How To Use FOMO To Your Advantage [TFC 107]

Good morning, everyone! I welcome you to another day with The Financial Coconut. In our podcast, we are debunking financial myths, discovering best financial practices and discussing financial strategies that fits our unique life. You get it, ultimately empowering us to create a life we love while managing our finances well, so today we’re going to spend some time about how to work well with FOMO. Of course, with the context of personal finance, because we are a personal finance podcast. But I want you to know that you’re not alone. A lot of people are FOMO about all sorts of stuff and in personal finance especially, tons of FOMO going on. So yeah.

Before I continue, I definitely want to reiterate that I also feel FOMO and I am human as well. We are all together on the ship trying to create a life we love and because we’re trying to create a life we love, we in our head have anchored some sort of ideal life aka fantasy and because of a lot of these fantasy does ignite some sort of FOMO here and there. Especially where you see other people inching closer… closer to the life that you think you want. That is an interesting angle. We’ll expand on it as we go along. 

But for all of you non-millennials, boomers tuning in, thanks for tuning into the podcast. I will… for the benefit of you, I will explain what is FOMO. FOMO is Fear Of Missing Out. Essentially, it’s this anxiety that is built up when you see something that you perceive to be exciting and interesting that you are not included. That is the best definition that I have seen so far and yeah, I think it works because anxiety of something you perceive to be exciting and interesting that you are not included. These are the three elements that forms FOMO. 

It feels like you are inadequate. You feels like you’re not part of the party and in my head, the emotions when you feel in FOMO, it’s a little bit of envy plus a little bit of self doubt. “Can I actually do this? I’m not a part of this” and also a little bit of that fantasy, that desire that you have based on the ideal life in your head that you’ve created. These are some of the elements. Having some words to plug towards FOMO actually helps you to be able to work with it a lot better. So in my head, FOMO is a complicated mix of envy, self doubt and fantasy life. 

But I am not going to spend today to expand on the causality of FOMO like what causes FOMO and all that stuff. Because if you think about it, it has very complicated causes, so the causality is a multifaceted, very complicated from a psychological angle to maybe family upbringing to societal reasons to inequality to what have you. Everybody, depending on who you talk to, they will hold onto one or two of these seeming causes and they will harp on it and say “oh, FOMO is caused by these things.”

But to me, all of them come together to create this FOMO reaction in ourselves. We definitely have the external reality which is the situation out there. We also have a comparison element where we compare to other people and then there’s the internal side of how we interpret this information that causes the emotional uproar as a FOMO. I’m not going to do that. It’s too complicated and I think there’s limited upside in trying to figure out that causality. 

We don’t always need to find causes, but I do think that a few of these underlying causes are worth bringing up. Number one is we are bred as herd creatures. To me, we are bred as herd creatures. It is very common, it’s not unique to Singapore. Everywhere is pretty much the same. It’s just a different kind of herd mentality. If there’s a common narrative out there that says that the “Singapore dream”, the “China dream”, the “US dream”… whatever dream that people have, those are building narratives trying to tell you that “your life is about doing this, doing this, doing this, and you do this one step, the next step get your house, blah, blah, blah, get kids” etc.

When you are born and bred as herd creatures with a common narrative, it tends to be that if you are not meeting their narrative, you fall out. You want to do a little bit different. All these things will arouse different emotions and FOMO is a very big part of this emotions, right? Just recognizing that it is a multifaceted situation is important, and that you are not alone is also important. Don’t try too hard to find a cause. 

Today, I’m going to focus on how to work with FOMO. In the earlier part of the podcast, I’ve thrown a few words at FOMO. How does it feel to be FOMO and try to do a little bit of a formulae to FOMO, which to me is a little bit envy, a little bit of self doubt and a little bit of that fantasy life in your head.

These three things to me are some of the core elements of FOMO. While I cannot stand by to say that “yeah, this causes FOMO”, but I think these three things come together to create this complicated, emotional mix of FOMO and I’m going to start with the first point of how to work well with FOMO. It’s not always about just suppressing it. I think we really can work with it. There’s some value to it. 

