Using Difficult Financial Stretches as a Metric for Measuring Progress

Back when I was teaching, I used to have a lot of conversations with high school students about how we show up on our “worse than average” days as being far more important to the general trajectory of our lives than how we show up on our “better than average” days. That if they wanted to make substantial and significant changes in their lives, to their wellbeing and their success (however they chose to define it), that their energy would be best spent thinking about how to make small, incremental improvements to the 50% of days that were below the median.

Why?

It’s relatively easy for most of us to show up on our “better than average” days—to do what we need to do to progress. On the best of those days we might be hitting figurative home runs, and on the just slightly “better than average” days, we might just be getting on base because we got hit by a pitch. But hey, we’re still on base, making progress in meaningful ways towards a life that we want.  

Then there are the days that ask a lot of us. And the truth is – financial days and financial stretches are no different. We will have days where it feels like the world has been generous with us and we are making great financial decisions effortlessly, and days when it feels like everything bad that can happen has happened to us, including some of the financial decisions we’ve made. And we will likely have a lot of ho-hum days in between.

And while I’ve talked about strategies for coping with and getting through the worst of these financial seasons in the post Getting Through A Money Slump, the topic of this post is a bit different. I want to talk about using our slumps as metrics of our progress. Because if we’re going to place a high value on improving the “worse than average” 50% of our financial days, we ought to have some way to acknowledge our progress.

The Problem with Best Day Metrics:

I love things that I’ve learned how to do as an adult because I have a much clearer memory of the trajectory of my progress. Skiing, golfing, playing guitar – these are all things I’m quite average at now, but I remember being quite bad at them. And unlike things I learned to do as a kid, I have a good memory of my learning curve and critical points along its path, including all those highs that came when I accomplished something that had at one time felt impossible.

Best day metrics are relative, depending on skill level, but I can clearly remember the first time I broke 110, or 100, or 90 on the golf course, the first (and, so far, only) time that I skied down a run with a black diamond on its sign, the first time I played a song all the way through with no mistakes on my guitar. It was a rush, a total high, and a pretty good recipe for a let-down because it usually brought with it the expectation that this was the new normal, creating a wildly unrealistic metric for the average and bad days that would follow.

Best days make good metrics for future best days. They make terrible metrics for the other kinds of days. It’s no different with money.

Consider this situation:

You’ve been working hard to manage your money and seeing incremental progress, saving each month and building up your emergency fund. You’ve almost hit your goal of $10,000. Then, you happen to coast through an inexpensive month with no unexpected bills, and you also get a bigger than expected tax refund. Then another month goes by, similarly, no major unexpected expenses. For the first time ever, in your whole life, you now have a $10,000 emergency fund—something that at one point felt like an impossible goal to achieve. Suddenly, everything feels like it’s starting to work for you, and you’re feeling great about your money management and all the hard work you’ve put into getting here.

But then, your water heater and your transmission go out the next month, $10,000 walks out the door, and your savings account is empty. And maybe nothing at all has actually changed about how you’re managing money (or maybe because you were tired and frustrated you did some online shopping and got some takeout, adding a little insult to life’s financial injury). But emotionally, you’re crashing—you were feeling so good you accidently created a new normal out of a best-day metric and now things feel really bad. In that moment it might even feel worse than if you had $10,000 of expenses come up and no money in your savings account, because at least then, you would have continued to believe that hitting that $10,000 goal was impossible.

And even though we instinctively can’t help but make that comparison… it’s a bit like comparing your personal deadlift record to the amount you can deadlift when you have the flu.

It doesn’t really make any sense.

The Case for Bad Day Metrics:

Bad days and how you progress through them are worth noticing. They will often tell you more about your financial progress than your best day metrics, AND without all the unrealistic expectations that best day metrics create.

Let’s go back to the scenario where your water heater and your transmission go out in the same month and that emergency savings account you had worked so hard to accumulate is back down to $0.

