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Grow Your Financial Comfort Zone

financial comfort zones are the sweet spot of money
❝There is no growth in the comfort zone.❞ -Jocko Willink

Kris grew up in poverty but now finds herself in a very successful career. Her bonus last year was more than her entire salary 10 years ago. She makes more than all of her family members and close childhood friends. She doesn't know how to behave when she goes home to visit. If she goes out with her friends, she's not sure if she should suggest a less expensive restaurant than she would usually go to so that her friends can afford to come with her. Or, she wonders if she should choose a more expensive restaurant and pay the bill. She's worried about what her friends will think of her. She's learned that her family makes fun of her success, using her as the butt of their jokes. Unsure how to handle this new situation, she gives a lot of her money away. It feels like she's doing good in the world. She's helping people get out of debt; she's funding her friends’ business ideas; she believes she's being charitable. Unfortunately, she doesn't have anything to show for her success. She's broke.

Mike grew up very wealthy. He never even knew that there were people in the world who struggled with money. Anytime he wanted anything, his parents would get it for him. He started to believe that he deserved anything he wanted, including his own business. He went off on his own, thinking it was easy to run a successful business, but the business never paid for itself. He has burned through most of his savings and all of his inheritance. He can't afford his lifestyle, but he still keeps up appearances. He still thinks he deserves a certain lifestyle. Unfortunately, he never learned how to get by on less. His lifestyle is not sustainable.

Financial Comfort Zones

We all have a financial comfort zone. A financial comfort zone is a range in which we're comfortable with money, either income or wealth. It's intuitive to think about having a lower bound on our finances. Not having enough money is, in fact, what many people believe to be their biggest financial hurdle.

It's less intuitive to think about there being an upper bound on our comfort zone. It's not intuitive because many of us believe more money will make our lives easier. It's hard to imagine there would be too much money. Having said that, you may know people who have a lot of money but aren't happy. Indeed, many of those who have come into money with the belief that money would make them happy find out that it does not. In many ways, this makes them less happy than they were before. You've probably heard of many examples of celebrities, sports stars, or lottery winners who came into a lot of money and then ended up losing it all, or worse.

A financial comfort zone dictates how we define "rich people" and "poor people." Rich and poor are very subjective terms. Somewhere out there is someone who would call me a poor person. Somewhere else out there is someone who would call me rich. Rich and poor are relative to where we are.

financial comfort zones change how we define rich and poor

Money Scripts Determine Financial Comfort Zone

We carry around a set of beliefs called Money Scripts that drive all of our financial behaviors. Our Money Scripts inform us about how the world works, at least our understanding of it based on our lived experience. These Money Scripts also set the bounds on our financial comfort zone.

For example, there are people who grew up at or near poverty. Many who are living at this socioeconomic level find it easy to believe that more money would solve all their problems. Someone with this belief might be living at or near the lower end of their financial comfort zone, while at the same time not believing there is a maximum to their financial comfort zone.

Some people carry around beliefs that money is wrong or that money turns people into bad people. Those who carry around a belief like this will have a lower maximum to their financial comfort zone, because they don't believe money is good. They may even think that there is virtue in living with less, so their lower bound may be relatively low.

People who grew up wealthy and have never had to go without may have created a belief that they deserve to have whatever they want. Someone with these beliefs will have the minimum of their financial comfort zone set very high.

money scripts determine financial comfort zone

Rules Change Outside Your Financial Comfort Zone

Most of us have an unconscious reluctance to move out of our financial comfort zone. I say unconscious because we would not be able to admit this to anyone, including ourselves. Within our financial comfort zone, we know what the rules are. We know how to navigate the world. When we leave our financial comfort zone, we enter unfamiliar territory. The rules change. This is just as true on the upside of our financial comfort zone as it is on the downside.

For most of us, our friends and family members are at or around the same socioeconomic level. Imagine what happens, then, when you leave that socioeconomic level. If you find yourself falling down the socioeconomic ladder, your friends may try to tempt you into spending more money than you can reasonably afford. If you come from a wealthy family and, say, decide to live a more simple life, you may find your family members may disapprove of your decision.

Now imagine what happens when you find yourself in a higher socioeconomic condition. Now you might be in a situation where your friends and family members make fun of you for having more. You may have heard the statement, new level, new devil. Or perhaps you're familiar with the Notorious B.I.G. song "Mo Money, Mo Problems." The problems you face at a lower socioeconomic level can indeed go away, but they are replaced with new, different problems.

The game changes when we leave our financial comfort zone. And that's uncomfortable for us.

rules change in different financial comfort zones