53: Conquering Your Financial Fears: Strategies for Empowered Decision-Making

Imagine a life where fear no longer dictates your financial decisions. That's exactly what we're uncovering in this episode. We're confronting those fears that keep you on the sidelines of your financial growth - fear of lost money, lack of knowledge, peer pressure, and the terror of making potentially costly mistakes. Drawing from personal experiences, we'll break down these barriers and share powerful strategies to face them head-on, allowing you to take control of your financial future.

To further empower you to make financial decisions., we discuss the value of expert guidance and the importance of embracing errors as essential parts of your financial journey. You'll find surprising parallels between competitive sports and financial planning, revealing how you can push yourself to achieve more. We'll take on the phenomenon of analysis paralysis and underscore the need to focus on your unique financial conditions. This episode tops off with the crucial components of financial decision-making and learning - from goal setting to the advantage of having a financial buddy. In this empowering discussion, we take charge of our financial destiny, one decision at a time.

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Transcript

Speaker 1: 0:00

Hello everyone. My name is Carolyn. Welcome to the Saving for your First Home podcast. I am the CEO of the Financial Moment. We offer money coaching for those who are ready and willing to make financial changes in their lives.

Speaker 1: 0:14

For the most of us, there comes a point in time where we think to ourselves it would be really nice to own property, but it sometimes can feel like a pipe dream and not very easily obtainable. So I created this podcast to give you all the information and tools you need to take the steps forward toward home ownership. Take it from me my husband and I started our lives together, working part-time jobs with a young child. Fast forward, through many hiccups and failures, we stepped our feet into our very first home. For us it was a pile of dirt, but eventually our family home was built on that dirt. Now we are in the midst of growing our investment property portfolio. I created the savings for your first home podcast to give you easy, actionable tools for you to do the same. If you have that same gut feeling that I did and want to create a life for yourself and your growing family, but don't know where to start, you are in the right place. Let's do this.

Speaker 1: 1:14

Hello and welcome back to the Saving for your First Home podcast. I'm Carolyn, your money coach, so lately I've been doing some outreach and giving some money talks to different organizations and libraries and it's been good because you get to meet people face to face. We are so used to those Zoom meetings and now to actually be in person and talking to people face to face, you really get an understanding of how people feel, and some of the feedback that I've been getting is that people are kind of scared to make financial decisions. Now, we're scared for lots of different reasons and I guess if people know me, they know me as being kind of, I guess, fearless. For instance, we were vacationing in Jamaica and there is this cliff that you can jump over. I think it's like 40 feet Probably. There's different levels, but the highest peak was like 40 to 50 feet high and you know people are asking oh, are you going to go jump? And I'm like, yeah, I didn't really hesitate, you know, and you get up there. You kind of walk up and now you're your heart starting to palpitate because you're like it's going higher and higher.

Speaker 1: 2:24

Now, I'm no expert, but what I usually do is not look down, because as soon as you look down, all the different things are going to come flooding into your mind as to what could happen to you. Basically, you could die, and so I try not to look down. I just kind of take two steps and boom, just jump, and you know, I'm okay swimmer. So I think that's probably a part of the reason too. I have confidence in swimming and so you know, if I hit the water, at least I can swim. So anyway, but there are things that I am scared of, and probably not so much those fear factor type things, but more like being embarrassed in front of other people and I would say probably judgment, you know, receiving judgment from others. So those are kind of my fears.

