(4 minutes to read)

Indecision is a plague in society right now.

Seemingly more than ever, many people are frozen, unable to make decisions, unable to take responsibility for themselves, and unable to deal with what’s in front of them.

In personal finance, this can really work against you, keeping you working a lot longer than you intend or preventing you from pursuing a next endeavor you’re more passionate about. Taking some time to think through things is important, but if you push certain issues too far down the line, it can really affect your financial picture in a negative way. These are questions that demand engagement and decision—now.  

For example, maybe you have a lot of your net worth tied up in your company’s stock, and you’re not sure if you want to do anything about that. At any time, though, the stock price could drop, and you could lose the majority of your wealth. It happens all the time. How about those LiDAR companies? Electric vehicle (EV) companies not named Tesla? A lot of really talented, hardworking people are starting over financially after those stocks got wrecked.

Are you working in an AI company right now? It’s been reported that about 60 percent of leading venture capital firm Sequoia Capital’s new investments in 2023 were in artificial intelligence, an unusually high proportion in one area. Will some of those companies go public and later fail? Without a doubt.

Having the majority of your wealth in one place is something that happens to a number of people, who often figure they can sort it out (or think about it) later. But if avoiding a dramatic hit to your current and future lifestyle is important to you, later often comes too late. You need to make a decision: yes or no. Yes, I want to fix the problem, or no, I’m willing to live with the consequences and accept whatever amount the casino cashes me out with.

Another example: Are you saving enough? If you don’t know, the answer is that you’re probably not. And if chronic overspending is keeping you from saving enough or is depleting your assets, you have a problem. And a decision to make. Am I going to take this on, or am I not? In other words, am I going to solve the problem, or am I going to live with the fallout from not solving the problem?

The consequences of not solving the problem are serious. Because money grows exponentially (think of bacteria doubling in a petri dish), time is of the essence. Every month you wait to get your spending under control means you’re giving up significant compound growth—in other words, growth on the growth of your money. And if you don’t allow your money to work for you by saving and investing, then you have to keep working.

Here’s one more example. Do you know where your old 401(k)s from prior companies are? When was the last time you looked at them? If you don’t know where they are or how they’re invested, you have a problem, and, again, not facing it has real consequences. That is, if you care whether or not your retirement money is languishing in some forgotten account, in investments that may not be adequately building your financial future. In this case, you once more have a decision: Am I going to find those accounts and pay attention to the investments in them, or am I instead going to live with potential subpar growth and a longer path to retirement?

I could go on. These are common examples, but everybody has their own financial issues. What’s important is to take on your particular financial issue and make a decision. To move forward on questions like this, you have to decide. Yes or no. Not, I’ll deal with it eventually.

I’ll deal with it eventually is the opposite of deciding. I’ll deal with it eventually is putting off the decision that needs to be made. I’ll deal with it eventually is avoidant behavior, and it’s not good for your financial health. It can lead to sudden losses, missed growth, extra taxes, greater uncertainty, and lost opportunities, effects which can delay your progress and keep you from reaching your financial goals, while making the journey harder than it needs to be. Remaining in indecision also has significant downsides that impact your psychological well-being, as it creates anxiety, worry, shame, regret, and endless rumination.

You don’t need to live like that.

If you find yourself living in indecision or frozen in some area of your financial life, here are a few strategies to help you break free.

First, give yourself a deadline. Setting a clear timeframe creates urgency and keeps you from getting stuck in endless deliberation. When will you decide whether or not to take on a festering financial problem? When will you say yes or no to solving it?

Second, just try it out. Sometimes you can’t fully understand a situation until you’re in it. Accept that some solutions, in their entirety, unfold over time. Start by saying yes, “let’s do this,” to solving your problem, and then let the solution come into view.

Third, consider the best and worst possible outcomes: a prosperous, secure financial future versus potential financial ruin if you don’t decide to make changes. In thinking about possible outcomes, you might just sell yourself on needing to act.

Once of my personal favorites, which often overlaps with thinking about possible outcomes, is to try on the decision mentally, first one way, then the other. Experience what both feel like. You’ll usually wind up favoring one choice over the other after living in the decision for even the briefest amount of time.

These are some ideas to add to your own unique process for making decisions, whether it involves gathering up a lot of information, trusting your gut, or asking the advice of others. Whatever your process, use it.

With financial questions, don’t linger in avoidance. Instead, make a decision that moves your financial life forward.

Parkworth Wealth Management provides holistic wealth management services including financial planning, equity compensation planning, investment management, tax planning, and others, on a fee-only basis and as a fiduciary, acting in clients’ best interests. If you have made a decision to move your financial life forward and to take on your festering financial problems, schedule a complimentary consultation.