It seems like the theory at one point in time – maybe 20 years ago – was that once more information was available on the internet, people would be able to learn more quickly and easily, possibly allowing them to do more for themselves without a professional. I can definitely get behind that idea, especially as I look back at some of the things I have learned, including the difference between a spinnaker and a jib in my current obsession with Cole Brauer as she attempts to be the first woman to sail around the world solo.
In a time when there is more information available about finances than ever before, why are people so confused about money? We see study after study about this, including this one released last year that indicates that 90% (90%!) of people are stressed about their money. You would think that having more information, more data, more free resources available online could allow people to be better informed about how to make good money decisions for themselves. Truth is, it hasn’t. This does make sense if we consider the consequences of failure for taking a DIY approach. Making sourdough bread? Consult the internet. Changing my brake pads? Hire a trained mechanic with a shop full of tools so I can have the confidence that my car will actually stop when I need it to.
We consider our firm to be a financial laboratory of sorts as we navigate our clients’ lives with them, each with a different set of circumstances, goals, values, timelines, risks, resources, and people involved. But they all have one thing in common:
They want to be confident in their money decisions.
In our first blog of the year, we listed our top 4 for 2024, and #4 was Confidence. We said this about our clients: “they are smart people who want to be good stewards of their wealth, but they lacked confidence about their money before they met us.” Sound familiar? If so, try these strategies as you think about how to bring your new financial goals to life this year.
Start with the end in mind: This is the most important step. When you visualize what life will look like after you make the decision, you will be able to use that vision as a lens to help you make the decision.
Let’s look at buying a car. You can probably identify some of the more obvious things, like whether it will be a sports car, a minivan, a pick-up truck, or a sedan. You also probably know whether you would focus more on style, safety, technology, driving dynamics, utility, fuel consumption, or status. You may even care a lot about the color of the car as you envision what it will be like to drive your new car. The kicker is – how will you feel when you pay for it? Will it feel worth it to have the highest end sports car? Will any of your other financial goals suffer if you buy it? If your answers are yes and no, then buy it! If your answers are yes and yes, then maybe you should reconsider if that is the right car for you now.
Write it down: Now that you have an idea of how you want to feel after you make this decision, write down what will align and won’t align with that vision. This step has even more importance for bigger financial decisions, like taking a career pivot or deciding when and how to sell your business. As an example, if you are an entrepreneur looking for a full exit with the highest sale price, selling to private equity may be the best answer. Or, if you want to stay involved and are more interested in protecting culture and rewarding long-time employees, an ESOP may be a better solution.
Stay committed: Distractions are everywhere these days. It will be very easy to get blown off course by everything from hot “insider” tips on social media to well-meaning friends, family and colleagues. Keep returning to your vision and the description you wrote down for how you can feel confident in this decision, and let your vision of your life guide you.
Celebrate: Once you have made a financial decision that you are very confident in, celebrate it! You may very well be in the top 10% of people who are not stressed about their money. Now you know you can do it, and you have an example that you can return to for future decisions.
Even when you know where you are now and where you want to get to, there is a lot of white space in between that still may require professional help along the way. If your goal in 2024 is to gain more clarity and confidence around your finances, we’d love to help you with your financial plan. Email us at email@example.com.
Debra Brennan Tagg is a CERTIFIED FINANCIAL PLANNER™ Professional and the creator of the DBT360 Financial Plan, a proprietary program that helps her clients prioritize their goals, leverage their resources, and address their risks. She is the president of BFS Advisory Group and teaches the public and the financial services industry about the importance of values-based financial planning and investor education.