The Dictionary Now Includes What???

I was in the car today and I heard a quick news story about some new words being added to the dictionary. “Brain cramp,” “bucket list,” “energy drink,” “life coach.” and “aha moment” were added to the dictionary, and the most talked about “new words” are “F-bomb,” “sexting,” and “man cave.” I have a feeling that if my high school English teacher weighed in with her opinion of these new words, her opinion would not be favorable.  She was not a fan of “can’t,” “wouldn’t,” and “should’ve.” She preferred that we write both words without the apostrophe rather than use the contraction.  She felt that we were getting lazy with our language and that traditional, established English had more than enough words to adequately express anything that you want to express.  Sometimes evolution/progress is good, sometimes…not so much.  That goes for our language as well as our financial lives!

One of the things that helped create the financial crisis that we are collectively digging out of (can you believe it’s been almost 5 years since Bear Stearns collapsed?) was a series of ever-increasingly-complex financial products.  People, institutions, and governments were buying financial products that were so complicated that even the people selling them didn’t always understand how they worked. When world events turned sour and markets started to fall quickly, some of these products made a bad situation worse. I won’t get into the public policy implications and the state of regulations of financial markets and products, but one thing was very clear; simplicity certainly wasn’t the order of the day prior to the market meltdown of 2008. In the financial services world, new words were being added to the product dictionary on a fairly regular basis. In retrospect, maybe that wasn’t such a great thing!

So, with all of the progress and innovation and change that is happening all around us how do we not get swept up in it during our own quest for progress and positive forward financial momentum? As new products and services emerge, how do we not fall behind?  There are a few things that each of us can do, and a lot of it is based on looking in the mirror.

  1. Ask one simple question. What are my goals? Every financial decision should start and finish with that question. It is without a doubt, the single most important question you can ever ask yourself. I ask it many times during the day to get myself focused on what I need to do next. When you understand your goals, you understand if something fits into them or not. For example, when my goal is to drop a couple pounds, I know reaching for a pint of Ben N Jerry’s isn’t going to help me get there, so I keep the spoon safely in the drawer.
  2. If you don’t understand something, ask as many questions as needed until you understand it. This is especially important if you’re buying some type of financial product. If you don’t understand it, don’t buy it! One of Warren Buffett’s rules is that he doesn’t invest in anything he doesn’t understand. I figure if it’s a good enough rule for one of the most successful investors of all time, it’s good enough for me! A lot of people say that they are too shy or embarrassed to ask too many questions, but I’d rather appear foolish for asking questions than feel foolish for investing in something that falls apart and losing hard-earned money.
  3. Engage your curiosity! I don’t mean books, necessarily. Google can be a wonderful tool. When I’m buying something, I use Google like crazy. Whether it’s a vacuum cleaner, a car, or an investment vehicle, I’ll go to Google and type in the product name and see what pops up. Then I’ll type in the product name with the words “reviews” and “complaints” and “scam.” So if I’m buying a “Thing,” I’ll Google “Thing,” “Thing reviews,” “Thing complaints,” and “Thing scam” and read what look to be relevant stories. It’s very informative. Do I talk myself out of buying stuff? Sure! But, that’s good for my budget, right? And, in reading what pops up on Google I inevitably accidentally learn a few thing.

I guess when you get down to the heart of the matter, I’m not all that different from my high school English teacher. While I will accept new words into my vocabulary and my daily life, there are a few time-tested human behaviors that are fundamental to decision making, especially when it comes to making decisions about how to invest your money. If we all walk away from the financial crisis with that kind of behavior, we’ll be OK no matter what words & financial products get invented in the future…

 

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