Money Woes Uncovered – Tackling the Right Financial Challenge

  • AUTHOR: editor
  • POSTED ON: May 24, 2023

In my professional experience, I have observed a surplus of personal finance guidance provided by numerous sources. While some of these sources are reliable, they often have conflicting advice. Consequently, the majority of financial recommendations vying for your attention are likely addressing the wrong issue.

Greg McKeown, the esteemed author of the remarkable book “Essentialism” and one of the few weekly newsletters that I have subscribed to, aptly points out the issue with solving the wrong problem – it may initially seem like a triumph, but eventually, it leaves you unfulfilled.

McKeown compellingly presents the business case against addressing the wrong problem using the example of Kodak. Despite the emerging digital sharing revolution, the company chose to double down on printed photos, ultimately leading to its bankruptcy. Their excessive focus on solving the wrong problem prevented them from recognizing and addressing the real issue at hand.

This leads me to ponder – what are the misguided problems that individuals often try to solve when it comes to personal finance?

In order to narrow our focus and explore the subject more effectively, let’s examine personal finance through a four-fold lens. When it comes to money, there are essentially four ways we can utilize it:

  • Spending – We can use money to support and maintain a lifestyle that aligns with our personal preferences.
  • Protection – Money can be employed to safeguard our lifestyle, family, and assets.
  • Saving and Investing – We can allocate money towards savings and investments to foster growth and establish future income streams for ourselves and our beneficiaries.
  • Giving – Money can be directed towards supporting the people and causes that hold significant importance to us.

Let’s examine each of these four containers for our funds and the incorrect issues we might be attempting to address:


We begin with this classification as it is where we find a plethora of potential solutions in search of the “problem.” The investment landscape is overflowing. To begin with, there are over 132,000 mutual funds, more than twice the number of stocks in existence. And this count doesn’t even encompass the vast array of derivatives, deposit products, annuities, cryptocurrencies (both virtual and physical), and so forth. The list goes on and on.

Many promoters of investment products often focus on solving the wrong problem, which revolves around the notion that you must discover a superior investment product or service to achieve your financial growth objectives. They insist that “the next great investment” holds the key. However, a significant number of individuals dedicate excessive time and effort to searching for the ideal investment, while the actual problem may lie within their budget rather than their balance sheet.

The primary problem that causes most portfolio shortfalls is not related to investments but rather to saving. While certain investment options may be superior, the key to achieving long-term goals lies in a dedicated approach to saving. Research indicates that a linear life is increasingly uncommon, particularly for those aspiring to early retirement. To sustain a financially secure extended retirement, it is recommended to save 15-20% or more of your income.


In personal finance, “protect” is often associated with different types of insurance. While insurance is essential for safeguarding our families, lifestyles, and assets, the fixation on insurance can contribute to the issue at hand. The incorrect approach is to try to link every potential risk with a specific insurance policy or product. Insurance is just one of the four risk management techniques:

  • Risk Assumption – Taking on the risk ourselves, such as by keeping emergency reserves or increasing deductibles.
  • Risk Elimination – Completely avoiding the risk, like not driving to prevent automobile accidents.
  • Risk Reduction – Minimizing the risk through safety measures and precautions.
  • Risk Transfer – Utilizing insurance for catastrophic risks that cannot be managed through other means.

The key to an effective protection strategy is to determine which risks can be managed through techniques one to four and focus insurance coverage on high-impact risks like untimely death or significant liability.


The mistake to avoid in the realm of giving is assuming that this category doesn’t apply to you all.

Statements like “I don’t need to worry about estate planning” or “Philanthropy is not relevant to me” often lead to neglecting planning altogether based on limited perception. Let me expand your perspective – the real issue is that you are already giving, whether you realize it or not, and by disregarding this fact, you relinquish control of your giving to others.

If you own any assets, you have an estate as defined by your state and the federal government. If you fail to determine your preferences for asset distribution or, more importantly, for the care of your minor children in the event of your untimely demise, the government will make those decisions on your behalf.

Believe you are not a giver? Well, if you paid taxes last year, you contributed towards your community, state, and country. Interestingly, by paying attention to potential giving opportunities, you may even have the ability to shift the balance from compulsory contributions through taxes to voluntary gifts to qualified non-profit organizations. (Do consult with your tax preparer for advice.)

Paradoxically, the most meaningful gifts from giving are often non-financial in nature.


One could make the argument that out of the four ways to allocate our funds, the one we discussed last should be mentioned first. In fact, for many individuals worldwide, the primary challenge of fulfilling basic needs for food, clothing, and shelter takes precedence over their capacity to focus on growth, protection, or giving. However, if you are reading this blog, it is highly likely that you are not among those individuals.

Once you have satisfied your basic needs, it is crucial to recognize the incorrect problem – and perhaps the most misguided among the various financial challenges we encounter – is the belief that having more money would solve all our problems.

The misconception suggests that with increased wealth, we could enhance our quality of life, save more, achieve better protection, and fulfil our giving aspirations. However, there is more to consider.

As instinctive as the desire for self-sufficiency may be, few things hinder our financial advancement more than the belief that money alone is sufficient.

The true problem lies in the fact that “more” will never be satisfactory. It is only through diligent effort and judicious allocation of our material resources that we can achieve a harmonious equilibrium among the four valuable avenues for our money – creating a meaningful and sustainable life, safeguarding our accomplishments against major risks, fostering wealth growth for long-term financial security, and giving in alignment with our principles.

The majority of personal finance literature focuses on selling solutions, as they can be monetized. However, there is an abundance of available solutions. The true difficulty lies in accurately identifying the underlying problem. Once the root problem is identified, it becomes much easier to prioritize and pursue the appropriate solutions.

Remember, success in personal finance begins with a keen understanding of the true problems at hand – it is in their proper identification that the path to effective solutions becomes clear.

Updated May 24, 2023
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