The Inverted U-Curve of Personal Finance

Okay…so before you ditch out on me because I mentioned “inverted U-curve” in my title – hang on just a quick second! This is going to be much more straight forward than what you may be expecting. You see, I picked up a haul of books from the library this fine fall evening (seriously, I scored on some great reads) and happened to get my hands on a copy of David & Goliath by Malcolm Gladwell. Now, I know inverted U-curves did not just stem from Gladwell’s book – but his chapter depicting the inverted U-curve (to classroom size & family wealth) got me thinking…what is the optimal point for thinking about personal finance on the inverted U-curve?

For those of you who may not have read David & Goliath, or cannot even remember the last time you discussed an inverted U-curve (possibly even Kuznets Curve) – no worries! Here’s a short breakdown:

An inverted U-curve can depict any concept – where on the left hand, vertical axis are benefits ranging from none to most. On the right hand, horizontal axis is a theme/concept/idea ranging from none, to some, to too much.

After looking & following along the graph, this is what you will discover: too little of something can be considered a bad thing. Too much of something can be considered a bad thing. But when you discover that middle ground, or the right balance – you’ve found your optimal point.

The inverted U-curve can be used for a wide variety of things in life. For example: too little of exercise can be detrimental to your health – too much exercise can actually lead you to injuries – but discovering the right amount of exercise and fitness for you leads to the most optimal health for your body.

Alright, so let’s actually talk about the inverted U-curve & what this means in terms of personal finance….

You know, what this post is actually supposed to be about?


I digressed a bit, but thanks for sticking out with me in that quick intro/lesson. Check this out…

You see, the inverted U-curve of time spent thinking about personal finance is something that each one of us can relate to at one time, or another.

With the horizontal axis relating to the amount of time we think about personal finance (on the spectrum of none, to some and ultimately too much), we experience the benefits of little – to some – to the most.


When the amount of time we think about personal finance is NONE:

  • We don’t track what we make & spend
  • We have no clear depiction or plan of what our money goals are
  • We do not have  any ambitions to even save money
  • We cannot provide encouragement to others for their financial goals
  • We potentially believe the falsehood that money grows on trees
  • Etc.

When the amount of time we think about personal finance is TOO MUCH:

  • We obsess on whether we are keeping up with all of our financial goals
  • We do not feel the amount we are saving and our plans are “enough”
  • We consistently question any and every purchasing decision
  • When practicing money extremes (from frugality to hyper-consumerism) we lose sight of what we value
  • We forgo opportunities to invest in ourselves because we are afraid there will be no pay off in the future
  • Etc. 

When the amount of time we think about money matters is SOME and at its OPTIMAL POINT:

  • We free up time to spend on things we value with the people we love
  • We have an ease of mind because we know we have an emergency fund in place & the right amount of insurance coverage
  • We are confident in all of our purchasing & saving habits
  • We smile & share encouraging words with others that reached a financial milestone
  • We have more headspace to strengthen any and all areas of life other than just our personal finances
  • Etc.

I cannot say that I am always perfect and consistently spend the optimal level of time in regards to personal finance. I am far from that. What’s important to me is the recognition of this inverted U-curve. If I am thinking too little to none, my goals & finances definitely derail. If I tip over to the too much thinking on personal finance, I fall to the insecurities and scrutiny of my own goals (not even ones that someone made up for me)! C’mon..what’s up with that?

Determining when the scales are tipped allows me to get right back to that balance of the ‘perfect’ amount of time to think about my finances. I recognize, that sometimes my optimal point can also be in flux. It takes time to recognize what is too scarce, and what is too extreme. Yet when I discover which trend makes me feel most comfortable and on track to spend in save in accordance with my values – I know I’ve hit my optimal point.

So whether your optimal point of personal finance thoughts means having a consistent “money-minute” check-up every day, only a monthly budget overview, sharing an in-depth conversation with a partner for a few hours on financial goals, chatting with friends in passing about a 401(k), or even doing the “20 minute end of the year money tune up” – so be it! Each and every one of us will have a different optimal point of time spent on personal finance in terms of the inverted U-curve. The question is: what is your optimal time spent thinking about your personal finances that works best for you?

What is your optimal amount of time spent thinking about personal finance? How can we discover we are thinking too little, or too much in terms of personal finance? Let me know in the comments below!


