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I grew up in competition. It was a part of my life, all over the place. And sometimes competition moved me to push my self far, motivating me to be excellent, and in other cases, competition broke down my will to excel. An individual reacts to competition different depending on the psychological factors, the situation, and how past competitions have played out. Because competition is everywhere in the world, particularly in a career or a quest for financial independence — not to mention just meeting personal goals one might set for oneself — look for ways to make competition work towards a positive outcome.

I wrote recently about one particular competitive experience. When I first began learning to play a musical instrument in school, we were seated by our perceived abilities. I was last in the row, worst clarinetist in the class. And I didn’t enjoy playing music for school, even though I had been musical at home. The following year, my family moved to a new location and a new school, and at this new school, I had a head start because my classmates were just beginning to pick up their instruments. Suddenly I was at the head of the class. And just as suddenly, I loved playing music again.

Year after year through high school, I continued playing, and continued working hard to stay the best. I was the “first chair,” and constantly faced challenges from friends who wanted to take my seat. To keep my position, I had to practice hard and stay focused on being the best. I eventually decided to study music education in college. Had I stayed in my first elementary school, it’s unlikely I’d ever pursue music as a career.

Competition was a main theme for me in high school. Another example happens to be related to music as well; our marching band competed with other similar marching bands from other schools throughout the northeast. Not every teacher agrees that competition of this type is useful in an educational setting. But competition exists in the real world, and learning how to deal with competition as a teenager might be a good way to prepare. We compete for jobs, we compete for money, we compete for recognition, and as is coming more clear to me with social media like Facebook, we compete to have admirable lives among our friends.

In the marching band world, competition was tightly controlled. One group competed against another only if they were similar in terms of size. Today, there are even more guidelines for appropriate competition — not only is size a factor, but so is funding, so a hundred-member band with twenty staff members available to focus on separate aspects of the performance doesn’t compete directly with a hundred-member band making do with only two teachers who have to do everything on their own.

Competition presents some challenges, in work and in life.

But when we compare ourselves to other people, we are often unaware of advantages, whether they are our own or of others. I can’t think of a time when I competed directly with a coworker for a promotion, but this happens all the time. And when faced with competition like this, some people shut down and give up, others rise to the occasion. If you tend to get motivated by competition in work situations, are you also using competition in social situations to motivate you?

Facebook recently conducted a social experiment on its users (without their knowledge but with the consent that comes in the form of agreeing to a contract when you sign up for an account). The news feed showed mostly positive status updates to some users and mostly negative updates to some users, and saw that users’ own moods (as measured by additional status updates) were affected by the tone of the updates they saw. On top of this, Facebook is a chance for people to market themselves to their friends and to feel good about themselves. Thus, people tend to share personal good news more often than bad news. People are more likely to use Facebook to tell the world “I got the promotion!” or “I got engaged!” when appropriate, but when a situation would call for announcing “She turned me down for a date!” or “I failed the bar!” chances are you won’t see it.

All of this makes it difficult to live up to the implied social competition. Even without Facebook, it looks like everyone’s life is better than yours. That’s only because you primarily about the good things that happens in someone’s life, while you still experience bad things even if you don’t share them with your extended group of friends.

Make competition work for you in your career.

You compete for a new job, you compete for recognition with your work, and you compete when you own a business. Without good experiences with competition in the past, there is a good chance that taking the easy way out is safer emotionally.

Steal a technique from video games. When you play a video game that’s based on progressing through a series of levels, you start out easy. You’re able to overcome initial obstacles, and as your abilities improve, you are able to face tougher challenges. The game takes you through a series of levels, training as you go to handle difficulties. You don’t get thrown to the wolves on your initial attempt.

In real life, you may not be able to choose your competition. But you can set your expectations so they match your abilities. I wouldn’t think I’d be able to compete for a first-chair position at the New York Philharmonic without first being the best clarinetist at my university (and I wasn’t). I wouldn’t think I’d be able to compete for a job in charge of a non-profit with someone who has been leading non-profits for thirty years — but I could take a different approach and start my own.

It also helps to keep a larger goal — or a mission — in mind. You may not always be recognized for your hard work, whether the recognition comes in the form of a promotion, a salary increase, an award, or even just getting a job. But if you’re doing what you need to be doing, you’re improving yourself whether other people see it or not. It can be demotivating when you constantly perform competitively and others seem to refuse to recognize how well you are doing. There are many reasons why people are rewarded for their actions, and sometimes it has nothing to do with your particular performance.

