Excel in Retirement
Excel in Retirement
How to Make Wise Financial Decisions Ep. 122
David starts out with a story about his recent vacation to Hilton Head Island with his family. Then he gets into some practical steps that can help you make good decisions.
Today, I have a few practical things that sometime inhibit us from making the best decisions. When it comes to personal finances this is super applicable because we need to get our financial planning right!
I just finished reading a book called The Richest Man Who Ever Lived. It’s about King Solomon, who the Bible says is the wisest person to live and he was incredibility wealthy. The author, Steven K. Scott, has a section titled “The Cost of Being Naïve.” I’ve been accused of being naïve before (probably true) so I was particularly interested in the content. I have a predisposition to think the best about people but as we have probably all experienced, we probably shouldn’t extend that courtesy to everyone.
Whatever the case, we all want to make great decisions that result in our intended outcome, so what do we need to be aware of that prevents this from happening? Scott states several reasons why we sometimes don’t make good decisions. He writes, “We all have a natural inclination toward simplicity. We want things to be simple. We want to be able to figure things out instantly, without having to read an instruction book or doing homework. We want to believe everybody, and we want to accept what we’ve been told at face value.
Solomon warned us about assuming tomorrow will present the same opportunities as today in Proverbs 27:1. The author states, “The fact is, however, we do not live in a static world. Everything changes moment by moment, and presuming that we will have the same opportunities or conditions to respond to tomorrow that we have today is foolish and naïve.” My takeaway is to seize the day and squeeze as much out of our present as possible. What would we do today if we knew we could not do it tomorrow?
The next reason we may be naïve is we misplaced our trust. Perhaps, we trust someone or an institution that doesn’t merit our faith. Sadly, the author writes, “More often than not, people are less capable, less experienced, less competent and less honest than they seem to be.” Solomon recommended looking well into a matter and doing due diligence, and Scott analogized that due diligence is shining a floodlight on a situation. It illuminates what’s there or what may be missing.
Investment advisory services offered through CreativeOne Wealth, LLC. Clients Excel, LLC and CreativeOne Wealth are not affiliated companies. Licensed Insurance Professionals. Investing involves risk, including potential loss of principal. Any references to protection or lifetime income generally refer to fixed insurance products, never securities or investments. Insurance guarantees are backed by the financial strength and claims paying abilities of the insuring carrier. Annuity withdrawals are subject to ordinary income taxes and potentially a 10% IRS penalty before age 59-1/2. Roth distributions are tax free after age 59-1/2 and the account has been open for at least 5 years. This video is intended for informational purposes only. It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet particular needs of an individual’s situation. Clients Excel is not permitted to offer and no statement made during this show shall constitute tax or legal advice. Our firm is not affiliated with or endorsed by any governmental agency. The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Clients Excel. The use of logos and/or trademarks of hosting sites are the property of their respective owners and are not an endorsement by those owners of our firm or our program.
Welcome back to the Excel in Retirement podcast, where we help good people make wise financial decisions so that they may excel in retirement with confidence. Learn more at clientsexcel.com. Now to your host, David Treese.
UNKNOWN:David Treese.
SPEAKER_00:Welcome back to episode 122. Well, we spent Independence Day last week down at Hilton Head Island. And if you've never been to Hilton Head, I highly recommend it. It's a cool spot. That was our second year in a row going for July 4th. And so maybe we've started a tradition here. I guess time will only tell, right? Well, last year we didn't take enough clothes. And so this year we overpacked. We wanted to compensate for a problem we had last year. And we happened to have a room that was near the elevator and the ice machine and the vending machines and so forth. And we discovered that in that tiny room, there was a washing machine and it was free to use. It wasn't like the old school ones where you had to have a ton of quarters to use and you put them in there and the thing pops back. Boy, I felt like Columbus discovering the new world when I saw that washing machine and dryer though. So next year we can take three sets of clothes and just wash as we go. So no more having to sweat it out, packing the car strategically like Legos and squeeze We can just wash as we go. I think it's fair to say, though, that we all want to make the best decisions possible when it comes to something as trivial as packing the right clothes for our trip, right? We are constantly working with our daughter, our six-year-old, Amelia, about how to make better decisions and teaching her how to make decisions. For example, we try to talk to her about when it's appropriate to ask for a snack and when it's not, and more broadly, how to ask the right questions at the right time. Have you ever been around around someone and they always ask the wrong questions at the wrong time. And so they're just out of place. And so that's frustrating to be around folks like that. And we don't want to inconvenience people when it comes to asking our questions at the wrong time. And so part of that is just having emotional awareness, I think, and we're trying to instill that in our daughters. Well, today I have a few practical tips that sometimes inhibit us from making the best decisions possible. And so when it comes to personal finance, this is super applicable because we want to get our financial planning right. Sometimes we can't make mistakes when it comes to planning because it will be too costly. And so we want to make the best decisions possible and try to avoid mistakes at all costs. Well, I just finished reading a book called The Richest Man Who Ever Lived. And it's about King Solomon in the Bible. And the Bible states he's the wisest man to ever live. And he was incredibly wealthy. In today's standards, some people would estimate him to be a trillionaire. We don't have any trillionaires in our world today. Billions like Elon Musk and Warren Buffett and so forth. But we don't have any trillionaires. And so by today's standards, King Solomon would be a trillionaire. And so he was given the opportunity to ask for anything that he wanted, and he asked for more knowledge and wisdom. And so as a result of that, God gave him many resources and great abundance. Now, the author of this book is Stephen K. Scott, and he had a section titled The Cost of Being Naive. And I've been accused of being naive, and it's probably true. So I was particularly interested in this content. And I have a predisposition to think the best about people. And as we probably