Skip to main content

Sound Advice: June 23, 2021

Planning:  Failure is not an option 

Why do we put off taking action that is important to our financial health?  In the past, I have explored some of the financial "emergencies" that can be avoided with planning or prevention.  It’s easy to understand why planning is so important.  It's less easy to understand why clients procrastinate on important things that are in their best financial interest.

Nine out of 10 people would agree that planning makes sense.  Just knowing that we should plan, however, isn’t going to change most financial behaviors. We already know what needs to be done.  The bigger question is why we put off doing it.

The answer to that question is almost always emotional.  Our procrastination often has deep roots in anxiety, fear, and grief.

Many of the blocks to planning can be tied to things we experienced earlier in our lives that were never resolved.  For example, I once had a client, a business owner in his 50s, who had committed to contributing to his retirement plan.  He had decided on the monthly amount to save, his business was thriving, and he could easily afford to make the payments.  Yet he never managed to get around to sending them.

When we met, he couldn't come up with any reasons for his procrastination. So I asked him, "What does retirement mean to you?"  He pondered this for some time and finally responded, "It means I die."

He went on to explain that every male in his family had died within two years after retiring.  He didn’t want to retire, or even think about preparing for retirement, because he wasn’t ready to die.  Retirement to him didn't mean moving into another phase of life; it meant the end of life.

I suggested to him that maybe retirement could mean that you get to do what you want, when you want, with whom you want.  We also worked with the idea that preparing financially for retirement did not necessarily mean he had to retire before he was ready to do so.  Once he became aware of this emotional block, he began making the contributions to his retirement plan.

The reasons that block us from acting to support our future financial well-being can be both internal and external.  If you are putting off a financial action that you know is important, consider whether any of the following factors may apply:

Avoidance: Feelings of self-doubt, fear of pain or anxiety around the task, depression, fear of asking for help, lack of trust.

Perfectionism: Fear of failure, fear of being criticized (both externally by others and – often more powerfully – internally by parts of yourself).

Ambiguity: Lack of clarity about the task, feeling overwhelmed, difficulty prioritizing in the absence of a crises, being focused on immediate tasks.

Narcissism: Overconfidence in getting it done at the last minute. Needing chaos or pressure to provide adrenaline, the ability to focus to the exclusion of everything else, and a feeling of being fully alive.

Physical Issues: Fatigue, illness.

Lack of knowledge: Not knowing what you don't know, unsure how to get needed help and information.

Financial: Not having the funds to take the necessary action.

With help, those issues can be resolved.  The first step is to identify them and begin to understand how they block you from taking the action you know to be important for your financial health.

N. Russell Wayne, CFP®

Questions?  Please contact me at nrwayne@soundasset.com

Comments

Popular posts from this blog

Sound Advice: August 19, 2020

10 Things Investors Need To Know Market forecasts are totally meaningless.   There are numerous seers in the media who with great seriousness provide definitive thoughts about where the market is going tomorrow, next week, next month or next year.    What's important to understand is that short-term market movements are heavily influenced by changes in investor psychology, which are unknowable.   And for that matter, please ignore pronouncements from so-called technical analysts who attempt to divine the future from recent price patterns.   That is what the Brits call rubbish.   The rewards of real fundamental analysis (profitability and financial health) are reflected in changing market prices over long periods of time, i.e., market cycles of three to five years or more, not in the next few weeks. Target prices are nonsense.   Take a look at Yahoo! Finance, enter a ticker symbol, and up comes information about the stock in question, including a target price.   At bes

Sound Advice: August 26, 2020

How To Forecast Future Stock Prices . . . Usually Wall Street research can be extraordinarily useful in helping to gain a better understanding of the inner workings of companies.   Having been on the research side of the investment world for many years, I've had extensive experience in exploring the nuts and bolts of dozens of companies, both through analysis of numerous financial reports and regular contact with corporate executives.   Some of it was useful; some was not.   In all cases, the goal was to come up with estimates of where company earnings were likely to be in the year ahead and the years beyond. As analysts, we looked for consistency of progress and the potential to grow at above average rates.   The task of coming up with these kinds of conclusions was a matter of translating discussions of ongoing operations and developments into numbers that made sense. Once that was done, we viewed the current analysis against the backdrop of the past.   The range of p

Sound Advice: August 12, 2020

"A goal without a plan is just a wish" Antoine de Saint-Exupery Planning for one's financial future is a straightforward exercise, but one in which the nuances can dramatically change the outcome.  When you start on the path ahead, you have the option to change direction as you move along toward your goal.  If you don't start, as is the case more often than not, you have no options other than struggling to deal with unforeseen consequences, which may well be less than desirable. A financial plan has four main elements: what you own (your assets), what you owe (your debts), how much you are earning (your income), and how much you are spending (your expenses).  If your assets are greater than your debts and your income over time exceeds your expenses, assuming nothing untoward happens, you're probably in good shape. But a plan is based upon assumptions that may or may not be on target.  Among these are the rate of inflation, the rate of investment ret