About five months ago, I decided to share some lifestyle changes I’ve been pondering this year. There are many habits and behaviors that, while not directly related to finance, can spell the difference between reaching your goals or not. But in my experience, people rarely hear about them from their financial advisor.
Picture this, you’re driving on one of those remote, dusty highways where it seems like there are more buzzards than other cars. It’s been hours since the last town of any size, which is concerning because according to your carefully laid plans, you should have reached your destination by now. There’s no internet, and you swear the GPS on your phone is down. You check your roadmap, but you have a sneaking suspicion you took a wrong turn sixty miles back. Meanwhile, your darling spouse and children are drumming their fingers and asking questions like, “Are you sure this is the way?” and “Are we there yet?”.
Then, a lifeline! You see a small town up ahead. The sign says, Welcome to Backwater, Population 76.
Now, you have a choice. Do you keep going, trusting in your own navigational skills…or do you stop and ask for directions?
How about this one? You’re shopping for a new car at the local Toyofordvolksler Motors dealership. As soon as you hit the lot, a salesman comes out. “I know just what you need,” he says and steers you by the shoulders to a car. “This model has been specifically built for your exact gender, age, family situation, political party, and favorite breakfast cereal. You could spend months looking at other options and not find anything better. Here’s a pen.”
Do you sign the lease…or do you ask questions?
These are two – admittedly extreme – examples of a dilemma people face on the road to their financial goals. To ask questions…or not? In my experience, many people fall into one of two potholes.
First, there’s the DIYers. Most of the time, independence and self-reliance are great virtues. But for the Do-It-Yourself crowd, it’s easy to take them too far. Refusing to ask for directions is a classic example, but it can be even more damaging when applied to your finances.
The fact of the matter is, no one knows everything there is to know about finance. Unless you want to devote thousands of hours of your life to monitoring your investments, researching the tax code, familiarizing yourself with the ins and outs of estate law, or constructing a painstakingly thorough plan for reaching your goals, doing everything yourself isn't an option. There are so many options to choose from, potential roadblocks to avoid, and possible shortcuts to use, that it makes more sense to stop and ask for directions.
You see, we all have different life experiences, which means we all have different areas of expertise. Those who take advantage of this fact are often the ones who go further, faster. Now, sometimes this means consulting with professionals like tax planners, estate planners, and investment advisors. But it can also mean having the humility to ask your friends, family, and neighbors for advice. If someone you know did a great job paying off their student loans and getting out of debt, ask them how! If someone you know got a killer deal on their mortgage, ask them how! Leaning on others for the occasional tip or insight isn't weak or shameful. It's smart.
Then there’s the overly credulous. While believing that you know everything is dangerous, equally dangerous is believing everything you hear without question. When it comes to reaching your goals, there is never a one-size-fits-all approach. There is no philosophy, strategy, or school of thought that works for everyone. And just as everyone has their own skills, everyone also has their own biases and blind spots.
What does this mean? It means that when someone gives you advice, whether they’re a professional or not, take time to ask questions. Questions like:
- How did you come up with this idea?
- What makes you think this is might be good for me?
- Why this and not that?
- Are there any alternatives for me to consider?
- What happens if this doesn't work?
- What are the downsides?
- What are the risks?
Remember, being careful is not the same as being cynical. Just as you would never buy the first car a salesman tries to push on you without doing a little digging, never blindly accept financial advice without asking questions first.
There's an old proverb that says, “He who asks a question is ignorant for a minute. He who does not remains ignorant forever.” I think there’s so much truth to that saying! So, as you travel along the highway of life, remember: Never stop asking questions.
It's the surest way to complete your journey advantageously.