“Life is the sum of all your choices.” – Albert Camus, philosopher, author, and journalist.
This is the second of a four-part series on Financial Success Through Policy Based Decision Making. The initial question we answered was “What is policy-based decision making?” This article will address WHY USE POLICY BASED DECISION MAKING? Future articles will tackle HOW to draft policies, and When / Where are policies best used for financial success.
Policy based decision making is the practice of making decisions based on pre-determined policies developed from your values and goals as opposed to current emotions. When value-sensitive financial decisions arise, it can cause decisional conflict and require support. Predeveloped policies aid in making decisions that are aligned with one’s intrinsic values and personal goals.
Having policies in place removes the conflict and angst over every financial decision. You already know the correct answer for your life, your values, and your goals. Decisions are easier to make when they are clearly connected to your values and goals.
With the constant economic news media focusing on the extremes, having financial policies in place will provide a sense of control and the ability to confidently make decisions. A comprehensive financial plan is a great tool and taking it to the next level with specific policies provides an even sturdier foundation to guide one’s financial journey.
The best decisions are made when you can remove yourself from the emotion of the moment. The best time to make an important decision is before the moment occurs. Developing policies on how you will act when faced with future decisions removes the emotion and allows you to stay connected with your values and goals.
By developing policies in advance, one is more likely to stay grounded and focused when change occurs. The policies must be broad enough to cover unexpected changes and events, and at the same time clear enough to provide a specific course of action in response to those unexpected changes and events.
Policies will bring clarity, objectivity, and efficiency to your financial life. They will keep you focused on your long-term financial goals and put you in the best position for a successful outcome. Quality decision making can profoundly impact your financial experience and provide value that exceeds the total assets or rate of return.