The first point is to have an objective yard stick. In other words, you must have some sort of measurement, especially in personal finance. People are talking to you about 20%, 30%, 40%, 50%, they screenshot then they show you 100% growth and you would be like “whoa, the guys doing 100% man! Why should we do 10%? Why should we aim for 8% growth or profits or returns?” what have you, whatever word you throw at it. 

The idea here is because you don’t have an objective yard stick, you have no basis of measurement, everything sounds possible and everything sounds good. In my head, having an objective yard stick gives you some sort of basis to compare. One of the easiest and lowest bar of yardsticks are averages, so your mean median, mode. These are the simplest way to go about having a yardstick to compare. 

It’s like, how do you know something is cheap or something is expensive? There must be some sort of comparison. If you compare it to the average price out there… like one plate of chicken rice, $4… okay, I’ve moved on guys. I’ve moved on. It’s no longer $3. Whoever tells you $3… they’re not wrong. But I believe that the mean now is $4. Anyway , I moved on from the $3 chicken rice to the $4 chicken rice and I compare it. 

Anything that is below $4 for chicken rice, I think it’s okay. It’s very cheap. So That is the yardstick for comparison. If I compare it myself to someone like Buffett, which is performing around 20%, or the broad market in a stock market, which is growing at about 8-10% after fees… if I’m comparing myself to these kinds of averages, objective yardsticks, suddenly it feels like “eh, actually 10% a year is considered quite okay. I’m doing fine. Even 15%, I’m doing very well! I’m better than average.” 

Of course, we have to go in to dig deeper… what is the strategy? What are you trying to do? What are you adopting? If you’re comparing index funds to index funds, there is a different thing. If you’re comparing stock picking to index funds, it’s a whole different thing. 

I get the whole fallacy discussion which we talked about last week, but having some sort of objective yardstick, objective measurement and averages in your head, it’s a good place to start to manage this FOMO because it manages the envy, it manages the self-doubt, it manages the fantasy. Not everybody’s going 100%, 200%. That is something that I think is a good place to start. 

If you want an improved yard stick… averages are simple places to start. These are objective yardsticks that are simple, but if you want an improved yardstick, a better one, I think probability is something that is under appreciated. You need to recognize that everything is a spectrum. 

Spectrum means there’s a range, from 0-100 or 0-1000 or what have you. Essentially, there is a range of things and the average tends to be where most of the people will perform. This is what some people will call the normal distribution because a lot of solutions… let’s say we contextualize in personal finance, if you are just trying to perform like the average, it’s very easy, right? Just buy index funds… like your investments, just buy index funds, low cost index funds. You hold and you wait.

A lot of solutions will be optimized for the average, so if you think that the average is okay, the mean, median, they’re all around here and you are fine with it, okay perfectly beautiful. You will tend to have a very high probability of hitting it because all the solutions will get optimized to be the average or meet the average at the very least and that’s why they’re called averages. 

We will not go into that discussion, but I want to push you a little bit further if you want to perform above average, you got to ask yourself: what is the probability? What are the chances of performing above average and what is the additional work you need to put in to increase that probability and benchmark yourself with a different yardstick. 

Idea here is most people compare to averages and it’s okay. It’s like in school, you don’t need to perform amazing at everything. There’s a broad average, but there’s probably that one or two… okay, shout out to all your people that perform straight As. I don’t want to talk to you. But anyway, there’ll be one or two subjects that you do a little bit better. My economics was pretty good while I was in school and I will never compare to the average. To me, my goal is to ace it, to be the top 10 in school or something like that. If that is my goal, then my comparison is different. My yardstick is not the average. My yard stick is this so-called version of improved yard stick where I measure what is the probability of achieving this thing and what is the additional work done that I need to put in to try to achieve at this level.

This is something that I think people need to recognize. Average is a good place to start, but if you want to outperform the average, you’ve got to ask yourself two things: what’s the probability of outperforming, and what is the additional work that I need to put in to potentially outperform or increase my probability of outperforming the averages? This forms what I call the improved yardstick which is closer to what you’re trying to achieve. 

