There are two emotions that usually cause people to make poor financial choices: fear and greed. If you look back at the worst financial decisions you have ever made (and we have all made them) you will see that they were, almost without exception, made because of either one or both of those emotions. Even the economy is primarily affected by fear and greed. If you look at major economical crises in history, you can see that those two emotions were at the root of the problem. Recently, in many states, we saw a housing boom that caused the value of homes to rise astronomically. This was exacerbated by some people who began to fear that if they didn’t buy right away, they would not get a house. Other people, who had never before invested in real estate, saw the thriving market as an opportunity to “get rich quick” by flipping houses. Sadly, many people in both of these situations are now facing major financial losses and credit problems, and the general housing economy is suffering as well. So how do we avoid making decisions based on fear and greed that could potentially cause us great financial and emotional distress?
#1) Ask yourself what you REALLY want and if this particular purchase will really solve your problem
Many times, we think all we want is more money, but that is not what we really want. We want what we think money can buy us. It is not the things money can buy us either—if you look back in your life, the things you want are constantly changing. If you look deep down, you will probably see that what you really want is peace, security, love, safety for your family and other things that money can help you facilitate, but for which a lot of money is not necessary. When you feel you are ready to make a major purchase or a large investment, ask yourself the reason you really want to do it and find the most practical way of doing it that will not cause you to extend yourself beyond your financial limits. For example, if you want to buy a bigger house, ask yourself why you want to do it. Is it because you want to have a room for every child? So you can have more storage? If those are the cases, look for a home that has more rooms or more storage space, not necessarily more square footage. If possible, you could make the necessary changes to your own home and save a substantial amount of money. Being specific about what you really want allows you to free yourself from getting attached to things that don’t matter as much to you that will cost extra. After looking at my own desires for a “bigger” house in a “better” neighborhood, I realized that I didn’t care if the house was actually bigger—I just needed another room and wanted a garage in a neighborhood that was clean and had young families with kids that my children could play with.
#2) Pray and have faith
Once you have in mind what is really important to you, take it up with the Lord. Prayer amid financial decision making is the VERY most important step. Because he cares not only about you, but about your ability to provide for your family, if you pray and tell him what you need and what you think you can afford, he will help you find it. It is critical to have patience and faith in his timing though. Remember that he not only knows what your financial situation and the economy is now, but he knows exactly what will happen in the future. An investment or purchase that seems like a “no brainer” to you, could end up causing devastating financial effects because of unforeseen future events if you make the decision without the Lord’s help.
To help you establish trust in the Lord and to use that trust to avoid making decisions out of fear, you can take a moment and write down times in your life that you have been afraid of the outcome of a situation, but the Lord has helped you through it. I find that in reviewing my journal, I see many instances where I was under a lot of stress and fear about unknown future events. As I look at how well those events ultimately turned out, it is easier for me to trust that the Lord can also help me with my current situation—even if it seems impossible for him to do so. I also find that talking to other faithful people and hearing their stories of situations they were helped with strengthens my personal faith.
#3) Do your homework and actively search
After praying that the Lord will help you find what you are looking for, do research and work to locate the item or investment that will best fit your needs. In this process, continue to consult with the Lord and try not to fall in love with the prospect of making any particular investment or purchase. Finding out what your purchase or investment is worth, how it compares to similar purchases or investments, and if you are purchasing it from a good individual or company will help you avoid potential pitfalls. Another important thing to recognize is that anytime you are making a major financial decision, there will likely be someone or some circumstance trying to convince you to make a choice quickly. I have seen real estate agents trying to convince their clients to buy right now—before the housing prices go way up again. Car sales people might pressure you by giving you a deal that is “too good to be true” or “today only”. These urges cause people to make decisions out of fear, but thorough research and prayer can help you make important decisions absent of both fear and greed. Pay attention to your feelings about your choice and make sure that you have a feeling of peace about the decision. In my personal experience, even the answers I get to prayer are most accurate if I have done sufficient research.
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