How to Make Wise Financial Decisions Ep. 122

David starts out with a story about his recent vacation to Hilton Head Island with his family. Then he gets into some practical steps that can help you make good decisions. 

Today, I have a few practical things that sometime inhibit us from making the best decisions. When it comes to personal finances this is super applicable because we need to get our financial planning right!

I just finished reading a book called The Richest Man Who Ever Lived. It’s about King Solomon, who the Bible says is the wisest person to live and he was incredibility wealthy. The author, Steven K. Scott, has a section titled “The Cost of Being Naïve.” I’ve been accused of being naïve before (probably true) so I was particularly interested in the content. I have a predisposition to think the best about people but as we have probably all experienced, we probably shouldn’t extend that courtesy to everyone.

Whatever the case, we all want to make great decisions that result in our intended outcome, so what do we need to be aware of that prevents this from happening? Scott states several reasons why we sometimes don’t make good decisions. He writes, “We all have a natural inclination toward simplicity. We want things to be simple. We want to be able to figure things out instantly, without having to read an instruction book or doing homework. We want to believe everybody, and we want to accept what we’ve been told at face value.

Solomon warned us about assuming tomorrow will present the same opportunities as today in Proverbs 27:1. The author states, “The fact is, however, we do not live in a static world. Everything changes moment by moment, and presuming that we will have the same opportunities or conditions to respond to tomorrow that we have today is foolish and naïve.” My takeaway is to seize the day and squeeze as much out of our present as possible. What would we do today if we knew we could not do it tomorrow?

The next reason we may be naïve is we misplaced our trust. Perhaps, we trust someone or an institution that doesn’t merit our faith. Sadly, the author writes, “More often than not, people are less capable, less experienced, less competent and less honest than they seem to be.” Solomon recommended looking well into a matter and doing due diligence, and Scott analogized that due diligence is shining a floodlight on a situation. It illuminates what’s there or what may be missing.

 

Investment advisory services offered through CreativeOne Wealth, LLC. Clients Excel, LLC and CreativeOne Wealth are not affiliated companies. Licensed Insurance Professionals. Investing involves risk, including potential loss of principal. Any references to protection or lifetime income generally refer to fixed insurance products, never securities or investments. Insurance guarantees are backed by the financial strength and claims paying abilities of the insuring carrier. Annuity withdrawals are subject to ordinary income taxes and potentially a 10% IRS penalty before age 59-1/2. Roth distributions are tax free after age 59-1/2 and the account has been open for at least 5 years. This video is intended for informational purposes only. It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet particular needs of an individual’s situation. Clients Excel is not permitted to offer and no statement made during this show shall constitute tax or legal advice. Our firm is not affiliated with or endorsed by any governmental agency. The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Clients Excel. The use of logos and/or trademarks of hosting sites are the property of their respective owners and are not an endorsement by those owners of our firm or our program.

Episode Transcript

SPEAKER_01 (00:00):
Welcome back to the Excel in Retirement podcast,
where we help good people makewise financial decisions so that
they may excel in retirementwith confidence.
Learn more at clientsexcel.com.
Now to your host, David Treese.

UNKNOWN (00:18):
David Treese.

SPEAKER_00 (00:24):
Welcome back to episode 122.

(00:47):
Well, we spent Independence Daylast week down at Hilton Head
Island.
And if you've never been toHilton Head, I highly recommend
it.
It's a cool spot.
That was our second year in arow going for July 4th.
And so maybe we've started atradition here.
I guess time will only tell,right?
Well, last year we didn't takeenough clothes.

(01:07):
And so this year we overpacked.
We wanted to compensate for aproblem we had last year.
And we happened to have a roomthat was near the elevator and
the ice machine and the vendingmachines and so forth.
And we discovered that in thattiny room, there was a washing
machine and it was free to use.
It wasn't like the old schoolones where you had to have a ton

(01:28):
of quarters to use and you putthem in there and the thing pops
back.
Boy, I felt like Columbusdiscovering the new world when I
saw that washing machine anddryer though.
So next year we can take threesets of clothes and just wash as
we go.
So no more having to sweat itout, packing the car
strategically like Legos andsqueeze We can just wash as we

(01:50):
go.
I think it's fair to say,though, that we all want to make
the best decisions possible whenit comes to something as trivial
as packing the right clothes forour trip, right?
We are constantly working withour daughter, our six-year-old,
Amelia, about how to make betterdecisions and teaching her how
to make decisions.