have all experienced, we probably shouldn't extend that courtesy to everyone. But I tend Well, whatever the case, we all want to make great decisions that result in our intended outcome. So what do we need to be aware of that prevents this from happening? Scott states there are several reasons in the book why we sometimes don't make good decisions. He writes, and I quote, We all have a natural inclination towards simplicity. We want to make things simple. We want to be able to figure things out instantly without having to read an instruction book or by doing homework. We want to believe everybody, and we want to accept what we've been told at face value. But he calls that simplicity foolishness. And we want to seek a matter out and understand all the aspects to it. Solomon warned us about assuming tomorrow also, and he assumed us about assuming that he assumed us about assuming. Well, Solomon warned us about assuming tomorrow will present the same opportunities as today in Proverbs 27.1. The author states, the fact is, however, we do not live in a static world. Everything changes moment And presuming that we'll have the same opportunities or conditions to respond to tomorrow that we have today is foolish and naive. And so my takeaway is to seize the day and squeeze as much out of our present as possible. And so we want to get the most amount done today. This is something that resonates with me, right? I want to be as productive as possible and get the most out of it. And whether that's working out today so I feel good tomorrow or feel good the rest of the day, or we just have better health in general, I want to get the most out of it. So that one resonated with me. What we do today, what would we do today if we knew that we could not I think that's a question worth pondering. The next reason we may be naive is why. A misplaced trust. We misplace our trust. Perhaps we trust someone or an institution that doesn't merit our faith. Sadly, the author writes, more often than not, people are less capable, less experienced, and less competent and less honest than they seem to be. Solomon recommended looking well into a matter and doing due diligence. And Scott analogized that due diligence is like shining a light or a floodlight on a situation. Have you ever turned on a light? Sometimes I take the dog out in the backyard at night and it's really dark and I turn on that floodlight and the whole backyard illuminates. You're able to see what's missing or what is there, right? You can see if there's any predators in your backyard or whatnot. And so doing due diligence is like turning on a light. It illuminates all kinds of details of what may be there. And so we can make better decisions. Scott writes that, And let's face it, we all want to get the result with the least amount of work possible. It's human nature, right? We want to conserve energy. It's human nature. But this is really a type of laziness, and it comes with perils. Looking well into a matter requires effort and work in order to make the best decisions. Solomon warns us in Proverbs 21.5,"...but everyone who is hasty comes surely to poverty." We have to give ourselves time to thoroughly investigate a matter or we risk acting in haste. And that's what Scott was explaining in the book. And it's just like when people sometimes get an inheritance or they win the lottery. If they get things in haste, they tend to evaporate very quickly. And so the folks that build wealth over many years tend to retain that wealth. And so if we do things in haste, it tends to go in haste as well. Sometimes we just don't know enough about a situation to make a good decision without outside counsel is another point. We don't want to fall prey to a narrow vision of a matter. Proverbs 15.22 says, And so there's always subject matter experts that we could perhaps lean on or read what they have to say about a matter. And so we should seek them out so that we can make great decisions. Integrity is another reason people are naive. The author writes, Why? Why? And so if we have a predisposition as being an honest person, it's harder for us to see that people may be deceptive at times. Greed is another problem. When we want things now instead of taking our time, we often make bad decisions. The example that comes to my mind is credit card debt. Sometimes people want things now, so we put it on a credit card as opposed to waiting a few weeks to save a few dollars up to buy something or maybe it takes months or years. And so we finance it when we don't need to really do that. We didn't need that thing, but we were greedy for gain, so to speak. The next pitfall is arrogance. The author writes that arrogant people often think they're smarter than everyone else. They don't feel the need to seek outside counsel or perform due diligence because they think they know it all. And so that's another pitfall. We don't want to be arrogant and overestimate knowledge about something that can lead to bad decisions. And the last one is wrong priorities. And it would it means people would rather spend time on activities that are easier or more enjoyable to do, like, say, golfing or tennis or soccer or watching TV or working in a woodshop or whatever it is for you. Or maybe it's just spending time with family. You would rather do that than do due diligence because they don't realize the potential cost of their being naive, and they never make overcoming it a priority. And so we need to make sure that our priorities are correct when we're making decisions. The author summarized that the solution to being naive is to look well into a matter. He also said to seek outside counsel and to choose your friends and associates wisely. He also wrote, I'd love to know what you think about these tips. I think that they're super applicable to financial planning and helping us make good decisions with that. If you have any questions or comments, please reach out. You can email us at hello at clients excel, or you can call me directly at 864-641-7955. Hope you have a great day. Investment
SPEAKER_01:advisory services offered through Creative One Wealth, LLC. Clients Excel, LLC and Creative One Wealth are not affiliated companies. Licensed insurance professionals. Investing involves risk, including potential loss of principal. Any references to protection or lifetime income generally refer to fixed insurance products, never securities or investments. Insurance guarantees are backed by the financial strength and claims-paying abilities of the insuring carrier. Annuity withdrawals are subject to ordinary income taxes and potentially a 10% IRS penalty before age 59½. Roth distributions are tax-free after age 59 and a half, and the account has been open for at least five years. This podcast is intended for informational purposes only. It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet particular needs of an individual's situation. Clients Excel is not permitted to offer, and no statement made during this show shall constitute tax or legal advice. Our firm is not affiliated with or endorsed by any governmental agency. The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by clients Excel. The use of logos and or trademarks of hosting sites are the property of their respective owners and are not an endorsement by those owners of our firm or our program.