Financial Prescriptions – do they cure the ailment?
Let’s run a small experiment. Imagine you go through your daily routine and every time you saw an advert for a financial product/service, you replaced the image with that of a doctor handing out a prescription.
Depending on the circles you operate in, these financial “prescriptions” can come at you pretty thick and fast. Whether browsing websites or reading billboards, they are difficult to ignore.
The problem with accepting financial prescriptions is that one collects a random mixture over one’s life that often overlaps, contradicts each other or worse, are not designed to treat the “ailment”.
In my experience the reason people end up with a collection of random financial prescriptions, rather than a targeted prescription based off a complete health diagnosis is:
- Perceived lack of time
- The dazzling attractiveness of recent past performance
- Not knowing who to turn to
- Not knowing the questions to ask
- Not being able to tell the difference between good advice and bad
I am not saying that the prescriptions received by many are wrong but often there is zero context with regards to whether it is suitable for us.
Why are we willing to follow a different path in our financial lives to that of our health? Why don’t most of us attempt to diagnose the condition in the first instance?
If we all mentally stepped off the revolving hamster wheel of life and asked a few questions, we might unearth some basic truths and discover that we do not understand our current financial reality.
These outcomes can be quite scary and it is easier to bury one’s head in the sand and step back onto the wheel. Therefore we don’t slow down, in the hope that we will stumble onto the right prescription early enough in our lives for it to be effective.
But how often does that happen? That we are lucky enough to take the right prescription early enough to prevent the condition?
What makes up a successful diagnosis?
As we should all know, a good diagnosis starts with asking a ton of really smart questions. For example:
- Why is money important to us?
- How would we describe our current reality?
- Where do we want to go?
The answers may prove surprising, even when compared between life partners. And lastly, how can we plan how to get there once we have decided where we are going?
Our financial lives deserve as much attention as our physiological lives. You wouldn’t gamble your physiology by taking a prescription without explanation, so why do the same with your financial life?
NB. Many thanks to Carl Richards for his thoughts and inspiration.