Decisions, Decisions, Decisions

Day of Decisions
Every day we are faced with a host of decisions. In the first hour of the day, hundreds of decisions hit us. What clothes to wear, what to eat for breakfast, do the kids need lunch, who is responsible for the carpool and on and on… We also make many financial decisions daily without even realizing it. For example, should I buy the $6 Starbucks coffee? Some decisions are larger, should we redo our kitchen?
We make so many decisions every day, we take them for granted. One problem I see with most clients is the volume of decisions we make every day blurs the line between the amount of thought that goes into everyday essential decisions and financial decisions. My goal is for clients is to not let financial decisions slip into the routine and carelessness of the multiple decisions we must make every day.
When was the last time you thought, I am going to make a clear and well-thought-out financial decision today?

Here is a trick that I learned and have shared with clients. Everyday try to make one financial decision. That might sound hard, but you most likely make many financial decisions all day long. Taking time and recognizing, wow, this is a financial decision will go a long way to help you make well-informed and constructive financial decisions.

When you start, you might have to try to make this decision, maybe while waiting in line for that Starbucks coffee, carpool line, there are many places that we grab our phone to occupy us for a few minutes, grab some thought instead.
Some ideas:
· Do I need the $100 worth of stuff I just bought at Christmas Tree Shop?
· How do I prepare to make the next step at work, do I need training, education, or specific experience?
· What can I do today at little cost that will yield financial dividends in the future. For example, networking with someone that might have a job opportunity in the future.

I know these seem goofy, but I think you get the idea. We all need to train ourselves to separate the everyday life decisions into buckets and make prepared, well thought and informed financial decisions. Maybe these decisions will turn out right or wrong, but at least we know we made the best decision we could with the knowledge we had at hand.
Pitfalls of Quick Decision-Making
Understand the Consequences.

When working with clients, we create a cashflow report looking at income and expenses. My client was horrified when he found out how much he was spending on cable, so he switched to a cheaper provider. Turns out some channels the family really liked were not part of the new service. So financially this was a win, but at what cost?

We have a client that let someone extend a wall onto their property, they asked, and my client agreed, seemed like a simple neighborly thing to do, the property marker was in place. My client is now having difficulty with the lot lines since the new neighbor says the property ends at the wall. This can be resolved by a survey at a large cost to both parties. A simple decision that wasn’t well-thought-out is now having now a sizable financial impact.

Don’t be Afraid to Stop a Moving Train
It is the emotional attachment, we see it all the time, house you have your heart set on, jewelry, clothing etc… Don’t let this get in the way of making a poor financial decision. Run the numbers and stick to your decisions. When things don’t work out the way you want, you must stop the train, regroup, reevaluate, and take a different direction. This could mean reevaluating what you thought was a well-thought-out decision, but events and factors may have changed. Yes, it is not the direction you wanted, but it might be the best decision to make with the knowledge at hand.

Don’t Make a Financial Decision on Wishful Promises
How many times have we planned to hire someone, take a new job, fix the house and someone says, I’ll cut the grass, I will take the garbage to the dump, I will help with the cleaning, I will watch the kids, you know the drill. You alter your decision based on this promise. This is fine for these routine everyday life decisions; the promise falls through, and you move on, maybe make a different decision. What we cannot do is make a financial decision that relies on something or what someone will do in the future.

Admit Your Mistakes and Learn from Them
One of the best decisions you can make is admitting you made a bad decisions and learn from it.
I think we can all think of decisions we made right or wrong that we wish we were a little less whimsical with the decisions. This is okay as it will lead to thinking about what other decisions we should have thought out a bit more and how can we do this better in the future. We all rely on our quick decision-making skills, which can be a curse and a blessing.

By compartmentalizing your decisions and following a few simple rules, you will be well on your way to making well-informed and thoughtful decisions. I cannot promise that they will be the right or good ones, but they will be the best for you given the information you have at hand.

We enjoy helping clients make financial decisions through our fee only planning process. We offer hourly rates for smaller decisions and project fee-based rates for larger decisions such as full comprehensive financial planning.

Our services are especially helpful for those that find themselves without their trusted partner or parent, whom they often shared these decisions. We also help clients navigate life events, such a divorce, loss of a spouse or parent, necessitates a rapid response to many decisions.