Speaker 1: 3:11

But this kind of translates into our financial life as well, and there are reasons why we fear making financial decisions, and I'm just going to go through a few of them and then I'm going to try to talk about how we can overcome this. Because if we really want to reach our financial goals, those big ones, the big financial goals then we have to work through our fears and put ourselves on the other side, where we're making confident, great decisions. So let's just dive into a couple of reasons why people are scared of making financial decisions. Now, the first thing that I've noticed is that people lack knowledge, and when you have little knowledge, it is very difficult to make an educated decision. Now, that is kind of an oxymoron, isn't it An educated decision when you have lack of knowledge? Right, it doesn't go. The two things don't go together. A lot of people just assume that you understand or you know what you're talking about. When it comes to finances, for example, if you go to the bank and they start recommending different saving accounts using technical jargon, and they're just assuming that you understand what they're talking about, and some of the time, people really don't know and they put their trust in the bank representatives to guide them through that process. There are some great ones and there are some not so great ones, and so you can get some good advice and you can get advice that maybe is not right for you.

Speaker 1: 4:43

And another reason that people are scared is that they have a fear of losing their money. Now, this can have a lot to do with their past and how they were brought up. Perhaps they didn't come from money and so having it means that they need to hold on to it and doing anything. Any type of investing or any type of financial movement can cause a lot of fear, because there is a risk of losing that hard earned money, and this can lead into a fear of making mistakes. It prevents an individual from actually taking the necessary actions that will get them towards their goals, perhaps investing some of that money instead of just saving it away in a savings account. Some of these things are based on our own personal personalities, our personal experience, and there's a direct connection with the way that they treat money.

Speaker 1: 5:38

Now, another interesting one is peer pressure. Now, if you head back to high school and everybody's doing one thing and you want to do something different, there's a fear there of having to follow along with the crowd. An example of this would be, maybe, cryptocurrency. A lot of people were talking about it. A lot of people were talking about Bitcoin. You'd hear the whispers here and there of how they're putting in their money. Now, for someone who doesn't have as much knowledge about cryptocurrency, it is a very complex financial product, so jumping into something like that with really not understanding 100% what it is, it could be a little bit of peer pressure and the fear of making that wrong choice. Do I invest, do I not? And then they're worried about judgment and criticism if they decide not to Now.

Speaker 1: 6:29

Another fear that holds people back is overwhelm, and this can happen in so many different facets of our lives. And this is obviously including finances, because right now there are so many choices, there's so many banks you can choose, there's so many different ways you can put your money, there's topics that you have to think about, like retirement planning or debt management, and it can just really be overwhelming. And when you're overwhelmed, what happens? Nothing. Inaction and avoidance those are the two things that happen when people are overwhelmed. So in avoidance, you're just like you know what, I'll think about that later, I'm not doing that right now and time just passes you by. Inaction is the same thing you feel like you're frozen and you can't make a decision and you can't move forward or backwards and you're just stuck in this place.

Speaker 1: 7:25

And another personality trait that actually kind of has an impact on our decision making is perfectionism. So if you're that type of personality that really wants things to be just so, that can actually deter you from making the proper decisions, because you know what Life isn't about being perfect. I have learned the hard way that the more you analyze and overanalyze, you can always predict exactly what's going to happen. Sometimes we have to make the wrong choice to make the right choice. So has any of these reasons for fear of making financial decisions resonated with you? Now, I don't want you to feel like you're alone in all of this, because all of these reasons either your past has an influence. The way you make decisions have an influence. The people around you have an influence. The fact that you weren't taught about money has made an influence as well. So you're not to blame for any of these reasons.

Speaker 1: 8:29

If you find yourself in a position where you're unsure and you're kind of scared of making those financial decisions, it's OK, I got you. Now, this is not something that is going to happen overnight. It takes work, it takes effort, it takes energy to make changes in our financial situation. So I'm just going to give you a brief outline of how you can overcome having fear when you're making your financial decisions. Now, for a minute, I'm just going to go back to my experience of jumping over the cliff in Jamaica when I hit the water. First of all, the hit of the water was so hard I didn't even think about that when I contemplated jumping and you sink down quite significantly and then you swim back up to the surface, which was fine, but then I turned and I looked towards the cliff that I had just jumped off and I was like whoa, you know, like that was super high and what was I thinking right? And again, all those thoughts kind of flooded my brain about why did I even consider doing that? Because I really had no idea what the consequences would have been had things gone south.

