How to Successfully Approach Financial Decisions

For many, the traditional approach to financial decisions, i.e: “just cut back on those daily Starbucks” or “just save more” does not and will not work over the long term. This type of budgeting and planning feels like a never ending practice in will power. Add to that the differing retirement planning advice on how much to save, the magic number you need to have saved, what to invest in, the right blend of stocks versus bonds, when to take social security, your personal risk tolerance, whether to start an encore career, and on and on. There are so many variables that go into financial planning that many times it just feels easier to focus on something else. Like coffee or tea from your favorite shop.?

Since many of us are looking for the secret to success, a short cut, or a magic pill, I got to thinking. What is the most important thing with regards to making financial decisions ? Is it willpower? I think there is more than one answer to that question.?

What if financial decisions are more about how you approach life in general?

I asked the increasingly popular life hack, ChatGPT, what type of people save the most. The answer was not all that surprising: high-income earners, the financially literate, those who are goal-oriented, and those who are frugal. And, of course, those who are approaching retirement age.?

In digging a bit deeper, I wondered which of these areas are inside our own control. The answer: financial literacy, goal setting, frugality, and maximizing income.?

But what characteristics provide the best fuel here? Discipline and curiosity. If you are naturally a disciplined individual, you are probably well on your way to a financially secure future (as well as a healthy one). But for those of us who fall somewhere between the moderate to low discipline levels, curiosity could be a fun path to better planning.?

How can curiosity aid in financial planning?

Often described as a desire to learn and explore , curiosity has a profound positive effect on our decision making — and can provide some fun along the way. Leaning into or developing some good, old-fashioned curiosity can:

• Enhance your information gathering as you explore multiple perspectives before making a decision. Curiosity leads to investigating the details, asking questions, and exploring a variety of sources, leading to a well-rounded scope of possible solutions.?
• Improve your critical thinking by encouraging you to question assumptions and consider alternatives. Curious people tend to challenge the status quo, which can lead to innovative solutions when it comes to financial decisions.?
• Open you up to new experiences and uncharted territories. This openness can lead to discovering innovative approaches, as financial solutions for one person might not be the best fit for someone else.
• Allow for emotional engagement and reduce stress. When you are genuinely interested in exploring options, you are more likely to be invested. Curiosity can transform decision-making from a mundane task into an interesting time of discovery.
• Increase adaptability, as those willing to learn from any mis-steps are more resilient over time. This adaptability means we can quickly adjust decisions based on our changing circumstances. This is important as without adaptability, we are often in a state of “freeze” and unable to make any needed changes.?

Where should you start with your curiosity?

This depends on your current stage in the financial journey and your natural level of curiosity or discipline. Consider the following:

• Retirement Vision: Define what retirement looks like for you. Full, partial, or no “retirement”?
• Income Sources: Do you have or need additional sources of income? Where will these come from? A financial product or an encore career?
• Retirement Timeline: How far are you from partially or fully retiring?
• Health Considerations: Even the most healthy of us need to factor in healthcare costs.
• Savings Assessment: How much have you saved and what are your monthly needs?
• Investment Preferences: Do you prefer actively managing your accounts or setting them on autopilot?
• Risk Tolerance: Do you enjoy chasing high returns or do you prefer the safety of a guarantee?
• Social Security Strategy: What are the options and what would be best for you with regards to taking social security?

I’m curious about what is on your minds

At 53, I am naturally curious, and plan to work as long as I enjoy it. My strategy includes a flexible career, maximizing retirement accounts with low risk, possibly delaying social security for maximum benefit, and securing guaranteed income to minimize my stress.

What about you? Are you curious, disciplined, or somewhere in between? Share your thoughts in the comments below. Discuss your curiosities with your financial advisor during your next meeting — and encourage them to think outside the box with you when it comes to financial decisions.