Let’s face it. We live in an age and a culture where information, expert advice, and countless opinions bombard us daily. Within minutes of picking up an iPad or Android we can easily become confused, scattered, and totally overwhelmed on a subject we were feeling pretty confident about just yesterday. This seems to be particularly true when making a financial decision. It starts with the well-intended notion that we ought to first do our research, we should certainly read articles from all the smartest experts, and maybe it’s a good idea to consult with Uncle Jim and Cousin Marge too. And then we’ll have the answer. Only somewhere along our data-finding, information-overload excursion, we lose ourselves and the initial shreds of any real clarity we had to begin with. Now what?
I think there’s a better way and it involves both doing your homework and making decisions from a clear, calm, anxiety-free place. A short case study might help shed some light on the matter. I recently sold my home in Atlanta, relocated to Asheville, and am currently in the market for a new home. But wait, the Wall Street Journal says home prices have jumped significantly in the past year. Should I wait until that cools off? Bond experts say the time to buy is now because mortgage rates are only going higher. Oh no. My dad thinks I should keep renting. What?! You get the idea.
So what’s the solution? How do we use the right information in the right doses all without losing sight of ourselves? After many years of sometimes easy but oftentimes painful lessons, I’ve discovered a few principles that seem to work without fail. Here they are:
Principle #1, stay focused on your “business”. By your “business” I mean things that you can control. Things like doing thorough research (of homes, financial advisors, stocks, etc…), creating and sticking to a budget, improving your knowledge base, etc… It also means staying out of areas that are not your business, i.e. outcomes. In my experience, outcomes are pretty much nobodies’ business and trying to wrestle out a certain result typically leads to stress and anxiety. More on that in Principle #3. Thus, I find it’s best to focus on activities within your control. An important point is to undertake your “business” with gentleness and kindness. If you’re feeling run down or more confused, it’s time to take a break. On the whole, when you stick to your business and enjoy the process, there’s less stress and more clarity – a great place from which to make any decision.
Which leads me to Principle #2: avoid making decisions from a place of anxiety, fear, or urgency. This can be difficult because sometimes we face important and potentially life-changing decisions that seem to go hand-in-hand with stress and anxiety. Although we may believe big decisions are inherently stressful, I’ve found that it’s usually the expectations we put on ourselves to produce a perfect outcome that kicks up all the anxiety. We hold onto the misguided belief that we have to make the best or perfect decision. That we’re not allowed to change our minds if something doesn’t work out, or that we can’t adjust our course as we go. That fact is no one can know how things will turnout, even with the best research and intentions. In that case, big decisions don’t have to be so scary. When we take this perspective it’s much easier to make a decision from a clear, calm place. A place that paradoxically is much more likely to lead to a good outcome.
Finally, principle #3, let go of the outcome. This is hard. Probably the hardest part of the whole darn decision-making process. We want what we want. We are certain that we know that this or that particular result would seriously be the best possible outcome. As much as we genuinely believe our vision of the way things ought to go is the best possible way things could go, attaching to a specific outcome only kicks-up anxiety, fear, and usually a whole lot of stress. I’ve found that in the few instances when I’ve actually let go of the outcome (typically against my will), things turned out better than I could have imagined.
So there you have it, three easy principles to help you make better financial decisions. Use them (or not) as they make sense for your circumstances. But above all, experiment, have fun, and enjoy the process.