For many, the traditional approach to financial decisions, i.e: “just cut back on those daily Starbucks” or “just save more” does not and will not work over the long term. This type of budgeting and planning feels like a never ending practice in will power. Add to that the differing retirement planning advice on how much to save, the magic number you need to have saved, what to invest in, the right blend of stocks versus bonds, when to take social security, your personal risk tolerance, whether to start an encore career, and on and on. There are so many variables that go into financial planning that many times it just feels easier to focus on something else. Like coffee or tea from your favorite shop.
Since many of us are looking for the secret to success, a short cut, or a magic pill, I got to thinking. What is the most important thing with regards to making financial decisions? Is it willpower? I think there is more than one answer to that question.
What if financial decisions are more about how you approach life in general?
I asked the increasingly popular life hack, ChatGPT, what type of people save the most. The answer was not all that surprising: high-income earners, the financially literate, those who are goal-oriented, and those who are frugal. And, of course, those who are approaching retirement age.
In digging a bit deeper, I wondered which of these areas are inside our own control. The answer: financial literacy, goal setting, frugality, and maximizing income.
But what characteristics provide the best fuel here? Discipline and curiosity. If you are naturally a disciplined individual, you are probably well on your way to a financially secure future (as well as a healthy one). But for those of us who fall somewhere between the moderate to low discipline levels, curiosity could be a fun path to better planning.
How can curiosity aid in financial planning?
Often described as a desire to learn and explore, curiosity has a profound positive effect on our decision making — and can provide some fun along the way. Leaning into or developing some good, old-fashioned curiosity can:
- Enhance your information gathering as you explore multiple perspectives before making a decision. Curiosity leads to investigating the details, asking questions, and exploring a variety of sources, leading to a well-rounded scope of possible solutions.
- Improve your critical thinking by encouraging you to question assumptions and consider alternatives. Curious people tend to challenge the status quo, which can lead to innovative solutions when it comes to financial decisions.
- Open you up to new experiences and uncharted territories. This openness can lead to discovering innovative approaches, as financial solutions for one person might not be the best fit for someone else.
- Allow for emotional engagement and reduce stress. When you are genuinely interested in exploring options, you are more likely to be invested. Curiosity can transform decision-making from a mundane task into an interesting time of discovery.
- Increase adaptability, as those willing to learn from any mis-steps are more resilient over time. This adaptability means we can quickly adjust decisions based on our changing circumstances. This is important as without adaptability, we are often in a state of “freeze” and unable to make any needed changes.
Where should you start with your curiosity?
This depends on your current stage in the financial journey and your natural level of curiosity or discipline. Consider the following:
- Retirement Vision: Define what retirement looks like for you. Full, partial, or no “retirement”?
- Income Sources: Do you have or need additional sources of income? Where will these come from? A financial product or an encore career?
- Retirement Timeline: How far are you from partially or fully retiring?
- Health Considerations: Even the most healthy of us need to factor in healthcare costs.
- Savings Assessment: How much have you saved and what are your monthly needs?
- Investment Preferences: Do you prefer actively managing your accounts or setting them on autopilot?
- Risk Tolerance: Do you enjoy chasing high returns or do you prefer the safety of a guarantee?
- Social Security Strategy: What are the options and what would be best for you with regards to taking social security?
I’m curious about what is on your minds
At 53, I am naturally curious, and plan to work as long as I enjoy it. My strategy includes a flexible career, maximizing retirement accounts with low risk, possibly delaying social security for maximum benefit, and securing guaranteed income to minimize my stress.
What about you? Are you curious, disciplined, or somewhere in between? Share your thoughts in the comments below. Discuss your curiosities with your financial advisor during your next meeting — and encourage them to think outside the box with you when it comes to financial decisions.
Interesting. I’m a fairly disciplined person when it comes to finances, but I really do wish I had asked more questions and been a bit more interested in options along the way. At 76 – I play it safe now with regards to money.
Congratulations on being fairly disciplined- that’s a good place to be! I can relate to playing it safe when it comes to investments, I am not a big risk taker when it comes to money. But, I have learned to ask more questions as you never know what alternative solution might be uncovered in this type of conversation.
You got me thinking.. I need to start questioning my retirement goals. And doing away with my daily Starbucks? No way!
I love it when people get to thinking! And while we do need to have a healthy dose of “will power” in life – a plan should not rely on that alone. Just like with a work/life balance – maybe an ebb and flow of a saving/spending balance.
Great article! It’s never too early to financially plan. Growing up with a finance dad, we were taught at a young age to save and invest. Enjoyed this read.
Good reminder that it is “never too early”, but I’d add that it is also “never too late”. As in – planning late is better than not preparing at all. Especially for those of us over 50, as we can make “catch up” contributions within certain plans. Hop on the IRS website and search for “Catch up contributions” for details on this.
Hearing that Gen X is of retirement age recently, has me drawn to this content. Thank you for providing some additional things to think about and some good starting points.
That got my attention! I am Gen X and do not feel like I am anywhere near retirement age – self perceptions are strange that way. In my 20’s, I often dreamt of retirement – I cannot say that I feel the same way now. Still making sure I have the money to live a nice, long time!
Interesting article, especially as a professional female who started retirement savings married and has had to adapt due to life changes.
Life changes will certainly force you to re-evaluate your long term planning. I watched my mom adjust her plans first after my father passed away and then again after her physicality declined. Being curious and open to new ideas are good qualities when facing changes.