I was listening to an interview with John Maxwell earlier this week. John is a renowned author, leadership coach, and avid golfer. During the interview, he was asked about some of the biggest life lessons he has learned playing the sport of golf.
His response began with reasons why professional golf tournaments are played over a four-day period. He said that with a one-day tournament, every pro that enters can win. The reason they play four rounds of golf is to eliminate the guy who could get lucky one day.
A four-day golf tournament requires the players to play consistently better than their competition for 72 holes. John elaborated by saying “everybody wants to get lucky one day and hope that lasts the rest of their life. Life doesn’t let you get lucky and live off of lucky. It says—‘No, you have to go out there and do it again tomorrow.’”
In my practice, I am frequently approached by people who are searching for the next “get rich quick” program. They want to get “lucky.” If only they could win the lotto, or find the next Apple stock, then things would be better.
As most of us know, financial success just doesn’t work that way. It takes planning, patience, diligence, concentration, focus, and of course, consistency. Every day you have to get back out there and make smart decisions with your money. Financial success is NOT a one-day tournament.
Here are three of my favorite tips for making smart decisions with your money and achieving financial success:
Focus on Things You Can Control
What’s the stock market going to do tomorrow? Is the Fed going to raise rates? How will concerns in Europe impact the U.S. economy this year? I don’t know! And guess what, nobody else knows either. Not even the “experts” on television. The answers to these questions are pure speculation and the result is completely out of our control.
Instead of worrying about what might happen, I would encourage you to focus on financial aspects of your life that you can control. A few examples:
- Saving more
- Spending less
- Cutting costs
- Reducing investment expenses
- Improving asset allocation
- Using asset location (i.e. what type of accounts your assets are held in)
- Mitigating taxes
Listening to speculation can be entertaining but it won’t get you any closer to financial success. In fact, it might lead to making some costly financial mistakes. Spend your time working on the things you can control to help get you closer to your goals.
Trust Your Gut
When I was in grade school, my Father gave me some wise advice: “if it sounds too good to be true, it probably is.” It’s one of those cheesy money sayings that we’ve all heard before but it can be very helpful when making financial decisions.
Before making a purchase or moving forward with an investment opportunity, take a step back and ask yourself if it sounds exaggerated. If it’s a major financial decision, I force myself to wait 24 hours before pushing the button. Along with doing some research and asking people I trust, I also use this time to clear my mind and listen to my instincts. More often than not, if I start second guessing myself and questioning my upcoming decision, it’s usually a good sign that I shouldn’t do it. Or at the very least, I should wait for a better time.
Google search and the internet can be helpful for a lot of things, but in the end, trusting your gut is likely more powerful for making smart decisions with your money.
Forget the Past
“If you knew then what you knew now, what would you have done differently?”
We’ve all heard this question. I don’t like it and I won’t answer it. It’s completely hypothetical and doesn’t do any good for improving your future self. Even if you had the information, who says you would have acted on it?
Instead, I prefer to focus on making smart decisions today that will put me in a better position tomorrow. The decisions I made in the past – good or bad – are behind me and there’s nothing I can do to change them. The time I spend dwelling on them is time I can use to make good decisions today.
If you’ve made poor financial decisions in the past, you’re not alone. Even the most successful people have made mistakes. But they didn’t gain or maintain their success by letting past decisions hold them back. They likely used it as a learning experience to make better decisions about things they can control today. You can do the same.
In the interview, John Maxwell wrapped up his answer by saying “if you make a bad shot in golf, you can’t say somebody gave you a bad pass. The club is in your hands.”
Like golf, your financial decisions are in your hands. We have nobody to blame but ourselves. No, you aren’t going to win every day. But when you lose or make a mistake, ask yourself what you learned from the loss. If you learn from the loss, you will have fewer losses, and will likely be more successful in the long run.