I so often meet people who know they won’t have enough money in retirement, who DO have plenty of time to DO something about it, and they still will not go there. What are their reasons?
A service provider of mine and her partner are in their 40’s and rent their home. They attempted to buy a home a year or so ago.
Their first offer was not accepted. They were ready to give up. After encouragement they put in a lower offer that was accepted. Then when they went to finalize things with the lender, the lender insisted they take out income protection insurance and gave them a quote.
The quote was perceived by them to be way too expensive (the insuree had a chronic health condition which may have contributed to this.) They argued about this. She really wanted the house. He really did not want to pay for the income protection insurance. Then they gave up. It all fell apart and now they’ve settled back into renting.
Here are some of the reasons for this:
Lack of education. They had so many other options and did not realise it! They could have gone to loads of different lenders, some of whom would not have insisted on that particular insurance. They could have gone to loads of different insurers to get comparative quotes. They did not “get” that they had a VERY GOOD deal on their hands, that was excellent buying in a temporarily deflated property cycle. They did not “get” that with property you make your money when you buy.
Inability to ask quality questions. When something stopped them, they had no idea what to do. They just took what they were told at face value and didn’t even THINK to question it. They didn’t know that the very first question should always be “Is that true?”. And given the answer to that should always be “maybe not”, then a whole lot of verification questions need to be asked, of the initial source of the blocking statement, and then many other alternate sources.
Lack of resilience. They got super-stressed super fast and took the second option of the fight or flight response. They fled. They fled back to the safety of their previous living arrangements, where they have stayed ever since.
And now they have constructed the belief that they can’t buy a home.
Why did they reach their stress limits so fast? Partly because of the first two points. They felt powerless and trapped. They didn’t even know what they didn’t know, so didn’t know who to ask what. The other reason is that this was their first attempt at getting off the comfy couch and doing something about their financial situation.
They weren’t seasoned to the whole world of negotiating, accessing financial services, crunching the numbers, and naively expected to win on the first go. When they didn’t win they figured it was all over. They didn’t know that these things take several goes, and we learn something from each attempt that upskills us for the next attempt. They didn’t know that this is normal.
I believe this is an example of the main reasons people keep their heads firmly planted in the sand regarding their personal finances. They hope that one day it will all sort itself out, while at the same time knowing that it doesn’t work like this. They are choosing not to get out of their comfort zone and do the groundwork. They need to get educated, develop the art of asking questions, and nurture a healthy resilience. They need to be brave enough to move from being unconsciously incompetent to consciously incompetent. For only then can they do something about it.
If you are reading this, and know that this describes you – then the very first step to take – if you decide to be brave and pull your head out of the sand is to get educated.
Grab some books about what you need to know. Find people who know what you need to know and pick their brains.
Check out our Financial Power Platform program. The first month is a free trial – so there’s no cost for the first lesson, and if you want to learn more, then you can opt to do so.
No-one else can pull your head out of the sand. You have to do it yourself. Things won’t stay the same while your head is down there. So why not *pop* and look around, and move in the direction of financial savviness, rather than waiting for it to magically come to you!
