Is Perfectionism Keeping You Poor?

Is being a perfectionist stopping you from reaching your goals?

Recently, I read the book The Perfectionist’s Guide to Losing Control: A Path to Peace and Power by Katherine Morgan Schafler. In her book Schafler argued that, contrary to popular belief, perfectionists are not broken. They don’t need to learn to accept imperfection. In fact, perfectionists striving for perfection are not flawed, but rather have a superhuman focus that drives them towards their goal. This can be an incredibly powerful tool. When perfectionists set their mind to something, they achieve it or die trying. 

That being said, Schafler also discusses how perfectionists are prone to certain maladaptive behaviors that can prevent them from performing to their fullest potential. One of these is “all or nothing” thinking. 

What is all or nothing thinking? 

“All or nothing” thinking is the idea that all things fall into the category of: success or failure. If you can do something perfectly (by your own standards), it is a success. If you cannot do it perfectly, you are a failure, you should never have even tried. 

Here are some examples: 

I’m already 45 years old… I’ll never be able to retire… so why open a Roth IRA? (Maybe you’ll retire at 75 instead of 65, but you’ll still have a retirement.)

I’m so bad at math… I’ll never be able to invest like Warren Buffett… so why bother learning how to invest at all? (Maybe you won’t ever be a billionaire, but you could be a millionaire.)

There’s so much information out there… I’ll never be able to learn everything… so why bother learning how index funds work? (Maybe because putting in time now to learn to invest can cut decades off your working years?) 

The biggest issue with all or nothing thinking is that it prevents us from trying, and without trying we will never know if we can succeed or fail. 

What are the consequences of all or nothing thinking? 

All or nothing thinking is dangerous, because it causes us to live a smaller life. People with all or nothing mentalities are: 

• Less likely to take risks

• More likely to feel like a failure

• Scared to ask for help 

• Less resilient 

Imagine someone with an all or nothing mentality trying to manage their finances. They would be:  

• Less likely to invest in more volatile/higher growth stocks 

• Scared to admit they don’t know how to manage their money and ask for help

• More likely to give up on investing if they choose a poor stock or lose money from an investment

• More likely to feel inadequate from making a mistake (and less likely to try again) 

What can I do about all or nothing thinking? 

First, identify your thoughts as all or nothing thinking. Sometimes, just recognizing that it’s happening is enough to break your mental thought pattern. 

After that, I believe the old adage “Progress over Perfection” is applicable. Even if you are a perfectionist, learning how to quantify your goals helps you feel a sense of achievement. Just doing something is better than nothing. 

I find the best way to break myself out of an all or nothing thought pattern is to do one small task towards my project or goal. I hate the feeling of an unfinished task, but I love the feeling of crossing tasks off my to-do list, no matter how small. Picking something that I can do in 10 minutes or less makes me feel like I accomplished something, and removes my fear of starting. 

Here are some examples: 

• If you feel like it’s too late to start saving for retirement… why not look up how to set up a 401k with your company? You don’t even need to open the account yet, just learn what steps are involved.

• If you’re scared to figure out how much credit card debt you have… start by writing down the name of every single card you have in your wallet. Having a list of all your cards will at least give you the scope of your problem. 

• If you feel overwhelmed by complicated money words like asset allocation and index funds… check out my money glossary! I upload new words every week to help you understand money in simple terms.   

So… is it too late for me? 

My goal for you isn’t for you to have the most perfect portfolio of stocks, or the most beautiful emergency savings fund (although those things are great), but I’d be ecstatic if you took the first step. Then another 5 steps. 

When you’re a perfectionist, making goals can be scary because you know that once you start, you can’t stop until you reach your goal. What’s more, you fear imperfection at any point during the process. With that in mind, breaking your goals down into smaller, more manageable, more easily crossed-off items can be a huge help.

How to set your goals 

Write down your goal. Even if it’s big and scary. Then decide on 10 baby steps you can do to start working in that direction. (Just the first 10 is fine. You can figure out the next 10 later).

Example: Save $2 million for retirement (Starting with $0 today). 

1. What accounts do I use? Choose an account: 401k, Roth IRA, etc. 

2. Where should I save the money? Choose a bank or brokerage where you will open the account. (If you’re using an employer-sponsored 401k, this is already chosen for you.) 

3. Open the account you will use. 

4. Decide how much money you want to contribute to it monthly or yearly. 

5. Decide if you want to actively manage your portfolio (buying stocks, bonds, etc.) or choose a Target Date fund.

6. Use $100 to buy your first stock or bond. (I recommend $100 because it’s enough to “feel it” but not so much that you risk losing lots of money).

7. Watch how the $100 goes up and down over the next month. Remember investing involves money going up and down, so don’t panic when you see the money turn red. 

8. Purchase more stocks and bonds when you can. 

9. Figure out ways you can reduce your budget to contribute more money. 

10. Revisit your investment strategy or asset allocation at least once per year.

I’ve also found that the timing of these steps is important. You should not do all 10 steps in one week or even one month. Start with 1 step per week. It’ll be easier to focus on one step at a time.

Being a perfectionist isn’t always easy, but it can be an incredible strength when you know how to harness your own power. 

Action items: 

1. Have you ever found yourself stuck in all or nothing thinking? Knowing you want something, but then following it with a “why bother”? Reflect on what made you feel that way. 

2. Write down your goal right now. It’s ok if it’s big, scary or even if you think it will never happen. 

3. Next, write down the first 10 baby steps you can take to get there. 

4. Embrace your superpower. 

Your life may not be perfect, but it is imperfectly yours. The only way to live it is your way.