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Financial Decision Making
April 27, 2018
We all have financial goals . . . hopefully. We know on some level what we want our future to look like. We know how we want to spend our retirement. Unfortunately, most 50-somethings have only $8,000 in retirement savings according to Motely Fool in October, 2017. They also average credit card balances between $8,000-$9,000. Even though those numbers don’t look promising there are ways to improve your retirement, especially if you start earlier. The key is a well thought out plan. We have put together a few steps to help you in the process.
Be calm. Decisions made out of fear and worry are rarely the best possible option. Meditate, run, get out in nature, do whatever it takes for you to clear your head. A relaxed mind can think more clearly and weigh options productively.
Compile your data. It is impossible to make an informed decision, when you don’t have all of the information. You need a clear picture of your assets and liabilities. That means what is your home worth vs. how much do you still owe. What is the total of your savings and debt? Chances are a complete picture will reveal details you had forgotten, both good and bad.
Be clear about your goals. “A dream is just a dream. A goal is a dream with a plan and a deadline.” Said Harvey Mackay. Write them down, but be specific. There is a huge difference between saying I want to retire and I want to retire on my 60th birthday. Different steps have to be taken. Discipline is more necessary. The best part is you are more likely to make it happen.
Research your options. When it comes to investments, the options are endless. Engage experts to help you understand how it works.
Weigh your options. Keep in mind often times, you will hear the best case scenario. Google is available everywhere. Do your own research and find the worst case scenario.
Sleep on it. In other words, give yourself time to think it thru. Is this right for you? Does it align with your goals?
Make a decision. “Decisions without actions are pointless. Actions without decisions are reckless,” John Boyd said. No one loses weight by deciding they need to lose weight. They eat less. Focus more on real food. They take the appropriate steps to make it happen. It works the same way in financial decisions. You have to make a plan and then work your plan.
Evaluate the results. Set a regular time table to take a look at your progress. Whether you evaluate every 3, 6 or 12 months, you need to modify when necessary. With some investments, the best strategy is to let it sit where it is for the highest return. For others, it may be better to move the money with more frequency. Sit down with your expert to fully understand the picture.
As Benjamin Franklin said, “If your fail to plan, you plan to fail.” Our advice is follow his advice.
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