Error is a concept that doctors are particularly sensitive to in our daily work. We do important, sometimes dangerous tasks with moral and legal accountability that many other professionals don't face. Errors come in two primary colorsâ€”commission and omissionâ€”both in medicine and in personal finance.
A Series of Missteps
Commission is the more obvious of the two. First, it takes a positive effort; second, the results of our actions are more readily attributable to the causes. We usually get to see what happens after we act. Examples in medicine are obvious and often too painful to digress into, making up the majority of malpractice actions.
Financial errors of commission are also usually visible and, in their own way, painful. The foolish investment comes to mind first, followed by the other foolish investment that shows us we didnâ€™t learn anything from the first one. The main lessons from these fiascos are do your homework, donâ€™t let greed prevent you from doing your homework, and if you have done your homework and still screw up, cut yourself some slack, because no one, not even Warren Buffett, always picks a winner.
The tougher of the error twins is that of omission. In finance, just as in medicine, it's what you didn't think of or didn't do that can rise up to bite you, sometimes even if you don't realize it. Amazingly, many doctors still have not met with a financial advisor to draw up a financial plan, or worse, have not done the rudiments of a plan like writing a will with a lawyer and buying insurance from a qualified agent. And, of course, for both types of errors the ultimate culprit is acting on feelings rather than thinking things through.
That's the tough part; getting past denial, fear, and discomfort to deal with what you know that you have to deal with. No excuses; no rationalizations; no pleading busy, ignorance, or poverty. The old saying, â€œToo soon old, too late smart,â€ would seem to apply.
The Guilty Ones
We're all guilty, every one of us. Even as I write this article, I am flashing back on my own checkered history of "maturity avoidance," you might call it. But, the good news is that once you begin the process of planning proactively and getting important financial plans accomplished, you will have set in motion a series of positive feelings to carry you through and reflect back on.