Do you make money decisions because of pain? Most of us do, even if this isn’t fully acknowledged. Among the first descriptors in the definition of pain is punishment. People with financial pain feel like they are suffering some type of punishment.
- Financial pain is real.
- Financial pain is predictable.
- Financial pain is destructive.
In our work with successful individuals with retirement on the horizon, clients often deny being in pain but usually want investments that promise to make their unacknowledged pain disappear. The foundational financial decision an investor makes is whether pain trumps purpose or purpose overrides pain.
Yo-Yo Saving and Investing
Most investment choices made from a place of pain end up being poor at least or bad at worst. Pain isn’t connected to purpose which is problematic since your personal purpose provides the motivation and impetus for investing in the first place. Because of this disconnect, it’s easy for individuals to save and invest for years without making any progress on long-term financial problems. Like the “yo-yo” dieter who keeps trying different diets without any results, people that invest to stop pain usually experience failure.
Focus on Your Purpose
That’s where financial planning comes in. The real point of planning finances is to connect investment decisions with your purpose. Simply put, your investing purpose is determined by what you want your future to look like.
- Financial planning is focused on the future.
- Financial planning acknowledges the unknown.
- Financial planning deals with life as it actually happens.
Stay on the Road
Personal emotions sway us away from accurate beliefs when pain gets in the way without the benefit of a planning framework. Sometimes clients refer to the financial planning framework as “guard rails”. That’s a good description since “guard rails” help us stay on the road to our destination and avoid running off the road and injuring ourselves.
Physical, emotional, and financial pain can cause us to look for instant solutions that do little more than dampen the pain impulse temporarily. Inevitably the pain reappears and we repeat the same cycle all over again.
- Conquer pain by returning to your personal purpose.
- Think about, dream about, and write down what you want your future to look like.
- Remember that your future is greater than your pain.
Every investment decision, every money choice, and every financial trade-off should be made with one eye gazing toward the future. Don’t follow the pain, focus on your purpose. Start there. Ready for a real conversation?