Decisions made from fear are more focused on the potential loss, risk, harm, or missing out.  Confident decisions come from applying the necessary skills and knowledge to analyze a situation from a practical, business-like position.

For example, if you have recently read something about investment fees and other negative impacts of active money management you could be tempted to convert all your investments to an alternate type.  This same situation can happen if you experience a drop in the stock market and you’re tempted to pull all your money out and invest it in real estate or fixed income certificates.

Another common situation is the one where you feel that the amount you have saved is going to cause you to work for the next several hundred years in order to finally be able to ‘retire.’.  In an attempt to alleviate this fear, you perhaps make a decision to take charge of your finances and start attending seminars on how to reduce your debt and increase your savings.  The biggest challenge with this is that the overwhelming majority of seminars are offered by people who are selling a particular product to fit with the information they have just taught you, or they are people who do not have a professional background and are therefore presenting strategies that are from their personal experience (which is good), but won’t have the connection to the technical aspects of the financial industry.

This situation leads to decisions that are often made with partial knowledge such as looking at reducing interest rates on mortgages or credit cards, but inadvertently reducing your long term flexibility or ability to access credit.  Credit scores are a complex serious force with far reaching consequences.  Anything at all to do with credit must be carefully calculated and considered with expert consultants.

So what do you do?  A solid financial foundation of skills and knowledge was not part of any formal curriculum for every adult trying to make these decisions today.  Because of this, the knowledge gap isn’t even recognized so we have decisions that appear to make sense on the surface based on ad-hoc, circumstantial information, but ultimately require a leap of faith to implement.  This type of decision making ultimately ends up being more like unconscious gambling, rather than a methodical, calculated, confident process that connects all the unique person circumstances to a desired outcome.

The first step is to realize that money is a dynamic, every increasingly complex situation, where decisions are not black and white.  Because of this, the component of the decision making process that can be controlled is your own values, priorities, goals, interests, passions, and unique purposes.  From here, the process of making decisions, implementing strategies and deciding on specific product solutions is a sequential balance of earning vs. spending; of saving vs. investing; of risk vs. reward; of growing vs. maintaining; and of the needs of today vs. the needs of tomorrow.