One of my main roles is helping people not get caught in the trap of making long term decisions based on emotions ~ fear and greed being the two biggies. With the now present 24/7 news cycle, news... good news and bad, is in front of many of us all hours of the day. With that being the case, it becomes even easier for us to fall into the trap of getting emotional about our money decisions, especially when it comes to investing and spending. #KeepingUpWithTheJones #TariffFears
When tensions are high, here are some tips to help yourself avoid impulsive decision making and move towards informed strategic decisions.
- Take a deep breath and step away from the story
- Have a plan. Benjamin Franklin once said, "If you fail to plan, you are planning to fail." I know it can sound harsh but look around at the most successful people around you. Money or otherwise, many of those people got to where they are because of a plan. Very rarely do we stumble onto success without some pre-meditated efforts!
And yes, I'll be the first to volunteer that the idea of creating a "financial plan" can sound excrutiatingly boring and for many overwhelming, but it doesn't have to be. And, while some choose to hire a professional here ~ that's not mandatory either. Put simply, it's about evaluating where you are today, where you want to go and creating realistic financial priorities that can get you there. When you have this in place, and the market ebbs and flows, that well thought out plan (rather than emotional reactions) become the foundation for your financial decision making.
- Education. We've all heard that knowledge is power. When we are stressed about our money or our emotions are running high, we are prone to less successful (and rational) decision making... not to mention post decision regret! Find trusted resources that will provide you with factual and objective content before emotions are high, then you know where to turn to when you later need to do some fact gathering.
- Financial Technology. We live in a world that is abound with online resources. Online calculators that can show the compounding effect of saving and investing. (Example: How much would you have in 30 years if you invested your Starbucks spending twice a week instead?). There are app's for budgeting and websites like bankrate.com for comparing interest rates. In fact, most of the information available to me is also available to you! It's a matter of finding it; and using it for help when you need it.
- Leverage those around you. Open up to trusted people around you. Have they encountered the situation you are facing? What did they do? What was the outcome? Would they do it different if faced with it again? For more on this topic, see January's blog titled: Kick Silence to the Curb and Start Talking About Money.
I hope these steps have helped you define some strategies to put in place to help you along your financial journey. As with anything, it takes time and effort to get these items put into place. If you find that you need any help as you put these items in place, we'd love to hear from you.
Stay tuned next month for the topic of budgeting!