The main idea here is that by having some sort of yardstick, it forms a basis for comparison and it reduces the emotional reaction from FOMO. You don’t get that envious. You recognize what you’re going for. You have some sort of basis to benchmark against. There’s less of that whole fantasy like “wah, maybe I could do that” or “maybe that is possible.” Yeah, everything is kind of possible, but how possible is it? The element of probability in averages are a good place to start.

Which brings me to point number two of how to work well with FOMO and that is to channel the FOMO towards a mentor source. I have been struggling to find another word to replace mentor and I think that it’s very hard to replace it because mentor has been tainted by a lot of fake gurus out there in a lot of… all these people trying to tell you that they can mentor you. I’ll tell you a little story later, but the idea here is it’s not always about suppressing FOMO, but because within the FOMO package that I have established, there’s this element of envy and envy is something that’s underappreciated. 

If you can channel envy well towards something that you’re trying to achieve, that is a good signal. It’s a good signal that maybe you really want to do that. Envy provides that edge for you to push through the pain, to achieve what you need to achieve. We’ll talk about this after a word from our sponsor. 

Okay, so a short little story about mentors. My view is this: the most amazing mentors are always in the mountains and they don’t come down the mountain and say “hey, I am a very good mentor! You should use me. I’m a very good mentor.” That is my base case. I’m not saying that some of the best people are not willing to teach or they’re not willing to share their knowledge or what have you, but it’s quite rare. 

So far, some of the best people that I’ve met, I have to tell them and beg them and ask them to mentor me. The best mentors do not come down and say “hey, I’m a great mentor!” That’s my view. But also, I think we all need to recognize that for most of us that first start, you don’t get the best mentors. You get whatever you can get and not all mentors need to be a living source also, so learn from the dead. I think learning from the dead is one of the best things because the dead has already been through, they’ve done that. 

How do you learn from them? Not prayer and all… you learn from them through reading books, reading what they have gone through, reading their ideologies. There are a lot of great books out there that are a little bit more complicated to read. I definitely think you should read some philosophy books. I do think that you should read some research papers if you can and if you want to, and don’t always just read the latest new books out there. 

There will always be new releases and I realized a lot of the new releases tend to be very diluted. Of course, it’s a good place to start, but after a while, after you read 10-20 books of these new release books, you realize that never mind, it is all pretty much the same. It’s very diluted. So why not just read the senpai’s book, which is the very, very old ones. If they’ve been published for 20, 30, 40, 50 years, and they’re still being sold very well, then you know that there’s some sort of basis there. There are a lot of good content and people are willing to pay for it. Of course, if you read a very old book, they don’t really sell it for profit anymore. It’s just trying to record their thoughts. So learn from the dead. I think that’s great. It’s not always about learning from live mentors. 

I went over to that short little rant because I want to clarify that mentoring is not a dirty word, but it’s just that recently, there’s been a lot of rise of “mentorship” and “courses” and what have you and a lot of them turn out to not be that great. With that in mind, I want to caveat my thoughts that hey, there are many things that you can learn from. 

You can watch YouTube videos, you can listen to podcasts, you can read books. You can buy a course. You can have a physical mentor, like someone you actually admire or some people that you admire partly. You only admire them for their work ethics. You’re not so admirable about their other things, then you can only learn that one part with them. That’s also okay. But we’ll caveat that later. I got something to share about learning parts. I will talk to you a little bit more about that after this, but the general idea is you can learn from anything, anyone. There are multiple sources and I just collectively call them mentor sources.

Why do I think you should channel your FOMO towards a mentor source? Because like I’ve established, FOMO is a complicated mix of envy self doubt, living in the fantasy. So when you feel that FOMO, it’s a very good signal that actually you want that, like “aiyah, I feel like I’m missing out from this thing. I kinda want this, I want that [indiscernible], I want to buy that car, I want to live in that house, I want to make the kind of returns”. It’s not all bad. Please don’t suppress your envy, suppress your desires just because it’s very low probability or just because you feel like everybody is like that or what have you. 