Don’t take other people’s achievements personally.

The competition to have the best life is one you can never win. If you’re feeling pressure from other people’s successes you read about on Facebook, and it’s affecting your emotions negatively, either stop reading Facebook or keep in mind that everyone who shares anything personal is automatically biased. Everyone wants to project a favorable appearance.

Not everything has to be a competition. You don’t have to be the first person among your friends to reach an important life milestone. You don’t have to show off everything that you’re happy about. People live their lives at different speeds and have different goals. You shouldn’t live your life based on anyone else’s personal achievements.

Stop comparing yourself and your life to others, and I guarantee you’ll be happier and better able to focus on achieving your own goals, whether in your career or in your life. If you’re focusing more on yourself, you’ll be able to see competition for what it is: something healthy that can spur you to move forward.


Whether you’re making a decision that has apparent, immediate consequences that could affect the rest of your life, like deciding to quit your job and open a business, or making a purchasing decision big or small, it is worthwhile to gather information and think about the future. When you gather information, you have to be careful, because people, businesses, and even statistics that provide that information might contain inherent biases.

Survivorship bias is often hidden in plain sight, but recognizing the bias when it exists could be the difference between building wealth over the long term and going broke. If a logical argument neglects to recognize that failure is a possible outcome, the argument may be subject to survivorship bias. If a statistic reflects the outcome of only the successful set, ignoring the set of those who fail, survivorship bias is at play, and can give someone a false understanding of the data.

David McRaney, the author of You Are Not So Smart explains survivorship bias:

Survivorship bias [...] flash-freezes your brain into a state of ignorance from which you believe success is more common than it truly is and therefore you leap to the conclusion that it also must be easier to obtain. You develop a completely inaccurate assessment of reality thanks to a prejudice that grants the tiny number of survivors the privilege of representing the much larger group to which they originally belonged.

It’s probably easier to illustrate survivorship bias than to explain.

Survivorship bias in the stock market.

Mutual fund managers rely on survivorship bias for selling their products. Overall, and over the long term, actively managed mutual funds cannot beat the relevant market benchmark. Considering actively managed mutual funds are more expensive to own than their index counterparts, index-based, non-managed mutual funds are better choices. But mutual fund managers continue to attract investors because they’re able to advertise higher returns.

Money managers can advertise these higher returns overall because poor-performing actively-managed mutual funds are eliminated or merged into other mutual funds. This hides poor performance. As a mutual fund manager, kill the low performers, and when you report performance results for the funds that survive, your track record looks better than it is.

The danger in ignoring survivorship bias in the stock market. Well, it’s all about making the best decisions with your investments. If you are taken in by promises of big financial returns, you may not be putting your future self in the best position possible. When an investment manager says 90 percent of his or her funds beat the market, he or she isn’t including those that no longer exist. And your money could end up in an investment that, someday in the future, will no longer exist.

Survivorship bias in stock recommendation scams.

Step one: build a sufficiently large mailing list. Ten thousand names will do, if the recipients are already inclined towards buying.

Step two: Pick a stock, and send a letter to half the recipients on the list predicting the stock price will go up in the next week. Send a letter to the second half predicting the opposite.

Step three: In the following week, determine which half received letters that correctly predicted the stock’s performance. Delete the other names from the list of recipients.

Repeat steps two and three, each time eliminating the half of the mailing list that saw an incorrect prediction. After a few weeks, a couple thousand people will consider you a stock market prognosticating genius, and each week, you have a better chance of selling something to those who were lucky enough to be on the winning side of each prediction.

This approach isn’t limited to bottom-feeding stock scams. Hedge funds catering to the wealthy often employ a similar strategy by initiating many funds, waiting for performance results, and marketing and reporting to indexes only the successful hedge funds.

The danger in ignoring survivorship bias in stock scams. This should be apparent. If something sounds too good to be true, it is. Don’t invest in stocks recommended to you by a stranger. Or by a friend who thinks he or she has insider information. Or in individual stocks at all unless you are Warren Buffett, can negotiate for a discount, have a say in management decisions, or are conducting an investment experiment.

Survivorship bias in entrepreneurship.

Do you ever wonder why all business owners seem to be successful? In the classic book, The Millionaire Next Door, the authors point out that entrepreneurship is the path to success. This message permeates, and many people believe that owning a business is the best way to grow wealth. While investing as much as possible in broad stock-based index mutual funds can get you to financial independence over a long period of time, barring bad timing as many people who were in retirement during the latest recession might have realized, owning a business is said to be the key to speeding up wealth accumulation.

