Would you like to know the signs of a bad financial decision BEFORE you make one? Hindsight is 20/20, and I have certainly made my share of financial mistakes. I’ve also watched friends and clients make them as well. The following are some red flags of a bad financial decision.
1. Emotion is high. When you are in a highly emotional state, your intelligence generally goes down. This is usually not the best time to make a financial decision.
2. You want to look good. If your motivation for a financial decision is to look good or gain approval from others, don’t do it. Your need for approval can be the biggest check you ever write.
3. You are taking advise from someone you assume has it together financially. I have met with many clients who appear to have it together financially, and give others financial advice. Behind the high-paying job, nice house and the new car is often a slew of bad financial decisions. They may also have a high need to look good and to be the “expert”.
4. Convenience is the deciding factor. Laziness can be expensive! Whether it is a large or small purchase, it all adds up. Plan ahead and avoid “conveniently” over-spending.
5. You have a long list of rationalizations. This is a sign you are trying to talk yourself into a purchase. This is similar to talking yourself into a piece of cheesecake. You start coming up with all the ways you will burn the calories, and telling yourself you “deserve it”. A bad financial decision plays out the same way.
When you see one of these red flags, STOP and tell yourself you deserve a better financial life more! Distract yourself with something else, remind yourself of your financial goals and begin to make better financial decisions.
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