The general narrative out there today is to suppress it or dissipate that FOMO. Some people go to quite extreme lengths. They will judge the other people… “aiyah, they lucky one lah”, or they’ll say “aiyah, all these people, you see them. You think they have a lot of friends? No lah, all these friends, very shallow one. I only need a few friends, very solid one. They will come down when I need them… come and drink beer with me.” 

The idea here is… I know today a lot of like flaming other people. But the idea here is when you do a lot of those things saying “hey, you know. You are pure luck lah”, or “all these friends are not real” and what have you, you are really just throwing hate and throwing all these negative kind of connotation to help you feel better, but you’re not actually affecting the other person. You’re suppressing yourself, you’re suppressing your envy. You’re trying to use all these things to suppress so that you do not pursue what you deep down may want to because you don’t really know exactly is this what you want. 

It’s just a little bit of envy that is a great signal for you that maybe there is something here. Maybe I do want to pursue something. Maybe I do want to make a little bit more profits. Maybe I do want to retire a little bit earlier. Of course, what does that then signal is a lot more complicated but I do encourage people to work on that envy, not in a sense of not being envious, but to take envy as a great signal to go and double down.

With that, one of the easiest ways to go about is to get a mentor, right? Read some books, learn some stuff, get someone to guide you along and that will provide you some reality check also. While you are doubling down on the envy, you take that as a signal, you pursue what you want.

It also gives you some sort of reality… it’s a guidance and good mentors are hard to come by. That is the reality. It helps you with getting or potentially getting to where you are and also the mentors probably do have more objective measurements of things and they will be able to work with your fantasy, like adjust your expectations maybe, or helpyou work through your self-doubt and all that.

I think mentors are under appreciated, but also the quality can be better. So, better books, better content, better thought processes, better people out there to mentor. Channel that. I think that’s an easy way to go about working well with FOMO. 

Like I’ve said in the opening of point number two, if you are learning something from someone… let’s say we put the dead things aside, we just learn from that individual human. If you’re learning something from someone and you only want to learn this work ethics part of this person and you want to learn this other person, how do they manage their family and you want to learn from this other person, how do they manage their investments? 

Recognize that when you’re learning separate things from separate people, you are actually creating because this person does not exist. You cannot find that same person that you want to fully emulate and we have limited time, limited bandwidth, limited resources. So when you are trying to optimize your work based on this person A, you’re trying to optimize your investment from person B, you’re trying to optimize your life with person C, then you realize that “hey, actually this ABC, they don’t exist in real life”. You are trying to put all their best parts together. 

Is it possible? I don’t know. This is something that you need to recognize every time you’re emulating from a mentor source, a part of it, you actually creating a whole new thing that may not exist and maybe it cannot work. Because maybe the person that does very well at work, they spent a lot of time at work and you cannot spent 12 hours at work and still have the additional time to take care of investments and take care of a family.

You have to realize this is a reality. If you learn in parts, you are actually creating a whole new thing and maybe it has not been proven that these three great parts can co-exist in one person or in one life or in one entity, okay? Good to know. Yeah, the most important thing is to recognize if you’re FOMO and there’s some level of envy, find the mentor. Work on the envy and also the mentor can help you with the self doubt and fantasies, some reality check and some support system. That is important. 

Which brings me to point number three of how to work well with FOMO and that is to recognize that you don’t actually need to follow the narrative. Like I’ve said, FOMO is very much stamping on some element of fantasy, right? The fantasy is built on the narrative. There is the narrative of what everybody should be and probably there is that narrative on top of that, like what are the best people doing? This narrative and the elevated narrative, which is the fantasy, forms this idea of the ideal life. 

When that happens if you fall short and you see other people that have it, you do feel some sort of FOMO, so that is something that I think people need to know and recognize. Although in the front we talk about how to work with it , how to double down on it, I also want you to know that actually you don’t need to pursue it if you don’t think it is something that you want to. 

But the idea is if you choose not to pursue a particular narrative, that means you choose not to entertain your FOMO, you just want to move towards another way of life. It is also a way to work with it but if you decide to go the other way, you will have limited support from this narrative. 