Of course business owners are better off financially than equivalent employees. If they weren’t successful, they would — and do — stop their pursuit of owning a business. In other words, those who don’t succeed drop out of the statistics.

The danger in ignoring survivorship bias in entrepreneurship. It’s easy to be seduced by the promise of riches that being a business owner seems to hold. Encouraging books and gurus often ignore the risk of leaving a job with a salary and benefits behind in favor of getting a project off the ground. At the same time, they emphasize the risk of staying in a job, subject to random layoffs and other stresses of answering to a boss. According to Bloomberg, eight out of ten new businesses fail within the first 18 months.

The remaining two become part of the statistics that show how worthwhile owning your own business could be, but chances are more likely any new business owner will eventually give up and no longer be counted among the “entrepreneur class.”

Survivorship bias in other aspects of life.

I go the gym three times a week to work out with a personal trainer. And after going this for about a year, not including time away for travel, I’ve made some progress. But I still look around the gym and see that I’m not nearly as in shape as just about everyone else. That’s to be expected, but not because of survivorship bias. Unless you work out constantly, every time you go to the gym, most of the people will be in better shape. The reason is that any person you see is a statistical representation of someone who is most likely to be at the gym at any particular time. And the people most likely to be at the gym at any particular time are the people who go to the gym the most often.

But survivorship bias manifests within fitness philosophies. An intense program can report high success rates for two reasons. First, the people who are most likely to fail don’t start in the first place. Second, people who being the plan but are destined to fail leave, and they are no longer included in the group of followers of the fitness plan.

Diets follow the same pattern. This phenomenon could also be considered selection bias, but selection bias is also important to marketers. If they can stop the “wrong” customer — someone not likely to succeed — from buying their self-help products initially, the seller can continue to report good success ratios with a clear conscience.

The key is to always ask questions.

I tend to be more skeptical than people I know. I don’t trust statistics immediately. I look to the source of information, and I try to think about logical holes, fallacies, and biases before making decisions. I may not always be perfect and may not always be the smartest person in the room, but recognizing biases has helped me make better decisions with my life.

If you’re only looking at successes for modeling your behavior, you’re missing an important piece of information. It’s quite possible that those who failed employed the same strategies as those who succeed. It’s also possible that failures vastly outnumber the successes, and are just not reported as such. So if you want to avoid failure, pay attention to potential survivorship bias.

Photo: Universitat Stuttgart (a tardigrade, Earth’s survivor)


Last Thursday, I drove to the place that was my home for four formative years of my life, my undergraduate university. I’ve written before about how the degree and overall course of study during college isn’t directly related to what I do today. Nevertheless, I still feel strongly about the importance of music and arts education.

I’ve been distracted away from this passion for many years; some bad experiences in my career in the non-profit and educational worlds led me to explore a different vocation. And then, as Consumerism Commentary began to grow as my “side job,” I pushed some other passions aside. At the same time, I haven’t maintained many connections with friends and professors from my time at the university. I was to be more involved, and today, I’m in a position to do so.

After a drive that brought back some memories, I found myself on campus, enjoying a tour arranged and led by a director of development. I’ve been a financial supporter of the university for several years, so I knew the purpose of this friendliness, including the opportunity to meet with the chair of the department and the dean of the College of Arts and Sciences, was primarily financial. More came out of it than I expected.

The director of development used the phrase: “time, treasure, and talent,” which although I had never heard this before, it seems to be a common way to describe charitable endeavors. For instance, I agreed to visit the campus again and speak to students in a new entrepreneur track at the university about my experiences.

It was on the drive home that I was struck with another idea about money systems. I passed an area on the interstate highway that I became closely familiar with over a decade ago. My new-to-me car, a grey 1986 Toyota Celica, broke down at that spot on the highway. I was working near campus after graduation, and it might have been when I was driving back to my parents’ home for vacation. And it might be misleading to say, “The car broke down.” It would be more accurate to say, “I broke the car.”

No one explained to me that in order to maintain a vehicle, you need to check and maintain the oil level. This is a basic rule of operating a car, and every driver should know this, but I didn’t. I could blame my dad for never telling me; maybe he did, and I didn’t remember. The 13-year-old car was a graduation gift, so I was just thankful to have something to drive. I didn’t ask the right questions, such as, “What is everything I need to know about owning and operating a car?”

A habit is a system, and asking questions until you understand everything is a habit.

Create a habit of asking questions.

