It’s interesting that, by majority, we feel really intelligent. Most of us believe that we are above average in our thought processes and how we make decisions. Yet, this over-reliance on our own thought processes is what has caused the vast majority of people to fail financially.
What drives our beliefs? Not fact, not science, or even probability, but rather the reality that’s been created from our experiences and dictated by our life history. I have found in working with thousands of people, that there are seven beliefs that influence a fight or flight response and lead to our cognitive decision making process breaking down.
Do any of these affect you?
1. Fear of Being Poor
Many people, especially those who are older, are so fearful of being poor that they act and live as if they are poor. They are afraid to spend, are excessively frugal, and save every last penny. Their fear of poverty results in them living poorly, even though they are not.
2. Fear of Losing Financial Dignity
Another fear I’ve come across, primarily among the elderly, is the fear they will lose their financial dignity or their ability to have choices. They worry that they will not be able to live where they want, buy what they want, or pay for what they want to do. The result, they live a life of fear, worry and sleeplessness.
3. Fear of the Markets
There are many who refuse to ever invest again after having had a bad experience. Much like a football player who gets knocked down and then refuses to get back into the game, the fear of getting knocked down by the markets is what keeps many from ever achieving financial success.
4. Fear of Risk
Some are so risk-adverse that they are unwilling to invest where necessary to outpace inflation and have the same purchasing power tomorrow as today. Inflation may win, and their fear of risk may result in them going broke…safely.
5. Fear of the Truth
Our self-esteem at times is so deeply rooted in always having to be right, that we continue to make decisions that are detrimental to our success. Fear of the truth or fear of advice, can lead to stagnation and defeat. There is no sport or game where you can compete at the highest level without a coach. The same is true with your financial life. You don’t know what you don’t know, until you seek out the truth.
6. Fear of the First Step
The number one reason people fail financially is due to procrastination. Often we feel that we need to think about it more, research it more, or talk about it more before we can take that first step. Unfortunately, the fear of doing is what leads to inaction, lost time and lost opportunities.
7. Fear of the Future
No one knows what is going to happen tomorrow, yet we still worry about it today. We worry incessantly as if the worrying will have some impact on tomorrow’s outcome. No one can predict the future and don’t trust anyone who tells you that they can. Fear of the unknown can rob years off your life and the ability to achieve or enjoy financial success.
These seven fears often evoke two responses: flight or fight. Flight can be an irrational escape from an exaggerated view of potential mistakes. When we flee based on perceived fears, we are also running from opportunities. With investing, the fight response has us thinking that we have to beat the system, time the market, and get in on the next hot pick.
We need to be cognizant of our fears and how they interfere with our ability to achieve success. We need to be intentional, thoughtful and focused on success. Fear is an emotion that often leads to poor decisions.
Planning is the answer. Put your faith in a process that mitigates emotional mistakes and irrational decisions, provides you with a road map toward reaching your goals, and aims to increase your probability for success!