Master Your Money Skills by Finding Your Financial Blind Spots
Managing your money is a journey that’s filled with twists and turns, much like any other life path. And, like any journey, this unique landscape is riddled with hidden corners and blind spots that can catch even the savviest among us off guard. So, let’s delve into the idea of financial blind spots, explore some common examples, and consider strategies for uncovering obstacles that may be lurking along our financial pathways.
What are Financial Blind Spots?
Financial blind spots are areas in your financial life where you have limited awareness or understanding. They might also indicate areas that you think you know well, but may actually be more limited. These can range from misunderstandings about investment options to biases affecting your decisions. Uncovering these money blind spots enhances your ability to make informed decisions and better work toward achieving your financial goals.
- Behavioral Biases: Our emotions can cloud our judgment. Fear of missing out (FOMO), loss aversion, and overconfidence can lead to making decisions that actively work against our goals.
- Misunderstanding Debt: Not all debt is “bad debt." In fact, some debt can be good! The inability to differentiate between the two types of debt can lead to unhealthy financial stress.
- Putting Off Retirement Planning: Retirement is far away—until it isn’t. Passive attitudes toward retirement planning can cost you mightily. And no matter what changes in the laws and landscape or retirement, one truth remains: the sooner you start investing in your retirement, the more time your money has for growth.
- Lifestyle Creep: Congrats, you got a raise—celebrate! But know that, as income increases, spending and lifestyle adjustments to a costlier way of living often follows. Recognize your increased income as an opportunity to save more toward retirement, build emergency savings, and other designated purposes.
- Knowing it All: Even longtime vets in financial roles don’t know all there is to know. In fact, it might even make for confined knowledge that doesn’t consider outside perspectives.
Uncovering Your Blind Spots:
Knowing what various types of blind spots are is one thing, but knowing what yours are is a whole other effort. Here are a few strategies for going forward:
- Honest Self-Reflection: Regularly reconsider your financial choices and habits. Are there areas of uncertainty or confusion, or purchases you’ve come to regret? Think big and small as well as long and short term as you do so. Knowing is the first step toward change.
- Always Learn: Invest time and effort to further your own financial knowledge. There are so many resources you can use to better understand financial topics. Whether it’s books, online and offline courses, blogs or something not listed here—the opportunity is there for the taking!
- Consult Others: Friends and family will almost always share their experiences of financial success—and some may even impart wisdom from their missteps. Also, financial experts can offer insights that are tailored to your situation based on years of helping others.
- Create a Budget: I know… budget is a horribly restrictive thought. But hear me out. Even if you take a good look at your spending, income, and debts ONECE or twice a year, it can reveal where your money is going and highlight needed adjustments. We highly endorse this Financial Checkup from our partners at Savvy Money. It literally interviews you about your spending, income, bills, and debts… then, you can get a personalized budget without any extra effort!
- Regularly Monitor Progress: If you use the Financial Checkup tool, you can sign in once a month, every couple months, or just a couple times a year to update your info and assess your progress. And, of course, if you would like to talk withus to help you navigate this money journey, we’d love to do so.
The journey of mastering your money does not happen overnight. It takes dedication, acknowledging and addressing your blind spots, and more. Everyone has knowledge gaps. Seek to understand and address yours and you'll have a better chance of enjoying a smoother path to your future financial well-being.