People need help with money blind spots “identification” just like my dad needs help seeing everyone in the world besides blond women.
My dad loves blonds…not in a creepy way, mind you…I think they all look like fairy princesses to him. “Did you see how great Reese Witherspoon was on that talk show? She is SO well spoken…” It is an ongoing joke for the rest of the family, how when he watches Dancing With The Stars he knows the name, the stats and every detail about the blond woman in the group (whoever it might be that season), but he can’t even tell you the first names of the rest of the contestants—the rest of them are “that short gal,” or “that bald guy.” My dad is somehow “wired” for blond, and is blind to all other hair colors.
And while this blind spot isn’t necessarily damaging my father’s life, I started thinking about how blind spots can’t help with money issues, and in fact, might be damaging to one’s financial life. Bias or blind spots prevent you from seeing the world around you clearly, so your potentially biggest money issue is one you don’t even see.
Help With Money Blind Spots
When I come across money blind spots when I meet with clients to help with money issues, I come across 6 categories of blind spots:
Opportunities – with my business clients, sometimes they become so focused on a specific tactic (or assume that something has to be done a certain way) that different approaches or markets never even occur to them. What opportunities are in your blind spot?
Prioritization – one of the biggest areas that are overlooked is simply saving money for a cash reserve. I come across people so desperate to pay off their debt or so focused on another goal that they never think to just have some money, set aside “just in case.” What areas of your finances are you minimizing or forget to think about?
Allocation – another blind spot is allocation of resources, which can happen at two levels: 1) allocation of your current savings between different goals, and 2) the more common association, allocation of your investments across different asset classes. Is your money organized in a way that reflects your goals AND your risk tolerance?
Overspending – This used to be my biggest blind spot, when I would spend $150 per month on coffee (I explain how I stopped in my free ebook, Conscious Spending). This is why it’s so essential to track your spending; you gain clarity, even without ever instituting a budget.
Discounting Input – One of the most valuable things I do with couples is “hear” both of their perspectives equally. I listen to both sides without any preconceived notions about the “validity” of each person’s contribution…so I tend to hear things that the other spouse has missed, discounts, or disregards because s/he doesn’t know how to integrate it into a cohesive strategy. What aren’t you hearing your loved one tell you about money?
Following Without Question – One of the most DANGEROUS things I see people do with their money is follow the advice of a professional without ever questioning it. Someone’s credentials don’t necessarily mean they know better than you what to do with your money. If you don’t understand the investment, don’t use it. If you don’t understand how someone gets paid, don’t buy the product.
Blind spots are dangerous because it never occurs to us NOT to do the thing we’re being blind about. This is why to a certain extent we all need help with money issues.
Actions This Week
- Ask an objective party. Be clear about what makes a person objective. Do they have any stake in you behaving one way or another?
- Ask your loved ones. Your loved ones DO have a stake in how you behave, so they can fill you in on all of the annoying things that you do that no one tells you about. Take their observations seriously.
- Assimilate feedback. If you’re asking about your blind spots, you might be surprised about the information you uncover. Take some time to be gentle with yourself and assimilate the feedback.
- Create ongoing task for yourself. Once you have digested the information from different parties, commit to one action to eliminating this blind spot. It might be scheduling a weekly time to listen to your spouse, or to log into Mint.