Are You Struggling With Financial Decisions?

November 9, 2008


Have you ever had difficulty making a financial decision?  You are not alone, we all struggle making choices about our money and many of us find multiple ways to postpone or avoid these important decisions.

What causes us to duck our financial responsibilities?  I have an evolving theory that we avoid making these decisions because we’re time poor, uncertain about the fine print, and fearful of the outcome.

Time Poor

Our lives are busy, it’s tough to find time to understand the details of the financial decision we’re faced with.  For example, a common question is “Where should I invest my money”?  You want to know:

  • Your investing options
  • How much you can make and how much you might lose
  • Who to ask for advice
  • How you can get your money back when you need it
  • The list goes on….

It’s difficult to make time do the necessary research so we can feel comfortable making the decision about where to invest our money.  Even once we figure out the fine print it takes additional time to take action.  Which brokerage should we use? As we setup the investing account we have to decide things like how much we should invest and how often we should invest.

Uncertain of the Details

Who is willing to write a check to someone if they don’t understand how that money will be used?  Everyone knows you can deposit money with a mutual fund company or an online brokerage and use it to invest but what actually happens to your money?

All of the questions we covered in the “Time Poor” section are part of our uncertainty.  If we can’t answer why, how, or when our money is being used then we don’t feel comfortable making a decision about where to put it.  Instead we may decide not to act and just leave our money in our bank account where we feel it’s safe and we can access it whenever we want.

Fearful of the Outcome

Uncertainty keeps us guessing about where and how to invest our money because we’re fearful of what might happen when we invest it.

There are many potential outcomes of investing your money and we’re scared of many of them.  Of course the most obvious is, “what if I lose all my money”.  The fear of loss can be a huge barrier to making a financial decision.

We’re not just afraid of losing money, but also afraid of not choosing the best investment.  We don’t want to be stuck with a lousy 2% return when everyone else is earning 6%.  While it would be better to earn 6% than not invest at all, sometimes we’re worried we won’t choose the “right investments” so we postpone making the decision.

A lot of the times the fear is tied to specific life goals. For example, if put my young son’s 529 savings in stocks instead of bonds, they could go down and he won’t have enough money for college.  Or if I only earn 4% on my retirement accounts I won’t be able to retire until I’m 70.

Even after we’ve make the time to understand our financial options, fear of the potential outcomes can keep us from taking action.

Tough Money Choices

I’ve used an example of investing your money because it’s one that most people can relate to but the same hurdles of time, uncertainty, and fear really apply to most financial decisions in varying degrees. For example buying life insurance, buying a home, choosing health insurance, picking a job, or even applying for a credit card or choosing a bank are all effected by these factors.

Share Your Thoughts

I’m going to enhance and refine my theory on barriers to taking financial action; with the goal of creating a guide that will help people understand their options, feel confident about their decisions, and have a plan to make necessary changes after the decision is put in place.

Your feedback will help shape this guide and make it useful for everyone. Leave your answers to the questions below in the comments section or you can email them to us via our contact form.

  • What do you think about what I’ve described?
  • What are some other factors that affect your ability to make a financial decision? 
  • What are your biggest roadblocks to making money choices?
  • What things are you most uncertain about or fearful of when it comes to money decisions? 
  • What have been your toughest money decisions?
  • What techniques have you used to overcome these barriers?
  • How have you made time to learn the details of your financial decisions?

Thanks for your feedback!


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Ben Edwards, the founder of Money Smart Life, saved up enough to buy a Nintendo back when he was 12 years old. When he used the money to buy shares of Wal-Mart stock instead, he knew he wasn't like the other kids... His addiction to personal finance has paid off for his family and now he's helping you to afford the life that you want. Check him out on the web at Google Plus, Twitter and Facebook.

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6 Responses to Are You Struggling With Financial Decisions?

  • Andy @ Retire at 40

    Over the years, I have found that I usually thought about my financial decisions a fair bit over lengths of time, but just 5 mins here and there so I didn’t notice it taking up too much time.

    Recently, I have been investing more time into my decisions since I believe that it is very important to figure out what is best for you and your money.

  • The Credit Toolbox

    * What do you think about what I’ve described?
    – I think you are right in term of time poor however I would rather say it’s bad priority management

    * What are some other factors that affect your ability to make a financial decision?
    – poor financial education
    – lack of trust in a financial advisor/banker/planner… the whole financial system 😉

    * What are your biggest roadblocks to making money choices?
    – my wife 😉 I mean opinion of other member of my household

    * What have been your toughest money decisions?
    – quitting my job without having another one in mind (but I did it!)

    * What techniques have you used to overcome these barriers?
    – I read a lot about personal finance
    – I became myself a financial planner

    * How have you made time to learn the details of your financial decisions?
    – the key point is to take a day to make a plan, an investment strategy, a saving system and then stick to it. Once it’s done, it’s easy to evaluation your decision.

  • stocks

    “What are some other factors that affect your ability to make a financial decision? ”
    i think that fear is probably the biggest factor in making a sane decision. And you hit it right on the head, about the interest rate on growth that can be made. I’ve been leaning more towards 10 year bonds lately because the stability of them, even though the rate is 3.75 or 4. interest, not like the usual 10% that the markets showed previously a year. But now that my 401(k) is down 40%, a 4% gain is not that bad…


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