Sunday, February 21, 2016

Money and Math Mindsets

Greetings, earthlings.  I emerge briefly from my quest to find a position as a financial advisor/planner (so far that is a never-ending story, but boy have I learned a lot about the industry) to offer yet more over-sharing and musings.

I have never heard someone say ‘you know, I’m just not good at reading, so I decided letters and words weren’t for me, and I’m choosing to be illiterate for the rest of life’.  But I often hear people say they’re not good at math and avoid it at all costs, and haha isn’t math gross?

It was pre-ordained that I wouldn’t relate to the math-averse, having two parents that met studying math at university, and who proceeded to teach math at home to me and my brother themselves.  I very distinctly remember middle-school algebra as the first math course where the material was nearly all new.  I grew up enjoying math, but the relationship with theoretical math, specifically, got way complicated in college.  Mostly because I had a fixed mindset.

I cannot count the number of books and articles that have over the years referenced the concept of a growth vs fixed mindset, and I’m very happy to finally be reading the original researcher, Carol Dweck’s, book on the matter.  She observes that people differ in how they view their intelligence/ability.  Those with a fixed mindset see their intelligence as fixed, and success/failure in any area as an indication of their ability.  Performing poorly often makes you question your worth, rather than appreciate an opportunity to grow.  Those with growth mindsets know that working hard, and putting time and effort into a skill is what increases our ability.  Doing poorly does not mean you’re not capable, and that in fact doing something challenging is how you improve.

I ultimately believe that a growth mindset is both more accurate and a healthier perspective.  I can point to taking Multivariate analysis freshman year, and putting lots of time into learning something complicated, then TAing the course two years later.  Of course it’s possible to go from being someone who knows nothing, to someone who’s mastered a topic!  We do that with so many things - building endurance to run a 5K or marathon, progressing to more and more complicated classes in college and grad school, learning to cook, from writing just one blog post to having 90 in 5 years and a reputation among friends as a huge math nerd who can help with investments and making financial decisions.

Math ability seems to be viewed, especially often, through the lens of a fixed mindset.  People are (allegedly) either good at math and get it, or hopeless and best off avoiding the subject area altogether.  That makes me sad, as someone who has had a lot of good times with math, but also as someone who loves money and finance.  I did not get off to an auspicious start - I distinctly remember having a lemonade stand in first grade with my best friend and next-door neighbor Elizabeth, and having literally no understanding of money and how we should price our product.  Nobody in my immediate family talked a lot about money, or seemed to find it particularly interesting.  But for me, it is the most useful and practical application of math.  Understanding technical math concepts has lead me to a healthy perspective on investments and compound interest, and how to accomplish my long-term goals.

I have always liked a measure of autonomy - in elementary school, that came through in my taciturn nature when asked about my day.  As an adult, I cannot have someone look over my shoulder while I’m on a computer, and watch what I’m doing.  Most of all, I have felt that relying on others for income is a point of weakness, and I’m making long-term plans.  Plans to be a great employee and invest my money for future income and stability, plans to eventually be in control of my life and income and answer to just myself (and I suppose my immediate family).  Money is an amazing tool for anyone who wants freedom and autonomy, for whatever reason.  Money gives you power to decline or evaluate opportunities for a good fit, to make time for your priorities and values.  To pursue a life of leisure or passion, to be able to ignore the noise of outside judgements/opinions if they aren’t helpful.

The reason I most love talking about personal finance is because everybody has a level of control and autonomy there, that when exercised, can have an amazing impact on your life.  Being in debt now doesn’t mean you have to still be in debt in the future.  Have a low net worth?  It doesn’t have to stay that way.  I’ve read a lot of books and a few blogs, asked a lot of questions, had a financial advisor when I was fresh out of college, and chronicled my financial progress openly (and imperfectly).  Now, 4.5 years after my first investment of $375, I’m in a very different place financially and in almost every other way.  And I’m very glad that I didn’t feel like my ability to understand money and finances was limited and couldn’t grow as I did.

What do you think of growth vs fixed mindsets?  Do you think everyone can learn how to manage money?

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