I’m the kind of person who needs to know as much as possible about a topic that interests me. As a kid, I used to read the World Book Encyclopedia collection my parents had in our house. Today, if I read or hear something that leaves me with more questions, I search for more information online. If I read a word and I’m not confident about my understanding of the definition, I’ll look it up. When someone I respect sees success in an area I’d like to see success for myself, I ask for suggestions.

It’s not enough to just ask questions. Get in the habit of asking the right questions — questions that get to the core of the issue. Even if I had asked my father to tell me everything I needed to know to own and operate a car, it’s likely I’d not get all the information I needed right away. It would start a conversation that would lead to follow-up questions, and getting into these details would give me real confidence — not false confidence — that I’m in a much better position for succeeding in my desire to make the car last many years.

The strongest barrier to asking questions is the fear of sounding stupid. Believe me, when friends asked me how I could possibly not know that a car’s motor needs oil to run, I didn’t feel like the intelligent young adult I knew I was. But I got over it, and figured it’s better to ask questions and ensure the knowledge is there than to run into a problem later.

As a result of my lack of inquisition, I needed to come up with several thousand dollars to replace the car’s motor at a time when I was earning very little money and had a growing amount of debt from student loans and credit cards.

The known unknowns and the unknown unknowns.

A few years, ago Secretary of Defense Donald Rumsfeld was defending the administration’s choice to go to war with Iraq. Here is what he said about the evidence:

There are known knowns; there are things we know that we know. There are known unknowns; that is to say, there are things that we now know we don’t know. But there are also unknown unknowns -– there are things we do not know we don’t know.

Putting aside the circumstances that required such a statement, Rumsfeld was getting to the core of risk management. When you ask a question, it’s usually because there is a known unknown, some topic for which you are aware of needing more information. But ask you get into the habit of asking these questions, your increased knowledge can reveal other missing details for which you originally didn’t even know was a hole in your set of knowledge of a topic.

Healthy skepticism.

More classic a phrase than “time, treasure, and talent” is “trust but verify.” When I ask questions, I try to only ask those that the other person in the conversation is qualified to answer unless I’m looking for less-than-informed opinions. I don’t immediately take a response as truth. Depending on the question, the answer might stem from a personal bias.

If I had taken that unasked questions about my car to a mechanically-inclined friend as well as to my father, I might have received two different answers, had two different conversations, and ended up with some confirmed ideas and possibly even more questions.

Healthy skepticism assists your financial condition in more direct ways. When you’re visiting the same mechanic that offered you advice to fix your car, asking questions helps reduce the possibility of being charged for something you don’t need. Asking questions when negotiating a contract or a job can offer you opportunities to earn or save more money than you would have been able to had you remained silent.

The more you get into the habit of asking questions, the better chance you have of taking advantage of good financial opportunities, whether to save money, to earn more money, or just to prevent someone from taking advantage of your ignorance.

Have there been any situations where asking questions has helped you financially?


The concept of success means different things to different people. Ten years ago, my vision of long-term career success would have been getting a job in a great school district as a teacher, teaching for many years, and having a positive effect on the lives of the students who pass through my doors. Financial success would probably have been staying out of unmanageable debt. My career aspirations changed, and financial success looks much different to me now.

Go back a few more years, and I was in financial trouble. Nothing too devastating, but I had debt, and it was increasing each month due to very little income and moderate expenses. Once that lightbulb goes off and someone who’s in a difficult situation realizes there’s a possibility of life being better must make behavioral changes towards that goal. Whether it’s health, money, personal relationships, or any aspect of life, change can be difficult to accept, start, and maintain.

Psychological barriers get in the way of meaningful behavioral change. At various points in this process of change, people mentally hold themselves back. A recent article by James M. Olson, PhD, published in the Canadian Family Physician, discusses these psychological barriers. While Dr. Olson approaches the topic from a health perspective, they correlate nicely with financial change.

I’ve already written about the psychological barriers to accepting the problem and those for taking the first step. Equally difficult is maintaining change once the process begins.

Recognizing those barriers helps overcome them, so this article may help people who want to change the course of their lives from a financial perspective. Cognizance might not be enough on its own, so I have some suggestions for dealing with each psychological barrier.

Cognitive and motivational drift.

Change can be hard work. Maintaining good financial habits may not be as fun as continuing damaging behaviors, like spending more than you can afford, showing off among your friends, or just trying to keep your appearances up with other people’s appearances. Even some well-marketed methods of getting out of debt, like Dave Ramsey’s Debt Snowball, don’t do enough to address the root causes, and many adherents fall back into debt, sticking to a mindset than never really changed.

