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Personal Finance success starts with good decision-making

Updated: Jan 9, 2023

Personal Finance is a life-long journey. We start the journey with grounding in the timeless aphorism: “Progress, not perfection.” Personal finance success results from a series of actions informed by our best thinking. Sometimes, waiting for perfection keeps us from moving forward. Our journey guide provides the tools for your confidence-inspiring action and personal finance success.

Personal Finance and general financial literacy are critical for making the most of your financial resources. It is very doable! Personal Finance is best understood through the decision-making lens. Whether big or small, we make decisions every day! While not all decisions are for personal finance, significant decisions are likely to have a financial impact.

Being good at personal finance STARTS with being a good decision-maker. The good news is that the skills you will learn for making good financial decisions will ABSOLUTELY be helpful to all life decisions. Our personal finance journey guide starts by first looking within. We investigate and establish a baseline understanding of how our brain operates. You will be astounded at how our neurobiology impacts decisions and personal finance success. "Know thyself" is the gateway to great personal finance outcomes. Your ability and willingness to change your mind is a key pillar to personal finance success.

People are emotional creatures. Even though, some people seem to lack emotion. Some people seem more like Spock, the ultra-rational first officer from the Star Trek movies. But their cool logic is mostly for show. It occurs because these Spock-like people are controlling their emotional expression, not because they do not have emotions. Harvard University neuroanatomist Jill Bolte Taylor said:

"Most of us think of ourselves as thinking creatures that feel, but we are actually feeling creatures that think."

This is an important perspective. Emotions get processed first. It takes skill, training, and tools to properly integrate emotion into your objective personal finance decisions. Emotions contain valuable judgment. Emotions also come with impulses, unhelpful attitudes, and unyielding beliefs. Borrowing a farming metaphor - this personal finance journey shows you how to separate the valuable emotional wheat from the unhelpful emotional chaff!

Confidence is an emotion. I call it the "decision emotion" because it provides the emotion-based signal as to whether we "feel" we made a good decision. Decision confidence is important. Confidence is an emotion-based signal that informs our decisions and motivates us to productively move forward after a decision is made. Confidence is important in most decisions. People are subject to inevitable "fast-brain" biases as woven into the fabric of our biology. Our brain biology has slowly evolved over many millennia. These biases are commonly known as "Cognitive Biases" and they likely impact the reliability of the confidence signal. This is tricky! The operative question then becomes:

"How do we achieve 'conviction in our confidence' when it may include false signals generated by our cognitive biases?!"

This personal finance journey guide shows you how to achieve conviction in your confidence!

Why personal finance success is needed more than ever

Having a great decision process will ensure you have reliable conviction in your confidence. A great decision process will provide the conviction that the best decision was made to drive personal finance success.

But why does this matter? Why is your long-term financial wealth so dependent on making good decisions today?

There was a time in the United States when financial literacy was not as critical. Most companies provided a pension program (Defined Benefit). You did not really have to think about it. Your retirement was taken care of. Today, pensions are almost gone, replaced by portable, self-service-oriented 401(k) programs (Defined Contribution). Also, there are even more "gig workers" needing to completely self-service their retirement. The bottom line is, the need for self-driven financial literacy is greater than ever.

Unfortunately, many are falling through the cracks. According to the St. Louis Federal Reserve, Americans are having retirement challenges. It would seem the switch from pension to 401k has caught entire generations unprepared.

Also, the student lending crisis continues to grow. Bloomberg News stated:

"The student debt crisis is one that spans generations, with about 8.7 million Americans aged over 50 still paying off college loans."

While education can be an investment in your future, the risk of overpaying for that education is greater than ever.

I've been asked, "What is the secret formula to financial success?" The truth is, there is no single "secret sauce." I think of financial success as the long-term outcome of a series of small but optimized financial decisions.

The challenge is, you don't realize financial success until long after those small financial decisions have been made. Wealth and security are built over decades, not months. Decisions lacking salience are when immediate outcome feedback is not available. Behavioral economists cite decisions lacking salience, whether personal finance or even global warming-related decisions, as significant impediments to reaching long-term success. [i] This personal finance journey guide shows you how to make regular good decisions, focused on the less-salient personal finance decisions.

The good news is, with a little preparation, your financial success is very doable. Our ability to manage our emotions, stay focused, and be disciplined is the key to victory. It has little to do with your knowledge of business, math, or trading strategy. In other words, knowing yourself, being patient AND persistent, plus applying discipline will power your long-term wealth.

You may be thinking, this does not sound too difficult, so why are so few people saving? Earlier, we discussed the challenges presented by our evolutionary biology. Our brains are not wired for long-term savings. This means retirement savings and other personal finance decisions must be intentional. This personal finance journey guide helps you make personal finance success an intentional part of your life.

Making high-value personal finance choices

This personal finance journey guide will help you make high-value personal finance choices. Choices require actions! Confidence in a good decision process will help you ACT. This personal finance journey guide prepares you for a lifelong decision journey. Think of it as a series of regular, smart, and positive habit-forming financial decisions leading to significant long-term value. Personal finance success is merely the cumulative value of those regular, smart decisions.

The journey guide is organized as a series of “bite-sized” chapters and sections. As an initial step, it is beneficial to read through the guide from beginning to end. This will help you create a comprehensive personal finance mental map. Much of the personal finance journey guide is organized around key life events or life needs. So, you will be able to refer back to the guide when the need presents itself. [ii] This guide is helpful for people of all ages. No matter when you start, this guide will inform your personal finance success!

