Relying on Your Head. Thinking with Your Heart

When in it comes to finances, we often find ourselves at a crossroads. It's hard to get started. It's hard to move forward. We know we should do something, but it's hard to make a commitment.

Why? Is it information overload? Is it a previously bad emotional experience? We feel alone; without a guide. Lost and confused. All of these thoughts can stop us in our tracks. Our head and heart are not in congruence – our experiences and awareness are not synced.

Relying on your head.   It's all about the numbers, right? Classical economics believes that we are always rational and logical. Economic theory also assumes that we have a firm grasp on our self-control and that we will always behave in our own self-interest. As a result, our decision-making will always be reasonable and consistent. Of course, we all know that when it comes to money, sometimes we're very good at making these balanced and common-sense decisions, and other times we're a mess. That's okay.

Thinking with your heart.   Part of understanding your own financial strategy is acknowledging that there is an emotional component related to talking about and managing money. For many of us, money has a push/pull effect — a few steps forward, a few steps back. Money allows us to do some things that may or may not be in our best interests. The point is, we make choices with our hearts and we should own them.

Know yourself.   A major component of finding the right financial strategy for yourself is understanding and appreciating your own behavior. Take a moment and think about your needs, your goals, and what's important to you and your family. Sometimes, a choice we make about money is emotional. Other times, our logical self takes control of the decision-making process. We're human; we're inconsistent.

Next steps:  Identify your goals — Understand your risk — Develop an investment strategy – Stay focused.   Work with a financial advisor to make an assessment. Become aware of tendencies that influence your financial decision-making process. Think about how you keep yourself accountable? How will you stay on track? You and your financial advisor can develop a plan that identifies your financial and personal goals. The result is that you will have a plan that accommodates both your head and your heart.

Beginning your financial journey can be daunting and overwhelming. Take small steps. Ask friends, family and colleagues for referrals. Ask your other advisors for referrals also – estate planning attorneys, accountants, etc. Most importantly, do your research and due diligence. Research licenses and certifications. Research products. To maintain and grow your wealth requires a plan. Begin creating your plan today.

Diane M. Manuel

Diane is currently a Certified Financial Planner™ with Urban Wealth Management. She provides holistic services that guide her clients to living successful and happy lives. A native and resident of Los Angeles, Diane has both a MBA and a Ph.D. in psychology. She is active in the local philanthropic community.

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