Re-examine your financial decisions and reap benefits

A number of years ago I was of the view that the older one gets the wiser they become and I frequently used age as the reason people make silly or avoidable mistakes. I was convinced that young people are inherently reckless and don’t give much thought to what they do and so many of the mistakes I was making in my twenties and early thirties were down to age or youthful short sightedness.

Even when I made obvious blunders I found an age-related reason to explain away my folly. I always comforted myself with the thought that the time would come when I grow up and stop making these reckless choices. This stance of mine troubled my mentor and one day just to make a point he asked me if I thought fools grow old or they stay the same age just because they are fools; we had a good laugh.

This particular conversation led me to examine an area of my life that I had until then paid very little attention to: my decision making process. I began to examine my entire philosophy to decision making, things like how quickly I make a decision, my frame of mind at the time I make a decision, how I evaluate the situation before I make a decision, what consultation if any did I do prior to making a decision and most importantly what time of the day I make critical decisions.

Doing this analysis especially in the area of my finances revealed some very disturbing trends as clearly I had not incorporated the benefits of having an educated mind into my decision making process. I have to say that for some reason, until this self-review, I did not give much thought to the majority of my day to day decisions. As I adopted this rigour around decision making, I began to notice that without exception all my poor decisions had one thing in common: I had made them when I was tired.

Think again
One day I took the trouble to walk around the house and check out items I had purchased that I regret buying and yes, all of them were bought when I was not fully alert because of fatigue. I have this pair of shoes in my wardrobe that I can’t explain how it can be a part of my “collection”. I remember buying it from a very persuasive sales girl one evening after work.

Recently I was speaking to a friend who was frustrated with the fact that she was being continuously short-changed by her “preferred” fruits and vegetables market vendor. Apparently this fellow to whom she had been a good and loyal customer had started saddling her with farm produce that was a couple of days old. According to her this vendor was being tactful about how he went about this scam by ensuring that he mixed the fresh stuff with the not so fresh stuff. What was surprising about this story was that this friend of mine is a very picky shopper that takes time to select each and every item that she buys.

Going to the market with her is an absolute nightmare as she wants to check out every tomato, mango and carrot that she buys. So what had changed? How was it that this vendor managed to pull a fast one on this choosy customer of his? It turned out that my friend had started shopping in the late evening on her way home. Mind you, she was still doing the actual selection of the fruits and vegetables she bought and this was why she was very frustrated. It was clear that despite all her fastidiousness she still ended up with old farm produce. I smiled as we chatted because I had been down this road of buying fruits and vegetables in the evening after a full day’s work. It was very likely that her tired mind combined with the poor lighting in the market led to her making poor selections.

Evaluate
I vividly remember the time I wanted to buy a car; I was looking for one of those low fuel consumption Toyota models. In the course of two days I think I looked at about twenty cars, some in bonded warehouses and others brought to me by different car dealers. Finally on the evening of the second day I zeroed in on this really nice car and since I had wasted so much time looking at cars I was anxious to close the deal and move on with my life. In a moment of sheer brilliance (read God’s mercy) I asked the car dealer if we could meet the following day, first thing in the morning. When I saw the car the next morning I could not explain why I thought it was a good choice. I even asked the dealer if he had brought me a different car. My tired mind had hyped that car the evening before.

Following this experience, I have resolved to categorise my financials decisions. There are some non-critical ones that do not involve large sums of money and I can afford to make them in the spur of the moment. Then there are others where I give myself time to think and evaluate. I need to point out that large is relative and what is a large amount of money for one person might not be big for another. That said, please remember that, paying close attention to all your financial decisions big or small will serve you well. The good book says it well “if you are faithful in small things you will be faithful in the big ones”.

Grace Makoko is Standard Chartered’s head of financial markets, East Africa.
[email protected]

[email protected]