Read Time: 4-minutes
Happy Saturday,
Here is this week’s edition of 6-Point Saturday — financial insights to help you make smarter money decisions.
Table of Contents*
*Clickable in the online version.
Point #1 — Your Money and the “Failure Reframe”
“At age sixty-seven, Thomas Edison returned home early one evening from another day at the laboratory. Shortly after dinner, a man came rushing into his house with urgent news:
A fire had broken out at Edison’s research and production campus a few miles away.
Fire engines from eight nearby towns rushed to the scene, but they could not contain the blaze. Fueled by the strange chemicals in the various buildings, green and yellow flames shot up six and seven stories, threatening to destroy the entire empire Edison had spent his life building.
Edison calmly but quickly made his way to the fire, through the now hundreds of onlookers and devastated employees, looking for his son. “Go get your mother and all her friends,” he told his son with childlike excitement. “They’ll never see a fire like this again.”
What an extraordinary response.
In personal finance, there are a lot of things outside of our control:
Interest rates
The stock market
Business disruption (AI)
But how we interpret events? That’s in our control.
Unfortunately, many individuals give up this power. Even small, much less significant, unwanted outcomes throw them off track.
But when you respond the way Edison did, you can get a much better financial (and emotional) outcome:
“Of course, there was more than just a little ‘rubbish’ in Edison’s buildings. Years and years of priceless records, prototypes, and research were turned to ash.
The buildings, which had been made of what was supposedly fire-proofed concrete, had been insured for only a fraction of their worth. Thinking they were immune to such disasters, Edison and his investors were covered for about a third of the damage.
Still, Edison wasn’t heartbroken, not as he could have and probably should have been. Instead, it invigorated him. As he told a reporter the next day, he wasn’t too old to make a fresh start.
‘I’ve been through a lot of things like this. It prevents a man from being afflicted with ennui.’
Within about three weeks, the factory was partially back up and running. Within a month, its men were working two shifts a day churning out new products the world had never seen.
Despite a loss of almost $1 million dollars (more than $23 million in today’s dollars), Edison would marshal enough energy to make nearly $10 million dollars in revenue that year ($200-plus million today).
He not only suffered a spectacular disaster, but he recovered and replied to it spectacularly.”
Interpreting unwanted outcomes productively is a superpower.
It’s the same mindset that allowed Edison to test 10,000 filaments before finding the one that would put lightbulbs in homes and buildings around the world:
"I have not failed. I've just found 10,000 ways that won't work.”
Labelling something as a failure can add a ton of unnecessary emotional baggage. Baggage that can damage your identity, self-worth, and morale—some of the most precious assets in your money mindset.
Instead, what if you viewed unwanted outcomes as neutral feedback?
This isn't gaslighting yourself. And it’s not lowering your standards.
It's simply a powerful reframe to think about results in a more productive way.
Point #2 — Ray Dalio's 5-Step Process: Where “Failure” Is Simply Feedback
Ray Dalio founded and ran Bridgewater Associates, one of the world’s largest investment firms. He attributes much of his success to a simple 5-step “evolutionary” process—simple in concept, though it can get complicated in practice.
Here are the 5 steps:
Have clear goals - Know what you're trying to achieve (build an emergency fund, pay off credit card debt, save for a down payment on a house)
Identify and don’t tolerate the problems that stand in the way of achieving those goals - What obstacles are preventing you from hitting those goals? (Overspending on dining out, no budget system in place, impulse purchases eating away at your income)
Accurately diagnose the problems to get at their root causes - Don't stop at surface problems. Dig deeper to the actual root cause. (Eating out isn't the problem, it's that you're exhausted after work and are still building your meal prep system. Impulse purchases aren't the root issue: it’s the notifications from retailer apps on your phone.)
Design plans that will get you around them- Create specific plans to address the root causes (meal prep on Sundays, automate savings first before discretionary spending, implement a 24-hour rule for purchases over $100)
Do what's necessary to push these designs through to results - Execute your design, and look for ways to make it easier on yourself (automate savings so you don't rely on discipline, suggest coffee meetups instead of expensive dinners with friends)
What results, if executed well, is upward progress in your finances:
Here's a complete example of how this looks in practice:
Goal: Save $10,000 emergency fund.
Problem: Only saved $1,200 after 12 months.