Speaker 1: 9:47

So instead, what you should do when you're making financial decisions is to get some education and knowledge right. Knowledge is power. You need to take the time to educate yourself about financial concepts, about investing, about budgeting, about personal finance, and nowadays it's so easy to do this, you know. First of all, let's just go back to the library. Okay, the library has so many resources, and it's not just both books and reading. They have seminars, they have access to audio books, like. There are lots of different ways to get information actually at the library other than just reading books. Although books are fantastic, you can also take an online course. Having a step by step instruction that you can do at your own pace is fantastic for a lot of people. I feel like going into this digital age. We've made our life so much easier by kind of learning on your own terms, and I think it's fantastic if you can do that and have a resource that you can ask questions about or attend a workshop or a webinar, and all of this will improve your financial literacy. When you have more knowledge, you can make better decisions.

Speaker 1: 11:08

And then, of course, I talk about this in my podcast a lot, but it's about setting clear financial goals. So if there's something that you want to reach now again on this podcast, I talk about saving for your home or other big financial goals like travel or retirement or education savings all these things are kind of big goals. Right, you need to break down those goals into small little pieces and so that you can tackle them and they don't become overwhelming to you. Now, in my early days of this podcast, I recorded an episode about doing just this, and that's episode number four. So if you haven't listened to that, I suggest you go back and listen to it, because it really talks about creating some doable goals, things that are actually attainable, because once you have a clear objective, it really gives you a sense of purpose, it gives you direction and it makes those decisions so much easier and straightforward.

Speaker 1: 12:10

And then there's planning. In order to create a kind of a comprehensive financial plan, you have to understand your income, your expenses, what you want to save, what you want to invest, how you do your debt. All of these things, and having a well thought out plan, can really provide you with a roadmap. And what is a roadmap? Back in the day, we used to pull out an actual physical map when we go on trips and we'd have our markers of where we're going to stop. And you know, we didn't have GPS and all the fancy tools that we have right now traffic indicators and all that. We just had to go by the basic map. And having that map and showing the outline of what you want to accomplish and just checking it off one at a time as you reach each milestone, gives you such a sense of peace because you know that you're on the path to the outcome that you're looking for.

Speaker 1: 13:06

And then why not seek out some help? Because why do these things alone right? It's so much easier to have someone in your corner that is rooting for you, that is perhaps, you know, five steps ahead of you, that can give you advice and say, hey, you know what. That decision may not be great, but why don't you try something like this? Any expert guidance is critical when you're trying to make financial decisions that are going to determine your path. This can come in the form of an accountant, a financial advisor, a money coach, a confidant, a mentor, a friend. It really can come in any form. You just need someone that you can feel comfortable enough to ask advice and maybe just bounce ideas off of.

Speaker 1: 13:54

In my family we are really big into competitive sports. A lot of the children that have grown up in my family are involved in some sort of competitive sport. You know they have a talent. Each one of them have talents, whether that was in basketball, soccer, tennis, dance, swimming, the list goes on. And they all have talent. But talent can only get them so far. It's the coaching, it's the team environment, it's that little bit of a push that you need to push yourself harder to reach the next level. And that's what competitive sports is all about. It's going to that next level, reaching that next milestone, and without the coaching it's very difficult. It's not saying it's impossible, but it's very difficult to get those next levels. And that's the same thing with our finances. Right, you need that expert advice and coaching to help you get you to the next level.

Speaker 1: 14:57

And remember that this path is not a straight one. There's no right or wrong. Each decision is going to play its part in your journey, and so you really have to embrace mistakes. Right, it's going to happen, you know. Maybe you spent a little bit too much on your credit card, maybe you made that investment that wasn't the right one. All of these things may happen, but if you embrace the mistake, then you learn from it and you can move on.

