget that the first order was probably something so menial you wouldn’t even think to do it with importance.
That’s where the three pillars of being an FHG start being the essential mechanism that it is: if you’re sleep deprived/overstimulated/reactive, you have less capacity for good financial decisions. This means your first financial domino won’t ever look financial in the first place—and as an FHG, it’s often something physical, because that helps you create real self-trust.
⟡ Why some opportunities go to waste
Opportunity without preparation is money left on the table, i.e., more opportunities are worth very little if your financial life cannot respond to them. For example, your dream job is handed to you—but you’d need to survive 8 weeks before you’re paid for the first time. Do you have that 8 week fund ready and waiting?
Essentially, it’s the opportunity of your dreams presenting itself, but you not having the financial capacity to act on it. Not even sloppily!
And the terrible part of low financial capacity is that is has a very annoying, clingy bestie: low psychological margin. It’s panicking at everything and anything you have to pay for or feeling like income wobbles are completely catastrophic.
When your finances causes stress that contaminates every non-financial decision you make thereafter, you think in smaller timeframes, and that’s how you end up spending for dopamine hits, avoiding your money altogether and going round in circles.
So for every financial milestone you hit, take the time to recognise what it does for you psychologically. Having emergency funds creates clearer thinking and you make decisions from a stable place. Having a runway saved up before you quit your job creates the mental peace you need to find good clients instead of working like crazy to just ‘make money’.
꩜ Creating financial luck based on your season
A quote doing the rounds on the internet this week got me thinking about this: “an idiot in motion is smarter than a genius at rest”. It applies financially. We’re FHGs, of course it does.
Thinking creates possibility, but motion makes reality.
Not all the results from knocking down the first dominoes will be successful but getting the feedback from doing it improves what you decide to do next, as well as crucially, your confidence. Another inception-style second order effect!
As with any formula, if anything is zero, the total is zero too. So the multiplying here is super important. To create financial luck, which is essentially the second-order effect, we need to knock down the first financial domino.
The right domino to put effort into depends on both your financial season and your capacity. If you’re stuck in avoidance/procrastination/over-researching cycles, things like sleeping properly, being disciplined about money dates, regulating your nervous system all matter as much as the financial first dominoes below—but don’t be fooled, sometimes just doing something you’ve been avoiding gives you the confidence to do it again but better. It’s the flywheel of being mentally, physically and financially hot.
🁽 Earn goal: more routes through which money can reach you.
Tell 3 loose acquaintances your rates (power of weak ties)
Ask your manager straight up what would make you promotable
Ask for an introTell 3 loose acquaintances your rates (power of weak ties)
Ask your manager straight up what would make you promotable
Ask for an intro
Do enough people know who you are, what you’re good at and that you actually want work? (Everyone forgets this part—waiting to be chosen is so not Financially Chic™) Are you avoiding any conversations because you’re not ready to be rejected?
🁺 Keep goal: financial and psychological margin.
Read through last months transactions
Ring your WiFi/utilities/bills provider and ask for a better deal
Move idle cash to a high interest savings account
Audit your subscriptions once a month
What is constantly making money feel chaotic for you? Why do you feel so financially un-put-together? What decision are you making over and over that you should Decide Once on? What would make a £1,000 unexpected expense feel much less daunting?
🂎 Grow goal: exposure to long-term upside.
Open the investment account with £10 (instead of researching for another month)
Increase your pension contribution
Set up a standing order
Where is your desire to be correct first time/perfect stopping you from participating at all? Which of your wealth building behaviours need to be automated? Where does Future You benefit disproportionately from you acting earlier?
Financial luck is all down to how prepared you are once doors open. You can’t control which doors, what doors, and when they open, but you can be prepared, in motion, and ready for that second order effect to change your life.
Until next week,
— Dev xo