By Dr. Danae McDaniel
A few weeks ago I was scrolling through Quora.com, curious about the questions people ask in regards to financial planning. A question was posed, “What has been your best financial decision?” As I read through the 100+ answers, I began to reflect the patterns emerging in the responses. I discovered 10 repeating themes that can help anyone wishing to gain long-term financial success. These themes were further sub-divided in two categories: (1) personal attitudes, and (2) practical actions that demonstrate the importance of inner strength combined with resolve. Throughout the stories recorded on Quora, a sense of “grittiness” was repeated more than any other trait. Today, let’s address the attitudes of successful financial decision-makers. In part 2 I will address the practical actions that coincide with these attitudes.
1. Be intentional
While there may be a few lucky souls in the world who fall into wealth accidentally, this is atypical. A deliberate approach to just about anything can increase the likelihood of its success, including financial success. This phenomenon of focused awareness sets your mind toward the tasks at hand while filtering out less necessary distractions to meeting your goals.1In order to make great financial decisions, the individual needs to first understand the goal in very specific terms while remaining open to new, not-previously-known options in the future. For example, if you know that you want to go to Europe next summer, and travel the region for three weeks, you may set your plans, pay for your flight and hotels, and prepare for international travel using a tour guide company. However, as you continue to tell people about your trip, you may find out that tour guides aren’t always the best option for seeing some parts of the country. As you continue to learn from others, you come to realize that you should cancel one of the tours scheduled and take a backpacking stint instead. Intentionality provides focus without becoming rigid and blind to alternative approaches.
2. Be disciplined
Disciplined is the new “sexy” today. Adults who have been suffering the consequences of self-indulgence, are forming a higher view of living a disciplined life. Our culture is beginning to respect and honor individuals who demonstrate restraint in spending. We all know that willpower is a necessity in reaching our goals, but how does one move beyond the sheer will to doing something, to actually creating a disciplined life? Psychologists continue to debate the answer, however, they are discovering that many people who make one very difficult decision well, will subsequently be less persistent on the next decision. The reason for this exhaustion of discipline is believed to be the result of energy consumption of the brain. We begin our day with the intention of making disciplined financial choices, but after several successful decisions, the brain loses energy-depleting our mental ability to maintain self-control. Scientists have discovered that a small amount of sugar can re-ignite the brain’s ability to demonstrate discipline in decision making. Strangely enough, one study from Northwestern University indicated that rinsing your mouth with sugar water was enough to do the trick.2 It appears that discipline is a combination of keeping the mind fueled during significant decision-making moments while remaining focused on your end goals.
3. Be a Lifetime Learner
Learning is simply the act of exploring one’s curiosity. When it comes to financial decision-making, many people do not feel the excitement and motivation needed to dig into complex government regulations, investment strategies, and tax law. Instead, people are often overwhelmed and unsure of how to begin, let alone how to become an avid learner of financial planning. This is why it is important to connect with professionals who are genuinely curious about financial options that can assist you in reaching your goals. Equally important is finding a financial planner that will educate you in bite-sized amounts. This will allow you to develop an aptitude for financial decision making overtime, and will inevitably build curiosity within you.
4. Marry the Right Partner
Subsequent posts on Quora.com remarked about the importance of choosing a great life partner.3 Some comments referenced the need for dual income and selecting a mate that partners well in that lifestyle. Other posts commented on the need to marry someone who has the same financial beliefs and goals so that both individuals are working in collaboration toward the same end. Team work also was a recurring theme in which each person in the relationship was able to become the best version of themselves while adhering to the plans and dreams they made as a couple.
5. Listen to the Wisdom of Others
The story which most gripped me was a raw, short explanation of how a man made the best financial decision of his life. The story goes something like this. The young man was in the HR office signing employment papers for his new job. The HR manager looked over at him, and shoved a piece of paper in front him. She instructed him to write “10” in one box and then again write “10” in another box. The young man had no idea what he was doing or why, but the HR manager said that he would thank her for this later. The man came to learn that the 10s in the boxes meant that he was putting 10% of his salary aside for retirement pre-tax and 10% post-tax. This automatic, or forced savings plan, allowed him and his wife to build a $2 million retirement nest egg. When it comes to making good financial decisions, we have to know when to receive the knowledge and know-how of others.
Sound financial decision making begins with the development of five key attitudes that drive the practical actions needed for financial success. In part 2 I will further discuss how these attitudes syndicate into living out actionable life choices.