A number of years ago I was sitting with one of my mentors for lunch. We were having a good conversation about a number of things. In the pride of my youth, I thought I was doing pretty well at that point. Yet, the words he spoke to me that day still ring true in my mind today. “John, you have a lot of knowledge, but in spite of all your knowledge, you still make foolish decisions.” I was sort of upset by this comment, and told him that I really did feel good about my life at that point. What he said next is the part I really remember -“That reply reveals that there is still more foolishness in you than what there is wisdom. Take the knowledge that you have and apply it in a wise way. That’s the true definition of wisdom.”
That conversation changed the way I approach decision making. You see, making a good decision is different from making the best and most impactful decision.
A good decision devoid of wisdom is a decision that doesn’t always allow you to accomplish what is most important to you.
When it comes to financial matters, I hear people say things like – “I have researched it – and I know the best investment to choose – this one has the highest rate of return.” Or “The ten-year track record is phenomenal.” This person has acquired knowledge, sometimes very impressive knowledge. Yet when we talk about the reasoning behind this decision or consider the potential pitfalls of this decision. When discussing the ways we have seen this type of decision play out in the past, it's clear that the possible outcomes are different than what the individual expected because of the application of their knowledge.
Think of the decisions you make regarding your daily cash flow – how much do you spend, why do you spend on those things, how much should you give to charities, how much are you setting aside for retirement, college funding, or even to make a large purchase. Making these financial decisions by knowledge alone without the wrapper of wisdom, destines you to make mistakes and not position yourself for success. To accomplish your big life goals, it’s not just about knowledge, and about what you have read and experienced. The big question is – are you wisely making decisions to accomplish your goals?
Wisdom comes from many different areas: life experience, having a teachable spirit when talking to wise counselors, from knowing what’s important to you and why. Wisdom is always based on your values.
When it comes time to set your financial resources and make financial decisions, you need to walk though those areas wisely. With wisdom, it’s important that you understand what you know, what you don’t know, and how the application of your decisions could turn out in your favor – or not.
You need to think about your decisions, not as good, bad, right, or wrong. But what is the wisest decision to help you live out the life you most desire. True Wealth Value #4 – Wisely set your financial resources.