Money Management Doesn't Always Feel Good
We like to think we always make decisions based on logic and reason, but it is important to realize emotions can sometimes get in the way.
FACT: emotions have the ability to drive our decisions.
Often what prompts your financial judgments is based on the comfort, insecurities, or feelings within ourselves. Instincts are powerful, and not always bad. However, if your instincts are negatively affecting your future, it may be time to change your plan.
The latest Nobel Peace Prize winner, Richard Thaler, would emphasize there is a gap between rational economic decisions and human psychology. The important takeaway from Thaler's findings, is to make sure you do not fall in that gap.
How Does understanding your behavior Impact Your future?
Sound investing is counter-intuitive to our emotions. Buying stocks when they are low and selling them when they are high may sound great, but it's one of the hardest things to do.
Up front, your financial planner is responsible for helping you make a plan, but long-term, your planner should help you stick to it. A solid financial plan won't always feel good, which is exactly why a financial planner should be someone to coach you through it.
It's time for you to challenge yourself. Be uncomfortable for a moment. Ask yourself, "What financial decisions am I making, or avoiding, based on how it makes me feel?"
Coaching our clients is a role we embrace at More Than Money and something you must demand of your financial planner.
Listen to The Full Show:
Get the full story on the ways your emotions could be creeping into your financial decision making. You may feel secure, but you will be shocked by the examples we witness all the time (Listen in at 5:52). The last thing we want is for you to fall victim to your emotions' sneaky ways.
"Having sat down with hundreds of people, I have learned how people make decisions. I hate to see people make emotional decisions that have a painful impact on their future."
"That's where my job really comes into play. It's not when you are sitting in my air-conditioned office and you're telling me how you theoretically want to be invested. It matters when you are watching the TV telling you the market is going to drop."
"I sit. I coach. We say hard things to each other. Then, you know what? You get to a point where you reach your dreams for the future."