One solution is to talk with someone who can be your financial mentor. He or she can take an objective approach to helping you succeed with long-term change. Check in with your mentor once a month to make sure you’re heading in the right direction. This is one reason I love the Naked With Cash series here on Consumerism Commentary. Once a month, the seven participants looking to improve their finances for the long-term check in, reporting their progress, challenges and successes. The experts in the series help them stay on track.

Self-motivation seems to come naturally for some people. When I’m passionate about something, I move. I get things done. It’s not easy to get passionate about personal finances, but perhaps keeping an end-goal in mind, a real goal, not a target net worth, those desiring change can stay focused on making the choices that move them in the right direction.

On the topic of staying focused, everyone who wishes to succeed with behavioral change should write and memorize a mission statement. Non-profit organizations use mission statements to determine what activities to pursue. People can use mission statements as a guideline for decision-making: “How does buying a new car and taking out a brand-new loan fit with my mission of achieving financial independence within five years?”

Lack of perceived improvement.

I’ve been working with a personal trainer now for about three and a half months. Aside from some travel that prevented me from going to the gym on just several occasions, I’ve been working out with an expert three times each week. I expected to see some better results by now. I thought I’d be in great shape and look it, too.

My expectations probably weren’t realistic based on my level of workout. I was starting pretty far from in-shape initially, and my workouts are only thirty minutes. These unrealistic expectations were probably formed by late-night commercials in which those starting a new path towards fitness seem to be successful immediately. My process and my starting point mean that progress for me will be slower.

And although yesterday’s sprints wore me out more than usual, if I can step back, I can see I’m moving in the right direction. I’m stronger and in better shape than I’ve been since college. Having realistic expectations is the first way to battle the lack of perceived improvement.

On the surface, being out of debt looks a lot like being in debt. In order to see the effects of change, especially at the beginning of the process, is to look for it specifically. If I had been taking photographs of myself once a week during the course of my workouts, I’d likely have seen progress in my physical appearance. Physical evidence makes progress more apparent. Likewise, tracking your finances is the best way to see your improvement from month to month or paycheck to paycheck.

Lack of social support.

Don’t keep your goals to change your financial behavior a secret. Money isn’t exactly a fun topic to talk about with family and friends, but you don’t really have to talk that much about it. When faced with a spending decision in front of others who you may feel want to see you make a decision you know isn’t helpful, let them know that you’re on a quest to make some changes. Good friends will be your supporters. Family will understand.

Look for people willing to be on your “team.” You can find social encouragement anywhere. I found some for my quest to improve my finances by starting Consumerism Commentary. I had now idea the site would grow into such a great place for people to motivate me along my path to financial stability. When I checked in with my net worth updates every month from July 2003 to December 2011, I felt like I had a community of friends who were interested in my success.

When my family became aware of my goals, they were all very supportive. So don’t keep your intentions a secret.


It’s natural to slip. There’s nothing bad about giving into the temptation to falling back into old behaviors. If that behavior is a drug habit, well, that can be a problem, and that’s how people die of drug overdoses. Thankfully, people very rarely die of a brief return to overspending. The stakes aren’t that high here — but that’s why people often think it’s not a problem to slip occasionally.

Lapses can be intentional or not. If you’re going to fall back into a bad financial behavior, if you do it knowingly, and you can do it while maintaining control over your financial situation, that’s alright. Rewarding yourself for your financial progress with a vacation on the credit card is an acceptable if not good way to continue your motivation — so that’s not really a lapse. Forgetting to update your financial records can be a dangerous lapse because it wasn’t intentional and shows that the most important feature of improving your finances is not that important to you.

The best way to counter lapses is to be prepared for them, recognize them when they occur, and recover very quickly. This will help create a pattern of dealing with lapses that you will soon be able to do before the lapse even occurs. And document them. For a lapse that consists of a single decision, write down what happened, what you were thinking and feeling when the lapse occurred, and how you solved the problem.

If the lapse was more continual, like gradually falling back into an old habit, reset from the beginning, monitor your decisions closely, and watch for the early warning signs of falling back into that habit.

Maintaining behavioral change with money is a life-long quest. Your finances aren’t something you can just fix one day and forget about it for the rest of your life. Behavioral change continues, but it gets easier to maintain with time. Addressing these psychological barriers can help you move forward towards your life-long goals, live your mission statement, and achieve financial independence.

Photo: Sarah G.
Canadian Family Physician


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