Avoid Distractions to Improve Your Financial Decisions

Have you ever actually noticed when you are not fully present? This is hard to do. Maybe you are driving and realize you haven’t actually paid attention to your route for a while. Or you are on a call while simultaneously watching a video, petting your dog, and brushing your teeth? Are you a multitasker? If so, you are letting distractions dictate your decisions.

Imagine you are driving down the road and you see a hubcap rolling the opposite direction. Or you’re taking an exam and you have to choose from some potential solutions that have complex looking formulas that all look right. Or a magician who tells stories and moves his hands brilliantly to keep us focused on all the wrong things. Or we listen to music while studying.

Distractions are competition for your attention.

The best decisions are always made when distractors are limited and you exclusively focus on the choice at hand.

Now I know I know some of you will argue about this, saying “No I am different. I don’t get impeded by having multiple things going on at any one time. I am a good multi-tasker”.

Well, that’s not what science tells us. Universally, nearly all experiments incorporating some form of distractors (while driving, reading, or walking for example) have negative consequences on our outcomes. Distractors include anything that takes your focus and attention away from what you should be doing. Distractions come in many forms: mental (things we are thinking about), visual (things we see), audible (verbal cues we hear), and physical (things we can see and touch) are just a few distractions which can impair our awareness and mindfulness. They all have negative consequences for decision-making. In study after study, functional magnetic resonance imaging (fMRI) scans of brains show us that distractors alter connections between neurons and cause different parts of the brain to light up, compared to when you are singularly focused on something. These interneurons literally change pathways when they are met with resistance in the form of a distraction. This also happens in real-life decisions.

So what does that mean for us as decision-makers? Especially for money and financial decisions? When buying a car or deciding on a mortgage loan, we have to be fully present and focused on that task. Don’t let the environment, the fancy dealership, the smells of new car scent, or the sales tactics distract you from the substance or reason you are there. Focus on the process, the numbers, your goals, and expected results.

I use a 5-step process to avoid being distracted at key times. Maybe these can help you too.

1. Don’t go buying, negotiating, or investing when you are tired, anxious, or noticeably distracted by something else that you have going on. If you are mad at your spouse’ it’s not a good time to go shopping.

2. When you are in that moment, calm yourself and make your mind concentrate on the singular task. Just like an airline pilot runs through a pre-flight routine, you can also benefit from focus in the present.

3. Take 2-3 very deep breaths. Make sure to breathe in for at least 5 seconds and exhale the same or longer. Take a few deep breaths before and during intense discussions and negotiations when you have to make a choice.

4. Make yourself repeat and confirm all the details. Ask yourself, do I really understand these terms? Do I know what this means for me tomorrow, next month? Can I live with that, comfortably?

5. Focus on aligning your heart and mind. Cognitive dissonance is one example of when we are out of alignment. It’s when we have second thoughts or remorse following a purchase or decision. Maybe you are fretting if you can afford it, or if you really needed it. Maybe you went with a cheaper option but really wanted something entirely different. Your brain is telling you one thing, while your heart says another. Heartache is when we are unsure if the path we chose is correct, maybe because we had to give something up or we had to choose when we aren’t ready.

Make sure that you are in congruence between what your brain is thinking, and your heart desires. Breathe and contemplate choices. Concentrate and focus. This way, we all can achieve the results we want.

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