If you stop comparing that scenario to your recent best-day stretch, and instead think back to 2 years ago, when the only option you would have had to cover $10,000 of unexpected expenses would have been to put it on a credit card, you can suddenly see that you have made a substantial amount of progress in this area.  At one time this scenario would have been a financial crisis, whereas now, while it feels like a really crappy punch in the gut, it is actually an incredible marker of the progress you’ve made.  

If you’re having a hard time managing cash flow this month because of bad circumstances or impulsive decisions, but that just means you didn’t make a contribution to your savings, and 2 years ago it would have meant dollars onto credit cards, that’s a big deal.

And the truth is, we don’t generally need a reason to carry on and keep up the good habits we’ve worked so hard to develop on our best days. The best days are, in and of themselves, quite rewarding and motivate us to keep going. But for most of us, to keep from dropping into the depths of despair, we need a way to measure progress on our worst days, to put them into perspective, to remind ourselves of how far we’ve come, and the only way to do that is to compare our worst days to your previous worst days. Our worst day metrics can tell us a lot about our progress at a time when we need to hear it the most.

Setting Realistic Expectations for Good Day Metrics:

I want to be clear, I think there’s a place for best day metrics, they tell us something about our highest potential to achieve (in a given moment), but we over assign value to them, often to the detriment of our progress. It’s not actually motivating to most people to feel defeated or less than what we are capable of being (I do want to acknowledge that for a small, fairly vocal, group of people this actually can feel motivating, but for many, it’s actually highly demotivating).

So, if we take our best day metrics, and overgeneralize them to our average and worst days, for many people, it ends up creating a sort of self-defeating space, where a bad day tested against a good day metric takes us into the headspace that looks something like:

Well, I guess I’m not any good at this after all. It was too good to be true to think I could stay on budget and have an emergency fund. This is always just going to be a struggle and I’m never going to be any good with my money, and I guess I’ll go back to my old financial ways because at least I was having more fun then.

So, it is important to have some bad day metrics to compare those inevitable bad days against to avoid this type of spiraling.

But, for those of us who are reasonably average at many things (and most of us are) with effort and time, good day metrics can and often do become average day and sometimes even bad day metrics, we just can’t expect them to be right way.

The first time I broke 100 on the golf course, the problem wasn’t in thinking that I was a golfer who could break 100, the problem was in thinking I was a golfer who was going to break 100 all the time from there on out. The truth is it took me almost a year to get back to that score – A YEAR. And it was one of the most frustrating and least fun years of golf that I have ever played, because every time I went out thinking I could break 100, and every time it didn’t quite happen, and I left quite discouraged. But now, 100 is a “worse than average” day metric for me on the golf course (and yes, for those of you who play a lot of golf with a high level of skill, you’re correct in thinking I’m still not that good of a golfer). And the fact that 100 is a bad day metric but it used to be a good day metric is a useful thing to remind myself of when I’m starting to feel frustrated.

Good day metrics have their place, and it’s fun to historically compare their peaks, but if you put them into the wrong place, you really risk a level of discouragement that can be crippling to progress. And your money trajectory is too important to let it fail because you used the wrong benchmark to compare yourself to on a bad day.

So go back and make yourself a list of those financial low points in life and remember to pull it out when you’re having a bad financial stretch. Maybe 5 years ago it was credit card debt you used to bail yourself out of a jam, then 3 years ago you had to spend down every last dollar of your savings account, and today, when a major unexpected expense came up, you still had $1000 dollars left over, and that’s substantial progress, even if no one is giving out trophies for incremental improvements on our worst days.

It’s natural for all of us to want to live up to our peaks all the time, but it’s important to realize when that’s actually getting in the way of our progress rather than propelling us forward to new heights. In those times, it’s critical to find a piece of information, a realistic metric, that allows us to take the next smallest step forward when we’re feeling discouraged, unmotivated, or disappointed.