A World in Transition
During a time of such uncertainty, focusing on the things you can control can lead to better decisions for the long-termKathy Longo, CFP®, CAP®, CDFA Thursday, 16 July 2020
If someone had told you at this time last year that you’d be spending your summer reeling from a global health pandemic that forced you to be inside for 12 weeks with every member of your family, an unprecedented economic downturn that will likely result in a recession in the months to come, a civil rights debate that would bring the world into a conversation that needed to be had a long time ago, you likely wouldn’t have believed it. Last year at this time, while things were assuredly not perfect, none of this could have been predicted.
And that’s the thing about predictions: they are uncertain. Just as we cannot time the markets, we cannot really predict what outside forces will impact our lives, livelihood, and social existence. For all these things we cannot control, though, we can find strength and resilience in knowing that there are things we can control, too.
Taking Back the Reins
We can control what information we take in as truth. We can control what we eat and drink, along with how we sleep, exercise, meditate, and practice self-care. We can control how we treat others and how our emotions affect the way that we react to the things happening around us. Of course, we have to be intentional about all of these things. Otherwise, we risk falling into patterns that leave us susceptible to poor decision-making. For example, a pitfall we all fall victim to at times: confirmation bias.
Understanding Confirmation Bias
We have a natural tendency to want to maintain our own opinions and viewpoints, even when evidence might point us in new directions. We feel anchored to our beliefs because they feel safe and they are part of our identity. This is risky, though, because it leads us to only seek out information that confirms our existing biases. So, if you believe coronavirus is a hoax, then you might be seeking only the information that seems to confirm your theory. If you believe your investments are in peril, you may latch onto evidence that supports that feeling, even if there is legitimate evidence to the contrary.
These are only examples and should not be taken as opinions or references to specific individuals or our own views for or against them, but the point is that confirmation bias leaves you vulnerable. In challenging times when you must make important decisions about your financial future, be intentional about seeking out all of the information that will help you make an informed decision, even if it’s in opposition to your own beliefs.
Why is this Meaningful?
Knowing that confirmation bias exists – and actively working against it – is a way to gain control over your financial future, even in uncertain times. Coronavirus, economic uncertainty, volatile markets, and racial injustice may be causing you intense anxiety, but you are not powerless. You can combat worries with mindfulness meditation, escape the confines of quarantine by safely getting outside for fresh air, and actively work against racial injustice by writing letters, peacefully protesting, supporting social justice organizations, and using your vote to make a difference.
When it comes to your finances, in particular, you can exercise control in multiple ways. You can plan for the unexpected, actively work against your investment biases, choose how you use your money, and feel empowered to communicate with your loved ones about your money values and your financial future.
In short, understanding your own biases gives you an additional layer of control. It reminds you to be cautious about how and where you are getting your information, as well as how you use that information to make important life decisions. When you make a concerted effort to focus on the truth and the things you can control, you’ll have all you need to make decisions that serve your best self.
Yes, the world is in the midst of an enormous transition at the moment. But, when you dig deep and focus on what you can control, you can continue making positive life and financial choices that will serve you long after this challenging time has passed.
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About the Author
Kathy Longo, CFP®, CAP®, CDFA
Kathy Longo brings over 25 years of expertise and experience to Flourish Wealth Management. Kathy is wholly dedicated to improving the life of each client and finds joy in making complex matters simple and easy to understand. She excels at asking the right questions, uncovering new possibilities and implementing the most advantageous strategies for success. Playing such a pivotal role in her clients’ lives remains an honor and a privilege. After earning a degree in Financial Planning and Counseling from Purdue University, she began her career at a small firm in Palatine, Illinois where she worked directly with clients while learning to build a viable, client-centric business. Over the years, she gained extensive knowledge and wisdom working as a wealth manager, financial planner, firm manager and business owner at notable, various sized companies in both Chicago and Minneapolis.