Friday, September 19 2014
We are quick to spend money on things that don’t matter, and yet very slow to spend money on the things that do. Why is this, but far more importantly, how do we change this paradigm in a way that is simple to introduce?
I believe that most people think that they make solid, thoughtful financial decisions, when in reality the financial decisions they make thoughtfully are undermined by the decisions which are made thoughtlessly. In addition, I believe that the thoughtful financial decisions are not so much well-educated selections as they are herd-mentality choices that we wait long enough to make that we convince ourselves we are being thoughtful.
Last night, we had a late football game, along with cheerleading practice and dance rehearsal. In the rush of the day I neglected to put anything in the slow cooker for dinner or other plans to feed my brood. We are all concerned with not eating fast-food junk. That is, most of us are concerned. At least one of my kids would object to that and opt for a greasy double bacon cheese burger every day. Thus, at 9:30pm with starving, smelly, sweaty kids, I picked up somewhat healthy wings and salads. This cost around $50. Yes, feeding my five kids is more expensive regardless of the food selection than most folks consider reasonable. Nonetheless, that is not the primary issue.
I’ve been debating and deliberating replacing my son’s backpack, which is currently held together with duct tape. Why? Because backpacks are both stupidly expensive and do not survive the abuse of ridiculous amounts of books and binders for any length of time. Truthfully, he has been using this backpack for over a year, which is long in bag years. I realized that the cost of a decent book-bag isn’t much more expensive than the thoughtless expense to feed my kids one evening.
I investigate and research to find just the right backpack for the best value. This effort also adds a delay to the decision process. When I do decide on a backpack, is it really the best value or is it just the pack that I come across the day I’m ready to make a decision? I wonder.
It seems that many of our major decisions are handled in this manner. I work with clients and their financial decisions every day. In designing financial plans, retirement ideas and insurance policies to meet clients’ needs, I find a common theme. Most people display a need to “think about it.” They want research material, company financials and third party validations. Within a few weeks most are ready to make a decision, even though very few admit to reading or researching the materials. But as long as we insert time delays into our decision process we convince ourselves that we are making a more thoughtful decision.
Creating a happy, successful lifestyle requires us to be honest with ourselves about thinks like how and why we make decisions and to understand what we want from life now and in our future. Setting financial goals with specific time-lines is a first step. We never achieve goals that we don’t set. But setting the goal is only the beginning. Putting the rest of the plan in place and then following that plan is where we find satisfaction. Brian Tracy, one of my favorite authors on goals says that we are happiest when actively working towards achieving our goals.
Take some time to put into words what you want to achieve over the next couple of years, then set some specific time-lines and action steps to reach those goals. Reaching goals requires us to work before we play. Just as I tell my kids that they must do their chores first, even though the chores will only take a few minutes and they may play for hours.
I help people to establish these specific goals and create a plan to make it happen. Let me know if I can help you.