Take a look at any financial website, newsletter, or magazine and you will undoubtedly find stories warning you about the Chinese economy, the Fed’s interest rate policies, the impact of the U.S. presidential election, global oil markets, forecasts for corporate profits, and market volatility.
Sometimes it seems like there are a thousand ways for things to go wrong with your finances.
But none of these stories — while interesting to read and ponder — is worth spending too much of your brainpower. Why? Because these big global factors are beyond your control and will be resolved without the slightest help from you.
You cannot control whether the S&P 500 will result in positive returns or whether the European theater will restart pumping profits. History has shown us that there are times when the U.S. markets outperform foreign markets and when the opposite is true. Same deal when it comes to growth stocks and value stocks and small and large companies.
There is no way to successfully or consistently predict what will happen next. So why do we bother?
The behavioral psychologists call it “the illusion of control.” Our intellectual minds tell us we can figure it out. Even when — trust me here — we can’t!
Putting your precious time into what you CAN control is really the only sensible way to go.
Think seven actions where an investment in focusing your energies will pay dividends:
- Develop rational goals built on your values. Let’s face it, without a real plan, you have decided to meander and hope for the best.
- Consider possible life transitions and how they might impact your actions. Transitions rarely give notice, so considering the impact of possibilities allows you to put proactive solutions in place.
- Build consensus with other stakeholders (your spouse, a partner) on strategies to reach your goals. Without all parties working toward the same goals, you’re more likely to be working against each other and get nothing really accomplished.
- Invest time and resources to work with professionals who can help move your goals forward. Whether it’s creating an Estate Plan or having a proper risk management plan in place, you’ll benefit from working with experienced experts.
- Know your financial numbers and assign priorities for savings, accumulation, and spending. Consider a rating system from one to five, where you assign a point system to where your paycheck and resources go.
- Live your life with purpose and balance. Consider your health, leisure time, education, spiritual life, and family — those areas that give your life greater meaning and where your actions can make a difference.
- Understand more about the “whys” of your life. Beliefs don’t just arrive in your thinking like a magician’s trick. On the contrary, your money beliefs — your mindset — come from your money history over the course of your life. And it’s that mindset that determines what you consider normal. Taking the time to understand whether your beliefs support your values is always time well spent.
These actions are very specific to you. You make the choices, decisions, and actions that will support the outcomes you desire.
Devoting time to the economic issues of China or whether equity markets will rise or fall is just giving power to the illusion of control. It will only divert your attention from what really impacts your life.