What do I mean? If the government is trying to tell you, if rulers of the land or the power source or the religious group, or what have you, they have a certain way that they want you to live. They have a certain narrative that they want you to abide by and if you are excelling in this narrative, you will be very well compensated. You will be very well rewarded. So if you follow the narrative, you do very well in school. You get a very good job. You rise up the ranks, you get a scholarship, you get propelled into leadership role and that is the narrative of Singapore. Meritocracy… whatever they sell you. 

If you follow the narrative and you do it well, you have a lot of resources to support you. Every time you take another puff, you try to take something else like sports, arts, trying to be entrepreneur… this is a little bit different, but generally, the idea is if you’re not following the narrative, you decide to do something else, you’re under-resourced, there’s no support system and you’re very much on your own. This is something that you need to recognize. 

Just look at the CPF system. The CPF system has all these different perks, 4% SA returns. You can use it to buy a flat. You can use it for further education for your kids and you know you have the medical expense. It helps you with the Medisave structure so that you don’t need to have very big medical expenses and CPF Life. There’s all these different narratives and all these different systems built to support their narrative. Using CPF towards the life of the Singapore dream, right? 

If you choose not to use a CPF, you essentially are priced out (of) all these different support system, from Medisave, Medishield, CPF Life, HDB housing. Because you choose to take the other narrative, you are not supported in this path. So this is something that you need to recognize and yeah, if you feel that you don’t want to follow the narrative and you don’t want to engage your FOMO, you feel that the FOMO is impeding your progress in some other way of life that you are trying to pursue, then just recognize that you can… but if you chose to do so, then yeah, you will have limited support in creating this new way of life that is not within the narrative. 

So these are the few ways to go about managing FOMO. I’m going to sum it up today: how to work well with FOMO? Number one is to have an objective yardstick. Like I defined, FOMO is a little bit of envy, a little bit of self doubt, plus a bit of fantasy. So if you have an objective yard stick it helps you to have some sort of basis to work with so that it’s not all airy fairy and you know what are the averages, what’s the probability of hitting something. It gives you a bit more of a reality check. You feel more comfortable, broadly speaking. That is one way of working with FOMO. 

The other way, point number two is to channel that FOMO towards a mentor source. Like I said, FOMO is a little bit of envy within it, so it’s a great signal to tell you that maybe this is something that you want to pursue. Instead of suppressing it, why not… doubling down on it and go and channel that energy towards a mentor source to go and learn and improve if the good mentors that can help you to manage fantasy, manage the reality and also work with yourself. 

Of course, point number three is recognize that hey, you don’t actually need to follow the narrative. You don’t need to engage this FOMO, but if you choose not to then there’s limited support system along the other way or the other narratives that you’re trying to build. So yeah, those are three ways to work better with FOMO… I would say work well with FOMO. with that, I hope you learnt something useful today. See ya! 

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I hope you found today’s episode useful because I do think a lot of people do face FOMO. Like I said, it’s a complicated situation, a complicated mix of things. But yeah, these are the few ways that I think people can work better with FOMO. It’s not always a bad thing. I would say there’s no really good or bad. It depends on your goals you have been trying to drive towards and depends on blah, blah, blah… I know, it sounds really lame. 

But yeah, if you are feeling FOMO and you need people to talk to, come to the Telegram group. You can DM me on Telegram if you are feeling it and you just want someone to talk to. I am happy to be there. I won’t say that I can definitely mentor you because it takes a lot of energy and I’m very occupied, but I’m very happy to just give you my thoughts, my feedback as and when you feel you need it. So come to Telegram group, add us or join our Telegram and yeah, we can chat more from there. 

Next week, we are going to focus on three signals that you’re not yet investing. I know a lot of people recently… they start investing. FOMO… a lot of it is based on investing. People rarely FOMO about insurance. Anyway, it’s like “all my friends investing and they are making more” blah, blah, blah. I think with the increase of platforms, with the increase of solutions, more and more people are investing or they think they are investing. So I’m going to share you some signals that you are not yet invested. You have not adopted the investor mindset yet. That will be for next week yeah. See you guys. Meanwhile, take care.