Given our very slow, multigenerational evolutionary processes, our "today" brains are still wired to make decisions typical of over one thousand years ago. Back then, simple but significant life-and-death decisions were more typical, such as:

"Should I run from the lion?" or "Should I fight this person from a rival tribe?"

These are simple because they are binary, yes or no, fight or flight, decisions. Today, decisions are often multi-criteria, multi-alternative complex decisions. A common car buying decision includes many decision inputs, such as:

"How should I evaluate my 10 car buying criteria?" and "Which of the 20 car alternatives should I buy?"

These are surprisingly complex. This car-buying example has over ten thousand decision factor combinations. Without assistance, the volume of comparisons is overwhelming. [iii]

As a result, tools to help make complex decisions are critical. Our brains are simply not wired to make accurate complex decisions without help. This personal finance journey guide will absolutely help. The good news is, we also provide a companion smartphone app. This app will help you implement many of the personal finance decisions we discuss throughout the journey. This app aligns with our naturally occurring decision biology strengths. It handles the complex decision math in the background. The app “remembers” your many perspectives as you walk through the decision process. To load the app on your smartphone, please see this website for links to the app store. It is helpful to familiarize yourself with the app near the beginning of the personal finance journey.

Finally, you still may be wondering “why?”…. what is our motivation for building long-term value using this personal finance journey guide? I’ll be the first to admit, as an economist, I am not accustomed to taking a position on “self-interest.” While economists believe people are motivated by their self-interests, economists usually defer these sorts of “why” questions to philosophers. However, being clear about your self-interested long-term value motivation is very helpful when setting personal finance goals. Your “why” perspective becomes like a decision beacon. This beacon will help anchor your decision goal and mediate your decision process. Think of your decision beacon as a helpful tie-breaker as needed throughout a decision process. The good news is that this personal finance journey guide will work for anyone, regardless of their motivation for long-term value creation.

Next is my personal “self-interest” or “why” statement. I offer this to encourage you to contemplate your personal statement as well.

I believe kindness to others is central to life. Building wealth and living a value-focused lifestyle enables your capacity for kindness to others. While there are certainly other means to provide kindness, wealth will provide options to deliver kindness to family, friends, and/or our community. Our time-tested world religions often share a common humanity.[iv] In terms of “kindness to others,” one of my favorite common humanity teachings is from The Bible, 1 Peter 4: “Each of you should use whatever gift you have received to serve others, as faithful stewards of God’s grace…”

I am glad you have chosen to make this personal finance journey. This is the first of many great decisions!

Your Personal Finance Journey Guide

Core Concepts

Making the money!

Spending the money!

10. Budgeting - Budgeting like a stoic

14. College choice - College Success!

Investing the money!

Pulling it together!


[i] Benartzi, Thaler, Heuristics and Biases in Retirement Savings Behavior, American Economics Association, 2007

[ii] Daniel Fernandes, John G. Lynch, and Richard G. Netemeyer, "Financial Literacy, Financial Education, and Downstream Financial Behaviors," Management Science 60, no. 8 (2014): 1861.

This article suggests the most effective financial training is provided on a “just in time” basis - that is, in anticipation of a pending financial decision.

[iii] "Satisficing" is a decision-making process in which an individual makes a choice that is satisfactory rather than optimal. The term satisficing, a portmanteau of satisfy and suffice, was introduced by Nobel prize winner Herbert A. Simon in 1956. Because of the complexity of modern decisions, without assistance, Simon believed the best decision available is a satisficed decision. Our personal finance journey guide helps develop the abilities and provides the tools to make an optimal decision, even in the face of complexity.

In the case of "helping others," our world religions demonstrate common humanity. The following is an excerpt from Wilson's book, demonstrating world religious alignment:

  • Do nothing from selfishness or conceit, but in humility count others better than yourselves. Let each of you look not only to his own interests, but also to the interests of others. Christianity. Philippians 2.3-4

  • The best of men are those who are useful to others. Islam. Hadith of Bukhari

  • All men are responsible for one another. Judaism. Talmud, Sanhedrin 27b

  • The ignorant work for their own profit, Arjuna; the wise work for the welfare of the world, without thought to themselves. By abstaining from work you will confuse the ignorant, who are engrossed in their actions. Perform all work carefully, guided by compassion. Hinduism. Bhagavad Gita 3.10-26

  • If I employ others for my own purposes I myself shall experience servitude, But if I use myself for the sake of others I shall experience only lordliness. Buddhism. Shantideva, Guide to the Bodhisattva's Way of Life 8.126-128

  • The man of perfect virtue, wishing to be established himself, seeks also to establish others; wishing to be enlarged himself, he seeks also to enlarge others. Confucianism. Analects 6.28.2

  • Rendering help to another is the function of all human beings. Jainism. Tattvarthasutra 5.21

  • Without selfless service are no objectives fulfilled; In service lies the purest action. Sikhism. Adi Granth, Maru, M.1, p. 992

  • I tell you these things that you may learn wisdom; that you may learn that when you are in the service of your fellow beings you are only in the service of your God. Church of Jesus Christ of Latter-day Saints. Book of Mormon, Mosiah 2.17

  • Grant other people something also. The Yamana do not like a person who acts selfishly. Native American Religions. Yamana Eskimo Initiation


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