We often act like we live in a binary world, where we have only two choices: 0 or 1. These binary decisions work for computers, but not for humans. Luckily for us, there’s a better way.
The more I speak with people about their finances, the more I realize how interesting humans really are. We tend to make things much more complicated than they have to be, and our brains tell us that in doing so we’re just being responsible.
But what’s really going on is that we may simply be afraid to make the wrong decision. That’s totally understandable! There is nothing wrong with wanting to make good choices and the right decisions, especially when The challenge is for us to admit this to ourselves… and this takes some vulnerability.
The Difference Between Responsibility and Fear
The last time I checked, acting responsibly and being afraid were completely different forces. One helps you make good decisions. And the other?tops you from making any decision at all. You may think you’re “playing it safe,” but you hurt yourself more than you realize when you take no action.
Fear stops you from making any decision at all. You may think you’re “playing it safe,” but you hurt yourself more than you realize when you take no action.
Fear can paralyze you. And that feeling comes on strong when you face financial decisions. You can find yourself frozen in your tracks when you try to answer questions like these:
- Should I buy a home or pay off my debt?
- Can I take a trip or should I put this money toward retirement?
- Should we have a baby or should I start my business first?
You can burn through excessive amounts of emotional energy agonizing over these questions. And because of it, you can justify taking no action by convincing yourself that you’re being cautious. You’re being “responsible,” you say.
Then we convince everyone around us that we’re doing the right thing to make ourselves feel better and more confident that we’re being responsible, not afraid.
Again, all of this makes sense. Who wants to make a decision when faced with the possibility that it may be the wrong one?
The problem is not that we want to make good choices, or act cautiously to avoid bad outcomes. The problem is that we don’t live in a world of binary decisions, especially not when it comes to finances.
Why “Right Or Wrong” and Other Binary Decision Making Doesn’t Work
Most people seem to believe that there are only two choices to make with each of these decisions: a right one and a wrong one. You either go to the right or to the left. It’s up or it’s down.
This way of thinking doesn’t work, because the vast majority of life choices are not life or death, or even wrong versus right. The decisions you make are rarely irreversible.
And, when it comes to planning for your finances, this can be a very good thing. But only if you take advantage of it.
You may feel like you have to make the perfect choice with your money right now. Otherwise, you’ll be on a one way road to failure. That is just not true.
The choice that seems like the best option right now may not be the right choice in 6 months. It may not even be the right choice right now. But the only way to know is to make a choice.
It really is that simple. Just decide, and then do!
Taking Action And Making Adjustments
By taking action, you move in a direction. You make an educated guess and move on. It’s the best you can do with the information you have at the moment.
Then in 6 months, you can evaluate that decision by measuring your progress toward whatever goal you want to reach.
If you realize you’re off track, make an adjustment. If you realize you picked the wrong road entirely — well, so what? It’s not the end of the world. Go back to square one and start again.
Each decision we make, each action we take, provides us with an incredibly undervalued tool: experience.
That’s why you often hear successful people say that the biggest mistakes they made led to their biggest successes. You learn more from your mistakes than you ever will from the decisions that turn out perfectly. Practice makes perfect, and “practicing” means making decisions, taking actions, and learning from your experiences every day.
Make Big Progress With Small Steps
Of course, this is all much easier said than done if you’re on your own. Having someone to help you through it can make the process much smoother and less stressful, especially when you’re trying to make these choices around your money.
I have these discussions every day with my financial planning clients. My goal is to create a two-way conversation and provide an objective (and educated) perspective on common financial challenges that you face in your daily life.
By examining all the options available, I help guide you to make the best choices for you right now. And then when things change, and they undoubtedly will, we re-evaluate these decisions. We repeat the process over and over again.
When you make a choice that doesn’t play out the way you hoped, make an adjustment. When your financial situation or goals change, you make another adjustment. And, as long as you continue to make these adjustments as necessary, you can continue to move forward, growing and improving with each action.
Life isn’t about a series of big, groundbreaking, make-or-break decisions. It’s about breaking down your questions into the least common denominators. Keep things simple and remain mentally fluid.
It may not feel like it, but many small steps eventually move you toward your ultimate goals in life.
There are no wrong decisions. There are just actions and inactions. You have the freedom to choose the life you want to live. Take advantage of that by getting out of your head and taking action.