After traveling, baking is easily one of my favorite hobbies. I’ve taken this extra time at home to expand my baking range and learn new skills. I finally learned how to make sourdough starter and now make fresh sourdough loaves each week. I learned how to make croissants (yum!) and my husband’s favorite, soft pretzels. As I’ve ventured deeper into this hobby, I’ve discovered the similarities between baking and finances go beyond just puns about dough.
Here are some of the things I’ve learned about baking and finances:
Simpler Is Better: When I set out to bake more during the pandemic, I was most excited about complicated recipes that included long lists of ingredients. I was ready to give myself a challenge! Yet some of my favorite things I’ve baked have required only a simple set of ingredients and my favorite basic bowls and pans. Even when recipes do call for special ingredients or equipment there generally are easy ways to substitute with items you already have in your kitchen. Likewise, people often assume to be good at finances you have to get fancy, using lots of speciality investment funds and/or complicated techniques. But when it comes to finances, a simple uncomplicated approach, using what you already have, is often the best one.
Tip: One of my favorite bread recipes -- sourdough -- just requires flour, water, and salt. Most of my other favorite recipes also include ingredients I already have in my kitchen. It’s the same with finances: Start with the ingredients you have. Using what you already have to the best of your ability will set you up well today and make future challenges (and opportunities) easier to navigate. This approach also ensures you aren’t wasting anything you already have at your disposal.
Make The Recipe Your Own: I’m good at following step-by-step instructions and obeying the rules. However, I quickly found out that blindly following someone else’s recipe only got me the result I was looking for some of the time. Subtle differences in ingredients, location, weather, humidity, and oven temperature all impacted the results. I had to use the recipe as a guide, not a rule, and tailor it to my individual situation. Similarly, in personal finance, you can’t just take another person’s plan and blindly apply it to your own life. There’s no one right system that works for everyone. You have to adapt it to your own situation.
Tip: Too often people treat personal finance like there is always just one right answer to every problem. That’s not the case. Personal finance is a whole lot more personal than it is financial. It often takes combining your values, your goals, your vision of a fulfilling life, and your risk tolerance, with someone else’s solid financial advice, to create a plan that really works for you.
Pay Attention, But Don’t Hover: As they say, “a watched pot never boils.” As I’ve been working on my bread baking this year, I’ve been learning a lot about what to watch for as bread dough rises and why this part of the process is so important. Sitting there to watch the rise the whole time would be a waste of time, but checking in every so often ensures everything is on the right track. It’s the same with your financial life. Watching your finances like a hawk is likely just going to create more anxiety, but checking in every so often allows you to stay on track without having it consume you.
Tip: Just like in baking, I’ve learned that patience is key to reaching many of my financial goals. My husband and I have worked for years to reach the milestone of having three months of expenses saved up for an emergency. Slowly and surely, checking in every so often, we were able to meet this initial goal.
Mistakes Are Just Learning Opportunities: Learning a new skill usually means producing a few flops. But I’ve found even some of my worst flops still taste good. Last week I made a butterscotch pudding that curdled a bit because I had the heat too high. The first time I tried to make cinnamon raisin sourdough, the loaf looked like it had been dragged through the mud -- cinnamon and raisins were leaking everywhere. In both cases, even though they looked gross, they tasted delicious. And even when the end result doesn’t taste good (and that’s happened to me more than once!), I often discover something about technique that makes me a better cook in the long run. Too often people let their financial mistakes define them forever. Of course the stakes feel much higher with your money than in the kitchen, but instead of letting your mistakes paralyze or defeat you, turn them into something you can learn from and overcome.
Tip: Dealing with guilt from a financial mistake you made in the past? Don’t let it define you! Follow the steps in this post to help you get past the guilt.