Powell: 5 ways to make financial decisions easier – USA TODAY

Robert Powell, Special for USA TODAY Published 7:00 a.m. ET July 5, 2017 | Updated 7:00 a.m. ET July 5, 2017

Many people think of their personal finances as something "cold" or analytical. Then they see those financial decisions outside of themselves and tend to avoid them.(Photo: Richard Drew, AP)

Making decisions about money isnt easy.

In fact, research suggests many people often neglect their personal finances, in part, because they feel those types of decisions are too "cold,"analytical, and unemotional for them, according to Jane Jeongin Park, a doctoral candidate University of Florida and co-author of Not My Type: Why Affective Decision-Makers Are Reluctant to Make Financial Decisions.

People feel that "financial decisions are 'not them,' "according to Parks, and her co-author Aner Sela, an associate professor at the University of Florida.

Given that, what might you do to make better decisions about their money?

Think outcome, not investment decision. Mentally re-frame financial activities in terms of desired life outcomes; lifestyle goals in retirement and dont think of them as financial investment decisions.

Why? "Because the term itself activates much of the negative baggage that is associated with financial decisions,"Park says.

Re-framing in this manner also reduces the tendency to avoid or delay such decisions.

Others agree with this tactic. "Re-frame the financial goal in terms of the outcome or emotional or personal meaning associated with an outcome,"says Ruth Lytton, director of the financial planning at Virginia Tech.

In their study, Park and Sela found that merely labeling a financial decision choosing annuities for retirement as "a decision about your life in retirement"instead of as "a decision about financial investments for retirement" dramatically decreased peoples tendency to avoid the task and the level of discomfort they experienced.

"This is something that people may also be able to do for themselves: namely, think about financial decisions in terms of the life outcomes they are supposed to serve, instead of focusing on their being 'financial,' "Park says.

Lytton shares this point of view. "Dont think about the annuity in terms of an investment but the satisfaction, reduction in stress, or benefit from 'regular'income that will support the goal of travel, golf, time with family, and the like,"Lytton says. In other words, focus on the 'end'result, not the interim of the research, ranking alternatives, decision making, and the like that may increase stress and lead to procrastination.

Focus on your vision. Motivation is what changes behavior, not knowledge. "Focus on your vision,"says Laura Mattia, the founder of the Womens Money Empowerment Network. "Put a picture of the house you want to buy on your computer or whatever it is that will motivate you and just keep working towards that goal. It may sound corny but it works like magic."

Be mindful."Realizing that ones subjective discomfort in the face of financial matters is simply a bias or an automatic association, and not an indication that one is unequipped to handle the decision itself, may encourage people to take action,"Park says.

How does it make you feel? Anyone that has tried to influence behavior knows that it is emotion that changes behavior, not intellect, says Mattia. "Investors should reframe their decisions in terms of howthey will make them feel in the long-run and how it will influence their lifestyle and their lives,"she says.

Lytton also says focusing on your feelings can help you make better financial decisions. Ask yourself: 'How will you feel'if, at 18, there are no savings to help your child attend college? How would you feel if there is money? What can you visualize?

"If the questions are phrased in a way to help (you) truly think and identify that emotion and the experience, that may be much more motivating than the daily coffee I have to give up now,"Lytton says. "We tend not be long-term thinkers, born out by lots of research, but if we can link the feelings of the future with the decision to be made today, it may be more motivational than the pain of immediate loss."

This should not be interpreted as manipulative or "guilt-inducing," she says. Rather, it's fundamentally about how to do we help people make decisions in their best interest. "We want to contextualize the decision, which makes it less scary and more urgent to deal with,"Lytton says.

Think values."I dont start with goals," says Mattia. "I like to talk about values. When you start with your life purpose, your values and your vision for your life, it opens up possibilities that may not have existed if you go directly to goals. It is motivational and inspiring."

MORE POWELL:

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Powell is editor of Retirement Weekly, contributes regularly to USA TODAY, The Wall Street Journal, TheStreet and MarketWatch. Got questions about money? Email Bob at rpowell@allthingsretirement.com.

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Powell: 5 ways to make financial decisions easier - USA TODAY