Diagnosis: Root cause isn't "not saving enough," it's treating savings as leftover money instead of a priority, which means it competes with every other spending decision.
Design: Automate $400/month to a separate high-yield savings account on payday before other spending happens. To make it sustainable, right-size other spending categories slightly rather than making one dramatic cut that feels restrictive.
Do it: Set up the automation this weekend.
Here's where the failure reframe lives: Step 2.
When you identify problems that block your goals, Dalio says: "View painful problems as potential improvements that are screaming at you."
So, your December overspending isn't a personal failure. It's Step 2 data telling you that your holiday spending needs a different system.
Your abandoned budget spreadsheet isn't evidence you're “bad with money.” It's simply feedback that granular tracking doesn't match your life right now. Maybe you need a simpler approach than Zero-Based Budgeting (more on this in Point #4) like the 50/30/20 rule instead.
Your move: Pick one financial goal you're working on right now and walk through Dalio's steps. When you get to Step 2 (identify problems), experiment with reframing any perceived failures as data. How well does that “lighten” the feel of the improvement process?
Point #3 — “…I don’t want to feel the shame.”
“I’ve noticed a pattern that is embarrassing also predictable.
Week 1 & 2 I’m motivated, I track everything, I feel in control and I’m like a person who has it together. Week 3 I miss a few entries, I get tired, something comes up then I avoid looking at my account because I don’t want to feel the shame.
Week 4 I reset. Again.
If you’ve built a budget that stays alive even when you’re busy or stressed what made the biggest difference automations, weekly check-ins, envelopes, cash, apps, rules? I need a system that can survive a human being in the real world.”
This individual is interpreting their week-to-week pattern as a character flaw: they feel “shame” when imagining looking at their account.
But viewed another way, Week 3 is merely giving them useful information.
Perhaps, detailed daily tracking doesn't match their life rhythm. When work gets busy or something unexpected happens, they feel the system collapses because it requires too much consistent attention.
This individual could experiment with less granular tracking instead of relying on more willpower. Maybe they could add more automation that removes daily decisions entirely.
They could also add more fun elements to make the process more enjoyable (e.g., opening a separate savings account exclusively for an upcoming trip or concert).
The system that works is the one you'll actually use when you hit your “Week 3.”
Point #4 — Zero-Based Budgeting vs. The 50/30/20 Rule
The Reddit user above asked what system survives real life: automations, envelopes, apps, or rules? The key is to experiment to find what works for you.
2 popular approaches are Zero-Based Budgets & The 50/30/20 Rule:
Zero-based budgeting assigns every dollar a job before the month starts. Income minus expenses equals zero. You decide exactly where money goes. $5,000 after-tax income? $1,500 rent, $400 groceries, $250 dining out, $500 to savings, and so on until you've allocated everything. It's granular and proactive. You know your plan before you start spending. The tradeoff is that it requires regular attention.
The 50/30/20 rule sets broad guardrails instead of line items. Spend 50% of your income on essentials, 30% on non-essentials, and put 20% toward savings & investments. The focus is on watching your overall ratios, giving you structure without micromanagement. The tradeoff is a less precise plan for where your money actually goes within each category.
If you tried 50/30/20 and it felt too loose, experiment with zero-based budgeting for a couple of months. If zero-based tracking burned you out, try 50/30/20.
Bottom Line: The right tracking system is whichever one consistently works for you. If one method isn’t working well for you, simply view it as data, and then experiment with a new approach.
Point #5 — Quotes of the Week
Which of these quotes resonates most with you?
Point #6 — My Questions of the Week
Think of a financial habit you struggled with but eventually fixed (overspending, inconsistent saving, ignoring your accounts). Did you view those early struggles as feedback about your system, or did you unnecessarily beat yourself up? If the latter, do you think reframing it would've helped you fix it faster?
Reply to let me know! I read every response.
Thanks for reading — I hope you found a helpful idea or two.
I’ll see you next Saturday with more.
Have a great weekend,
Benjamin Daniel, CFP®
Founder, Money Wisdom
P.S. Want to take control of your money, stop stressing about your expenses, & feel confident about your financial future? There are 2 ways I can help you:
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Disclaimer:
This material is not investment or tax advice. No responsibility for loss occasioned to any person or corporate body acting or refraining to act as a result of reading this material can be accepted by the publisher.
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