What If I’m Wrong

If you’ve ever watched Steve Jobs 2005 Stanford Commencement Speech, you will likely remember the poignant description of his morning ritual in front of the mirror. Every morning he asked himself: “If today were the last day of my life, would I want to do what I am about to do today?” (If you haven’t watched this speech, look for it on YouTube. It is 15 minutes well spent.) What a way to start a day!

I ask myself a question in front of the mirror every morning, as well. It doesn’t have the power that Steve Jobs question has, but it is a powerful question nonetheless. Each morning I ask myself: “What if I’m wrong?” It is a reminder to test my assumptions on a daily basis and it can have tremendous power when dealing with financial matters.

What If You’re Wrong?

We all make assumptions when making financial decisions. It’s impossible not to do so. We make assumptions about the potential outcomes of the decisions. We make assumptions about what is important to us now and in the future, how we will feel about a decision and what will make us most happy. These are assumptions about what the future will be and can’t be anything other than assumptions and guesses.

So, what if you’re assumptions are wrong? You are about to make a decision based partly on those assumptions. Have you questioned their validity? Do you recognize that you’re making these assumptions or do you simply accept them as truth?

What if you’re wrong?

Who Knows?

The future is uncertain. How a decision will turn out is impossible to predict. Our assumptions are all we really have. And the “what if I’m wrong” question cannot change that. Who knows what the future holds?

That’s not the point of the question. The point is to take a moment before making a decision and consider the assumptions you are making and be fully aware of them. You might notice that you are assuming something based on a belief learned a long time ago that you no longer hold. You may realize that you are making an assumption based on somebody else’s beliefs, not your own.

This awareness will help you make a better, more informed financial decision.

An Example…The House Purchase

An example will help illustrate my point. Some time ago, I was asked by a young couple how much house they could afford to buy. This couple was recently married, had a child, had a comfortable and stable income and wanted to buy a house. They wanted to buy the most house they could afford without major strain on their finances.

I asked them to consider the “What if I’m wrong” question before I would answer their question. I asked them to answer why they wanted to own a house. What were the assumptions they were making about home ownership?

They considered what if they were wrong about owning a house. They quickly struck on several assumptions they were making…and one really big assumption that needed to be explored.

They realized they had never considered if they really wanted to own a home or not. They simply assumed it was the next item on the checklist. Married…check. Stable income…check. Healthy kids…check. Own a house…next.

This blew them away. They had never considered why they wanted to own a house. They asked themselves “What if I’m wrong? What if I don’t want a house?” And they began to answer the question and really take on their assumptions.

They Bought a House

They did end up buying a house and are very happy having done so. They arrived at that decision intentionally; not because it was simply the next item on the unconscious checklist they were both carrying.

He loved working on and around houses and realized he would get great joy by fixing up an older home. She wanted a place that was intimately hers where she could invite friends over and feel proud. They wanted to own a home.

And they knew why they wanted to own a home and had realized they had been wrong about why they wanted a home before. Buying a home because it was on the checklist was not a reason for them to base the purchasing decision on.

Answer the Question

“What If I’m Wrong” is so simple, but it carries tremendous power. Testing your assumptions and being aware of what beliefs are going into your financial decisions will help you make good financial decisions.

The next time you are making a financial decisions ask yourself “What If I’m Wrong?” You might be surprised.

FPA member Nathan Gehring, CFP®, provides financial planning services at KeatsConnelly, the largest cross-border wealth management firm in North America that specializes in helping Canadians and Americans realize their dream of a cross-border lifestyle.