34 thoughts on “The Inverted U-Curve of Personal Finance

  1. Aha! I totally thought this was going to be about that research that shows that there’s an optimal amount of money to be making per year (I think it’s like $70-80K?) and then it’s all downhill from there.

    But no! 🙂 This is great. I definitely hadn’t thought of a U-curve in this context before. I’m in a bit of a weird place with this stuff right now since I’m pretty new to caring about personal finance — kind of a honeymoon phase of sorts. Like I’m still super excited to tally up all my receipts at the end of the day (well, most of the time). But I realize that this may not last forever, and your point is very well taken: I don’t want to become obsessive about this stuff or let it interfere with my daily functioning, relationships with others, or ability to enjoy life.

    Thanks for presenting this very simple yet very thoughtful concept!

    Liked by 1 person

    1. Yes! That was also in Gladwell’s book, but I decided to go with this theme instead. 🙂 I like how you call it the honeymoon phase! I’d have to say I’m relatively in the same place (started a little over a year ago to get very serious). My hope is to set up all the best foundations & systems now to get into a place where I am not incessantly worried/constantly thinking about money. I’m reading the book “The One Page Financial Plan” right now, and that’s the place I strive to get to. It’s challenging whenever you have big goals, it’s almost as if you have to hyper focus on them to achieve what you truly want. Here’s to finding our optimal points for personal finance! 🙂


  2. Excellent analysis. For me, the end of the month updates have been very useful. I know I don’t need to check my investments or mortgage balance the rest of the month. The incoming/outgoing is usually a weekly checkup of all bank accounts and credit card accounts to make sure everything has been added to the budget and there aren’t any unknown charges, etc. Then the messing with spreadsheets time… that may verge into the “too much” territory. 🙂

    Liked by 1 person

    1. Maggie, that’s a great breakdown of time spent! The weekly check up to me isn’t too bad because it’s more just to observe whether things are still smooth sailing. I have a lot of things automated and I want to ensure they haven’t gone haywire haha. But you’ve got to have spreadsheets (and snow)! I don’t think that could ever be too much. 🙂


  3. I answered yes to every single point in “too much” 😦

    I think I am so worried about hitting my goals and staying positive about my finances I’ve become a bit too obsessive and am still stressing about every single dollar that leaves my account. I really need to work on finding a happy medium like you mentioned.

    “We have more headspace to strengthen any and all areas of life other than just our personal finances”
    ^That should be my new financial resolution.

    Liked by 1 person

    1. Ah, Alyssa! I’m sorry – I hope I didn’t stress you out! But – I do want to point out you are SO great about other areas in life, your health especially! You’re a motivation in the work out arena to me. 🙂 The difficult part about our age is that we still have many phases of financial aspects to come. Focusing in on them now (in the short term) will allow for 25+ years of not having to worry as much! 🙂


      1. Oh no worries at all!! If anything it was an awesome reminder to focus on why I am doing what I’m doing for the exact reason you mentioned. To allow for 25+ years of having no financial worry 🙂

        If we ever meet in person we will have to go for a run together!

        Liked by 1 person

  4. I love Malcolm Gladwell! Sadly I think I’m behind w/ his books because it’s hard to devote to reading a full book nowadays w/ the kid and all 🙂

    I know I get a bit obsessive about my personal finance stuff. I spend WAY too much time checking and rechecking my YNAB and Personal Capital Balances each day. I’m also constantly thinking of little ways to save more or do a quick money hack, when maybe I should spend a little more time looking for a job or learning new skills during my layoff. What can I say, personal finance is my hobby – my break from the drudgery that is wading through online job boards 🙂 I do think that overall I might be leaning toward the optimal spectrum because I don’t think it’s too obsessive to the point where it kills my productivity. 🙂

    Great post Alyssa!

    Liked by 1 person

    1. Me too! I could imagine though – I’m trying to cram in all the reading I can before we start growing our family. 🙂 Sometimes I think the rechecking is completely okay! Hey, it sometimes is more beneficial than checking other things on the Internet. 🙂 The great part is you’re developing skills through your passion & blog that will help for the next big opportunity!

