The New Formula for Financial Success – No Math Involved 

 July 9, 2021

By  Ted McLyman

Welcome to Behavioral Finance Friday

The conventional wisdom about money implies wealth creation is a simple process. All you need is time, money and rate of return. Really? How's this working out for you?

Unfortunately the orthodox approach to money is wrong. Why? Because behavior is seldom part of the equation.


Does money make you crazy? It should, because you are human and humans aren't very good with money. It's the way we're built. We'd much rather focus on staying alive and passing on our genes than following a budget or reading a credit card disclaimer.

Whether you like it or not, money is important. You have to know something about it. In fact, today everyone is "self-employed." This means you are ultimately accountable and responsible for our own money success. No pressure . . .

Like it or not, you have to know about money. You are the boss and that's what bosses do. So what should you do?

I think the financial services' industry makes this money "thing" way too complicated. Sure the products and services can be pretty complex - just read a mutual fund or variable annuity prospectus. In fact, if you let yourself get bogged down with all the features and benefits of the financial stuff your head will explode.

Here's what I recommend you do - because exploding brains are not a good thing - focus on the "why" and not the "what." Get out of the product mode and focus on the outcome. What do you value most in life? Why is money critical to what you value most? What is important about money to you?

These are tough questions. Let me give you a better formula from my latest book, Discover Your Money Temperament, A Common-Sense Guide to Financial Security - this looks more intimidating than it really is.

Values(values) = (Time + Money + Rate of Return)/Behavior

"Big V" represents your most important life values. These are often intangible. The key is, if the values are not supported or accomplished, you will suffer emotional pain. A "Big V" value can be anything that is important to you - from opening a clinic for sick kids to having your ashes spread at the 50 yard line of your favorite football team. It doesn't matter, as long as it's an important life value to you.

"Little (v)" represents your tangible goals. This is the stuff you want to own - cars, house, vacations, and so on. Think of these as life-style purshases, and often consumable. Don't confuse "Big V" values with "little v" values. They are different. When it comes time to stroke the check for the sick kids you'll know if you got it right.

There are only four things you have to worry about to accomplish your "Big V" and "little v" values. They are time (T), money (M), rate of return (RoR), and behavior (B). That's it. Simple isn't it?

Time (T) is an important variable. The more time you have the better. Time gives you leverage because you can let your money compound - a very good thing. Unfortunately, you probably don't have as much time as you think. Once time is squandered you can never get it back.

Money (M) is also important. Yes, you need money to make money. However, I bet you have more money than you think and the ability to earn more if you choose. Money is a life-style choice - which you have a great deal of control over.

Rate of Return (RoR) is the money you make on your money - interest, capital gains, appreciation and so forth. Here's the catch, you have no control over the rate of return. That is determined by the market for the financial stuff you own or lend. All you can do is decide how much to invest and where - the market does the rest. Ironically, the conventional wisdom seems to be that rate of return is easy to control. All you need is the right product, service, features and benefits - wrong. Billions have been lost chasing performance and the next "sure thing."

Behavior (B) is the most critical variable to achieving what you value most in life. Do you know your money temperament - how you think and feel about money? You should. Do you know how you process information and learn - your money knowledge? This is also important.

Remember, money is always emotional. You make money choices first with your feeling-emotional brain, then maybe your rational brain kicks in. Hope, fear, greed, and overconfidence are just a few of the things you wrestle with every day spending your money - and you usually don't even know it. Understanding and managing your behavior is the tough part of money success.

Money, wealth creation, and financial security are always about behavior.


Read Discover Your Money Temperament, A Common-Sense Guide to Financial Security. Accept that you are human and that you will always behave human with your money. 

  • Your money behavior is a reflection of your money beliefs and culture.
  • 95 to 99% of your spending is automatic, nonconscious, and emotional. 
  • Know that you have a natural desire to conform to your cultural and social norms, and spend will spend accordingly.
  • Discover your natural Money Temperament, manage your behavior - not your money. 


Discovering your Money Temperament will unleash your Money SuperPowers and make you a better spender. And you will reap the emotional and economic benefits of Behavioral Financial Wellness. 


Understanding your relationship with money and creating a one-size-fits-YOU money mindset is easy to do. The sooner you start, the better the outcome. 


Think about, or better, write down your answers to the questions below.

  1. What money formula are you using?
  2. Does your formula factor in behavior?
  3. Are you getting the results you need to achieve your Big V values?

Meet Ted

Ted McLyman, Author, MPA, MS

Author | Entrepreneur | Business Owner | Speaker | Trainer | Lt Col, USMC (Ret) | Ironman Triathlete

Over 30 years of award-winning experience, helping individuals and organizations achieve peak performance.

Founder MyApexx Behavioral Solutions Group and Pathfinder Coaches Academy; Director, Behavioral Finance, and Advisory Board Member at www.DreamSmartAcademy.com; retired financial advisor/agent; economics instructor, US Naval Academy; Aide to the Under Secretary of the Navy for Financial Management; Head, Marine Corp Training Management Division; Commander, USMC Financial Management School; artillery officer; Executive Office, Battle Assessment Team, Operation Desert Storm.(www.tedmclyman.com www.pathfindercoaches.com @tedmclyman)

BA Social Relations, Colgate University; MA Public Administration, Pepperdine University; and MS Performance Technology, Boise State University.

Authored three books on behavioral finance, money temperament, and spending behavior. Ted's author site: www.TedMcLyman.com

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