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Tags: financial planning | personal wealth

Why Smart People Make Poor Financial Decisions

Why Smart People Make Poor Financial Decisions
(Dreamstime)

By    |   Tuesday, 22 August 2023 02:59 PM EDT

If you’re anything like most of the people I talk to, you’re probably smart and hardworking, but you’re still not quite where you feel like you should be financially.

Does that sound familiar?

If you said yes, I hope you take some comfort in the fact that most people feel the same way. More importantly, I want you to know that it doesn’t have to be this way.

You see, we’ve all been taught a lie about money, and it’s that if we just work hard and follow the rules, we’ll end up doing well financially. Unfortunately, a lot of smart people believe that, and when they work hard and follow the rules, but still don’t end up where they feel they should be financially, they get frustrated.

They often feel that either the system is rigged against them or that they’re not smart enough — and neither of those things are true.

I know because I used to believe that lie, too.

Don’t get me wrong, I’ve done very well for myself and have amassed what most would consider substantial wealth, but it wasn’t until I took a step back from my life and took a hard and objective look at things that the real growth in my life started.

Self-Sabotage

When I did that, I was able to see that while I thought I was making the best financial decisions possible, I was actually sabotaging myself on all fronts, and that was severely holding me back. I realized that while I had built a successful real estate investing business, it could have been so much more, and on top of that, I found that the same self sabotage that limited my financial prospects also hurt a lot of my relationships.

So I dug in and started to work on changing this.

In doing so, I learned that over 95% of our decisions — including our financial decisions, are made by our subconscious mind, so while we may “know” what we should do, we often don’t do it, and in many cases, may even sabotage ourselves.

That’s why we can work around the clock in pursuit of our goals and do great things at work, but still not achieve the financial independence we feel like we deserve. But before I talk about how to eliminate that problem and permanently change your financial trajectory, I want to talk about a related problem that needs to be addressed first.

It’s the mindset that more money will solve your problems.

The truth is, it won’t, but most people who don’t have money think it will, so they focus on money and never see the real hurdles in their way. More importantly, they don’t understand why they’re pursuing money in the first place. That comes from inside — it’s a self-worth problem, and it’s caused by childhood programming.

Myth of Money

Unfortunately, almost everyone has a problem with self-worth because we've all experienced childhood programming and few have taken the steps to resolve it. Even worse, most people don't even realize it. They just know that something seems to be missing in their lives, and they think money can fill that void. This is often how entrepreneurs are created. They think money will give them the self-worth they desperately need, and they dive in, ready to take on the world.

Now I know you’re probably thinking, “No way, Brad! I know my worth and I love myself! I don’t have that problem.”

That may be true, but — and please don't take this the wrong way — it’s probably not.

If you’d have asked me a few years back if I had a strong sense of self-love, I would have enthusiastically said, “Hell yeah, I do!”

If you’d have asked me if I had self esteem, I would have enthusiastically said, “Of course!” And if you had asked if I cared what people thought about me, I would have enthusiastically said, “Absolutely not! I know exactly who I am!”

At the time, I didn’t realize it, but none of those things were actually true, and that led me to make poor financial choices and self sabotage.

If you truly want to start making better financial decisions, you need to look through your life for some of the following red flags, which are signs of a self-worth problem that needs to be resolved.

  • Negative self talk
  • Arguing a lot or feeling the need to be right
  • Self destructive behaviors
  • Difficulty sleeping
  • Having few, rocky, or no deep relationships
  • Anger
  • Anxiety
  • Depression
  • Addiction

Did you spot any of these red flags in your own life? If you’re being completely honest with yourself, then the answer is probably yes. The good news is this can be fixed, and once you do that, you will make better financial decisions from then on.

You can start working on it by becoming intensely curious about your actions and feelings. But it’s not enough just to be aware of what you’re doing and thinking — you also need to understand why. And be careful not to jump to the first answer that seems logical.

Dig deeper because the real driver is often buried deep below the surface.

Let Your Head Rule

I’ll give you an example. A while back, I was working on a large investment property I was planning to flip, and it was easily the single biggest project in my life. When I saw the potential profit I thought I would earn from this investment, logic went out the window and emotions took over.

As the project progressed, with something going wrong at nearly every step, my losses piled up, but I couldn’t walk away. I was convinced I could save the deal, turn a massive profit, and then bask in the glow of admiration from other investors because of my genius.

I was wrong, and I suffered a massive loss as a result. But the real problem wasn’t that I was so wrong. The problem was that I allowed my self worth, at that time, to drive emotional, rather than logical, financial decisions.

At first, I thought I just made a series of bad financial decisions. Once I dug deeper, though, I realized I was trying to prove something — both to myself and to others.

First, it was, “Look at how much profit I can earn from this deal!” Then, it became, “I’m going to look awesome when I turn this around despite everything going sideways!” And it soon turned into, “There’s no way to fix this, but I can’t let it go because that will make me look bad!”

So I held on as my losses racked up, with the final total weighing in at over one million dollars.

When I dug deeper into why this happened, and deeply analyzed my actions and thoughts throughout the deal, I realized that everything I had done was about stroking my own ego. At the time, I didn’t have a strong sense of self-worth — but I didn’t know it consciously, so my thoughts and actions revolved around proving to myself and others that I was, indeed, worthy. (That’s why I created my free Self-Love Quiz so others could get an accurate measure of where they stand.)

My $1 million loss is just one of many examples I could share, but we all have plenty, they’re almost always caused by our own lack of self-worth, and they will hold us back until that is resolved.

When you analyze your own past financial decisions, you will almost certainly find similar patterns, but if not, you could talk through your last five decisions that went poorly, with a trusted confidant who may be able to spot patterns that you may be blind to. *Note: While some of your friends and family may be able to identify patterns in your decisions and behaviors, they most likely will not be qualified to help identify and fix the causes.

So I want to challenge you to find a qualified professional to help you uncover the self-worth you deserve. This will be absolutely life-changing because when you do, not only will your financial situation improve, but your mindset, relationships, and health will as well.

________________
Brad Chandler is founder of Brad Chandler Coaching. During a conversation with a transformation coach, Brad was told that he had a tick when talking about his childhood that was likely the result of unresolved childhood trauma, and that it was likely negatively impacting every area of his life. After receiving help for that, his life was completely transformed, leading him to new levels of happiness, peace, calm, and success he had only dreamt of previously, which inspired him to launch a coaching business, Brad Chandler Coaching, to help others achieve a similar outcome in their own lives.

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StreetTalk
If you're anything like most of the people I talk to, you're probably smart and hardworking, but you're still not quite where you feel like you should be financially.
financial planning, personal wealth
1465
2023-59-22
Tuesday, 22 August 2023 02:59 PM
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