Its 2020, and almost everyone has been plotting their New Year’s financial resolution presumably as a step to turn their financial vision into reality, but have you ever thought of asking yourself before engraving these resolutions into your system if these get you any closer to the kind of accomplishments you would want to reach in your lifetime, and the kind of person you want to be known? Did you bother to examine the clarity and feasibility of your vision? Were there any chances that gave you a hint that you might need to step back a little to reexamine yourself, and see if your resolutions are in unison with your vision?
Most, if not all of us, are trapped in myopia or clairvoyance. The former makes you vulnerable to failure due to your inability to be agile, or swiftly make changes in your behavior or mentality toward money and life. Two of the classic behavioral biases that exhibit myopia are loss aversion and pessimism bias. The loss aversion is a fear of experiencing losses, hence setting visions that do not have elements of imagination, foresight and intellectual insight, while the Pessimism Bias is an overestimation on the likelihood of bad things to happen. On the other hand, the latter is equally dangerous since it has something to do with overconfidence and illusion of control, or also known as the Dunning-Kruger Effect, which means an egotistical belief that you are better than what you are. This is usually caused due to the absence of the self-awareness of metacognition.
Your financial vision is very personal which is why to achieve a 20/20, it starts with self-realization and ends with self-actualization. Hence, you must have a deeper understanding of your past, present and prospect, and use these three as a foundation to help achieve a lucid financial vision that will not only help you to become resilient and tenacious to overcome any forms of financial challenges and behavioral biases as you go along with your financial journey, but to also give you the purpose to keep you on your toes:
Understand your past. While your past does not ultimately define or shape your future, but it does give you the needed foundation to build a clear and achievable financial vision by making a decisive decision of choosing whether to dwell on your past experiences, beliefs, values and culture or transform yourself. What makes a 20/20 vision is when you have already accepted the past, and have moved on to challenge the present and the prospect. It pays to address the question of should I stay as to who I was in the past when dealing with my finances or should I change?
Understand your present. As to how I always perceive the kind of world we are into right now, it is volatile, uncertain, complex and ambiguous, which naturally transforms us to be fast in meeting the immediate demands, sometimes causing our finances to completely go south. Such transformation, if not handled with caution, could undoubtedly derail or lose your identity. Understanding your past enables you to prepare the baseline architecture in creating a 20/20 vision, and an understanding of your present solidifies and finalizes your baseline in preparation for the development of your target architecture (prospect). The critical question for this climactic change is, am I really who I am today? If not, who am I?
Understand your prospect. The life-changing decisions you have made in the past and present brings you closer to the home run. The final step is to make the toughest decision that will ultimately define the future you. This is the stage where you would have to consider important factors, such as your knowledge, skills, abilities, values, beliefs, culture, cost to achieve each goal, time line and resources. Understanding these factors gives you the edge to identify financial visions that are meant to stay as dreams.
In essence, the amalgamation of decisions you would
have to make from your past, present and prospect would define who you are,
what you want to achieve financially, how you are going to achieve it with
absolute certainty, who do you want to become and how you would want to be
remembered by those aspiring to achieve financial
success this 2020.
Earl Pagatpat is a registered financial planner of RFP Philippines. To learn more about personal financial planning, attend the 81st RFP program this January 2020. To inquire, e-mail info@rfp.ph or text <name><e-mail><RFP> at 0917-9689774.
