Over the past 11 years or so, I’ve spent countless hours putting out information to help people make their own financial decisions and equipping them with the knowledge to put those decisions into action.
One pattern is very clear: the step between taking on the knowledge and then pressing the button is a massive chasm, at least for some people. When it comes to money, much like the choice of life partner or where we live and work, the implications are potentially so big that we can become paralysed by indecision and inaction.
This checklist blog series aims to walk you through the process of moving from decision to action, one baby step at a time.
We’re all different, I’m sure we can agree. When it comes to making a decision, we need to know ourselves well for a couple of reasons.
Firstly, knowing how we might react in different circumstances gives us something of a heads-up as we approach a decision. Do we generally overthink things? We’ll need to try and break down a big decision into smaller steps, perhaps. Do we tend to post-mortem decisions to the nth degree? We’ll need to factor that in, too.
The WAY we make decisions is important to know. Are we generally hasty? If so we might need to put a plan in place to slow ourselves down. Do we overcomplicate things? We might need to find a way to simplify.
Trouble is, it’s REALLY hard to know ourself honestly. Nobody lies to us more than ourselves, am I right? To know ourselves is a life’s journey. Socrates famously said that an unexamined life is not worth living. Marcus Aurelius wrote journals and letters to himself reminding himself of timeless truths because he knew his own tendencies to forget them.
Now, most of us are not Stoic Warrior Kings, and will probably have to make do with sitting down for a quiet hour and doing some soul-searching. This might sound a bit woo-woo, but doesn’t need to be – we can approach this in a rational way, if we’re so inclined.
I suggest you carve out an hour and ask yourself some questions, writing down the answers in a notebook:
- How do I usually approach a big decision (think back to the last one you made)?
- What worries/occupies me most about the future? How might you bring those worries to a decision?
- What matters most in my life? Great for context and keeping perspective
- What elements of my character and temperament would I like to change? This will help you focus on the negatives so you can become aware of them
- Where does my comfort zone end? How might I push it further? This is where growth happens
I came across a brilliant list of self-examination questions on the Positive Psychology website, which you can find here. I think it’s worth working through these periodically (maybe in batches, as there are 87 of them!) and resolving to know ourselves a little better each year that goes by can only help.
Knowing ourselves gives context to our decisions, but it’s only one context…
Establish Context for the Decision
When facing a big decision, financial or otherwise, take the time to establish the context for that decision. I think that the first question to ask yourself is just how big is this decision anyway?
So many of the emails I get from people filled with angst about a decision they’re facing, really ought not to be causing them so much difficulty. I do understand that some of these things are easy for me, with 20-odd years’ experience as an adviser and with a pretty good understanding of the system.
Anything looks more daunting when you don’t know what you’re doing. But many decisions are actually not as far-reaching as they first appear, and their ramifications need not be life-defining.
One way to establish context is to consider the potential knock-on effects of this decision. Does this decision lead to another that must be made – a kind of decision chain? If so, then do you need to consider all the links in the chain at once or can you actually make this decision in isolation and then move on to the next?