      Liked by 1 person

      1. One thing I tell people when they say they can’t make time for their budget is think about how many times they check Twitter/Facebook/Instagram throughout the day. If they replace one of those times with checking their YNAB/Mint/Personal Capital it’ll be a lot more beneficial than checking what their high school classmate did during Thanksgiving!

        Liked by 1 person

  5. When we started on the journey in the spring, we thought about PF way too much. We went from never thinking about money to almost obsessing over every dollar. We had lofty goals and the “need” to play catch-up. Fortunately, we’ve relaxed our position a bit. Our income is more predictable, we’ve automated our finances to a large degree and I think our weekly review of our spending is optimal. Thank you for the opportunity to self-reflect! 🙂

    Liked by 1 person

    1. I think that’s a fairly similar theme amongst people who get in tune with their personal finances! I have to admit I was a bit on the obsessive side too, but it helped me begin my journey. I’m glad to hear that overtime you were able to relax your position! Automation is such a wonderful thing, and definitely allows for more seamless happenings with your finances. I’m glad you had the chance to self-reflect, I enjoy hearing everyone’s reflections! 🙂

      Liked by 1 person

  6. I love this! & honestly, I think I’ve hit a point where I’m thinking about it a bit too much. BUT, I also think that I’m in an intense hustle stage where I’m attempting to build the kind of lifestyle I want and that it’s requiring a lot of intense work to make some pretty heavy duty shifts to achieve my goals. (Some of which include switching to freelance, becoming location independent, etc.) So perhaps I’m okay with being a bit past the point of optimization while I hustle for the next year, haha. Thanks for the great graphs and thoughts though. The Optimization Curve is an awesome tool that can provide a lot of insight for most areas of life.

    Liked by 1 person

    1. That’s great, Taylor!! I think going beyond the optimal point from time to time helps give that extra drive. What’s great is you have that recognition where if you push hard now, it will help you get to that optimal/balanced point! Recognition is key. 🙂


  7. It would be interesting to see if everyone’s optimal point lines up at the same spot or if some people actually get benefit from obsessing a bit more than others or neglecting it a bit more. I am really interested in personal finance and realize that I can get a bit obsessive 🙂 but it works for me!

    Liked by 1 person

  8. Hey, Alyssa. I read David and Goliath a while back and forgot all about the inverted U curve. Thanks for the refresher. Right now the time I devote to personal finance is optimal (at least according to your list). But I worry a little that I might be approaching the top of the curve. This post will keep me in check. Appreciate your insights.

    Liked by 1 person

    1. Hey, Mr. Groovy! I’m glad I could give you a refresher. Thats great to hear you are at your optimal point! It’s always great to revisit and see if we need to readjust when necessary. Thanks so much for stopping by!


  9. Great stuff. I’ve been on the other side of the U curve where I was too obsessed with personal finance. I’ve backed off a bit now and believe I’ve found the optimal balance in life. As you stated, it’s all about finding your personal balance.

    Liked by 1 person

    1. Admittedly, I think a lot of us have experienced that point of too much. I think in a lot of ways it helps propel you to get your financial goals aligned! I’m happy to hear you’ve found your optimal point. That’s the best news I’ve received from so many visitors. 🙂


  10. I love this. This is how I feel when I look at the people doing extreme couponing and frowning if you ever mention a vacation, a dinner out, or a cup of coffee. That’s why I’m all about the big wins to allow me to not focus on the little things.

    Liked by 1 person

    1. Great call out, Adam! I focus less on the little things too because I fall into a trap when I deprive myself of things I enjoy (especially when it means spending time with people – vacations, meals out, etc.). It sounds like you’ve found your optimal point!


  11. I giggled a bit at this Alyssa! Over the past 2-3years I went from very little concern of my finances to now too much concern over my finances – I can relate to all the points associated with both xD And it doesn’t make me sad, it does make me aware though!

    It’s just funny to think about where I was and where I am now. It’s my goal now to find a happy balance between both… because I’ve discovered neither works too well for me (surprise, surprise!)

    Liked by 1 person

    1. I love the realizations people have had after reading this post! 🙂 The awareness is absolutely the biggest aspect that is key. It’s funny reflecting back on my thoughts as well! I have definitely tipped over both sides, and working on finding my optimal point is a work in progress – but it’s getting more & more refined. 🙂


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