Speaker 1: 15:25

Remember when we were talking about overwhelm? Well, I'm not a psychologist, so I can't in no way give you any advice on how to kind of beat anxiety and those types of things. However, I do think that it's important to not have too much information overload. Right, because if you have so much information that's coming at you, you kind of what they call it of analysis paralysis, right, you feel like it's just too much information and you can't even make a decision because there's just so many choices. And perhaps you know we need to kind of pare that down.

Speaker 1: 16:03

Focus on essentials, the things that are directly impacting your current financial goals, your current, your personal situation. So somebody else's situation is not the same as yours, right? Everybody has a different income level. Everybody has a different amount of debt. Some people have a home, some people don't, like everybody's situation is so different. So, you know, make sure to not overwhelm yourself about how other people are doing things, because your situation may be completely different. But on the flip side of that is to get a support system right. Talk to your family and friends.

Speaker 1: 16:43

I made this analogy once, I think, in one of my talks, where we talk about, you know, getting in shape and losing weight, and we'll even ask our family, our friends, to come join us at the gym. You know, maybe do a marathon or whatever. It is right, we wanna do it together because we know that it's easier to actually get ourselves there and get ourselves in shape if we have some buddy that's doing it with us. Right, why not? The same about your finances Doesn't mean you have to default everything about your finances, but you know what you could ask someone. You know how do you set up your banking. Do you pay your credit card off every month and, if so, how do you do it? How do you keep track of everything Right. It's okay to share these little tidbits with each other. Why not push each other to do better? And once you've kind of done all of this and you've put this into place, you've educated yourself, you've built a support system, you're embracing your mistakes, then all you have to do now is just take a look at your situation and adjust as needed. Right, sometimes you may have to change that strategy just slightly based on the changes that are happening in your life or financial decision or market conditions. Right, it's okay. It's okay to make an adjustment and to pivot into a different direction.

Speaker 1: 18:03

I remember when I was just getting married and I drove a Honda Civic, one of those hatchbacks, and I had that car for a long time. It was like my little baby, right, and I think it was even a stick shift, so it was fun to drive. And probably two weeks prior to us getting married, the car just died, like literally. I was driving down a hill and the engine actually fell out from underneath it. I don't know if there was probably rust or something I you know who knows, but engine fell out, the car was done, the tow truck came and they said you know what? This is pretty much a write-off. Now just picture this Two weeks prior to getting married, all the errands that you have to do, all the running around, and I was just left without a vehicle and it was crazy. And you know, luckily, obviously, I had family and friends to rely on and support to lean on to get through those couple of weeks.

Speaker 1: 19:01

But then, you know, after the wedding's done and we were married, we had no car. And you know, expensive a wedding was a lot and so we couldn't just run out and purchase another car and we had to pivot. Like you know, all the things that we had planned, location where we were gonna live, all these things, you know, are reliant on a vehicle and we had to figure it out. You know, take transportation, public transit, and just do what we had to do to save up enough money and to buy another vehicle. So I share this.

Speaker 1: 19:36

Just to say that it's not gonna always be easy. Pivoting is not always easy and the mistakes you make aren't always easy. It's the process that's beneficial, right. It's going through them, realizing what's happened and making educated decisions for the next time. So when you're beginning to feel that fear, come on when you have to make a financial decision, and it could be a simple one like oh, maybe I'll put this on a credit card instead of paying cash, because I wanna hold on to my cash, just in case.

Speaker 1: 20:10

Take a deep breath, think about what it is that you need to do for the next week or two and then make a decision with as much information as you have, and then later go back and think about that decision and assess whether or not that was the right one, because that is how you learn, when you go back and you review and you don't repeat mistakes over and over again. All right, guys, I hope this episode was helpful to you and, if you're enjoying the podcast, I would love it if you could give us a review and perhaps start by sharing this episode with someone a close friend or a mentor or someone that you are going to use as your financial buddy. All right, we will see you next week, thursday, same time, same place. Thank you for listening. We are committed to helping you place your very first steps into your new home. See you next time.