(02:10):
For example, we try to talk toher about when it's appropriate
to ask for a snack and when it'snot, and more broadly, how to
ask the right questions at theright time.
Have you ever been around aroundsomeone and they always ask the
wrong questions at the wrongtime.
And so they're just out ofplace.
And so that's frustrating to bearound folks like that.

(02:31):
And we don't want toinconvenience people when it
comes to asking our questions atthe wrong time.
And so part of that is justhaving emotional awareness, I
think, and we're trying toinstill that in our daughters.
Well, today I have a fewpractical tips that sometimes
inhibit us from making the bestdecisions possible.
And so when it comes to personalfinance, this is super

(02:53):
applicable because we want toget our financial planning
right.
Sometimes we can't make mistakeswhen it comes to planning
because it will be too costly.
And so we want to make the bestdecisions possible and try to
avoid mistakes at all costs.
Well, I just finished reading abook called The Richest Man Who

(03:14):
Ever Lived.
And it's about King Solomon inthe Bible.
And the Bible states he's thewisest man to ever live.
And he was incredibly wealthy.
In today's standards, somepeople would estimate him to be
a trillionaire.
We don't have any trillionairesin our world today.
Billions like Elon Musk andWarren Buffett and so forth.

(03:35):
But we don't have anytrillionaires.
And so by today's standards,King Solomon would be a
trillionaire.
And so he was given theopportunity to ask for anything
that he wanted, and he asked formore knowledge and wisdom.
And so as a result of that, Godgave him many resources and
great abundance.

(03:56):
Now, the author of this book isStephen K.
Scott, and he had a sectiontitled The Cost of Being Naive.
And I've been accused of beingnaive, and it's probably true.
So I was particularly interestedin this content.
And I have a predisposition tothink the best about people.
And as we probably have allexperienced, we probably

(04:18):
shouldn't extend that courtesyto everyone.
But I tend Well, whatever thecase, we all want to make great
decisions that result in ourintended outcome.
So what do we need to be awareof that prevents this from
happening?
Scott states there are severalreasons in the book why we

(04:40):
sometimes don't make gooddecisions.
He writes, and I quote, We allhave a natural inclination
towards simplicity.
We want to make things simple.
We want to be able to figurethings out instantly without
having to read an instructionbook or by doing homework.
We want to believe everybody,and we want to accept what we've

(05:01):
been told at face value.
But he calls that simplicityfoolishness.
And we want to seek a matter outand understand all the aspects
to it.
Solomon warned us about assumingtomorrow also, and he assumed us
about assuming that he assumedus about assuming.

(05:22):
Well, Solomon warned us aboutassuming tomorrow will present
the same opportunities as todayin Proverbs 27.1.
The author states, the fact is,however, we do not live in a
static world.
Everything changes moment Andpresuming that we'll have the
same opportunities or conditionsto respond to tomorrow that we

(05:45):
have today is foolish and naive.
And so my takeaway is to seizethe day and squeeze as much out
of our present as possible.
And so we want to get the mostamount done today.
This is something that resonateswith me, right?
I want to be as productive aspossible and get the most out of
it.
And whether that's working outtoday so I feel good tomorrow or

(06:07):
feel good the rest of the day,or we just have better health in
general, I want to get the mostout of it.
So that one resonated with me.
What we do today, what would wedo today if we knew that we
could not I think that's aquestion worth pondering.
The next reason we may be naiveis why.

(06:28):
A misplaced trust.
We misplace our trust.
Perhaps we trust someone or aninstitution that doesn't merit
our faith.
Sadly, the author writes, moreoften than not, people are less
capable, less experienced, andless competent and less honest
than they seem to be.
Solomon recommended looking wellinto a matter and doing due

(06:51):
diligence.
And Scott analogized that duediligence is like shining a
light or a floodlight on asituation.
Have you ever turned on a light?
Sometimes I take the dog out inthe backyard at night and it's
really dark and I turn on thatfloodlight and the whole
backyard illuminates.
You're able to see what'smissing or what is there, right?

(07:12):
You can see if there's anypredators in your backyard or
whatnot.
And so doing due diligence islike turning on a light.
It illuminates all kinds ofdetails of what may be there.
And so we can make betterdecisions.
Scott writes that, And let'sface it, we all want to get the

(07:53):
result with the least amount ofwork possible.
It's human nature, right?
We want to conserve energy.
It's human nature.
But this is really a type oflaziness, and it comes with
perils.
Looking well into a matterrequires effort and work in
order to make the bestdecisions.
Solomon warns us in Proverbs21.5,"...but everyone who is

(08:17):
hasty comes surely to poverty."We have to give ourselves time
to thoroughly investigate amatter or we risk acting in
haste.
And that's what Scott wasexplaining in the book.
And it's just like when peoplesometimes get an inheritance or
they win the lottery.
If they get things in haste,they tend to evaporate very

(08:38):
quickly.
And so the folks that buildwealth over many years tend to
retain that wealth.
And so if we do things in haste,it tends to go in haste as well.
Sometimes we just don't knowenough about a situation to make
a good decision without outsidecounsel is another point.

(08:59):
We don't want to fall prey to anarrow vision of a matter.
Proverbs 15.22 says, And sothere's always subject matter
experts that we could perhapslean on or read what they have
to say about a matter.
And so we should seek them outso that we can make great

(09:22):
decisions.
Integrity is another reasonpeople are naive.
The author writes, Why?
Why?

(09:50):
And so if we have apredisposition as being an
honest person, it's harder forus to see that people may be
deceptive at times.
Greed is another problem.
When we want things now insteadof taking our time, we often
make bad decisions.
The example that comes to mymind is credit card debt.

(10:12):
Sometimes people want thingsnow, so we put it on a credit
card as opposed to waiting a fewweeks to save a few dollars up
to buy something or maybe ittakes months or years.
And so we finance it when wedon't need to really do that.
We didn't need that thing, butwe were greedy for gain, so to
speak.
The next pitfall is arrogance.

(10:34):
The author writes that arrogantpeople often think they're
smarter than everyone else.
They don't feel the need to seekoutside counsel or perform due
diligence because they thinkthey know it all.
And so that's another pitfall.
We don't want to be arrogant andoverestimate knowledge about
something that can lead to baddecisions.

(10:55):
And the last one is wrongpriorities.
And it would it means peoplewould rather spend time on
activities that are easier ormore enjoyable to do, like, say,
golfing or tennis or soccer orwatching TV or working in a
woodshop or whatever it is foryou.
Or maybe it's just spending timewith family.

(11:16):
You would rather do that than dodue diligence because they don't
realize the potential cost oftheir being naive, and they
never make overcoming it apriority.
And so we need to make sure thatour priorities are correct when
we're making decisions.
The author summarized that thesolution to being naive is to

(11:36):
look well into a matter.
He also said to seek outsidecounsel and to choose your
friends and associates wisely.
He also wrote, I'd love to knowwhat you think about these tips.

(12:00):
I think that they're superapplicable to financial planning
and helping us make gooddecisions with that.
If you have any questions orcomments, please reach out.
You can email us at hello atclients excel, or you can call
me directly at 864-641-7955.
Hope you have a great day.
Investment

SPEAKER_01 (12:22):
advisory services offered through Creative One
Wealth, LLC.
Clients Excel, LLC and CreativeOne Wealth are not affiliated
companies.
Licensed insuranceprofessionals.
Investing involves risk,including potential loss of
principal.
Any references to protection orlifetime income generally refer
to fixed insurance products,never securities or investments.

(12:45):
Insurance guarantees are backedby the financial strength and
claims-paying abilities of theinsuring carrier.
Annuity withdrawals are subjectto ordinary income taxes and
potentially a 10% IRS penaltybefore age 59½.
Roth distributions are tax-freeafter age 59 and a half, and the
account has been open for atleast five years.

(13:06):
This podcast is intended forinformational purposes only.
It is not intended to be used asthe sole basis for financial
decisions, nor should it beconstrued as advice designed to
meet particular needs of anindividual's situation.
Clients Excel is not permittedto offer, and no statement made
during this show shallconstitute tax or legal advice.

(13:29):
Our firm is not affiliated withor endorsed by any governmental
agency.
The information and opinionscontained herein provided by
third parties have been obtainedfrom sources believed to be
reliable, but accuracy andcompleteness cannot be
guaranteed by clients Excel.
The use of logos and ortrademarks of hosting sites are
the property of their respectiveowners and are not an

(13:51):
endorsement by those owners ofour firm or our program.