FREE NEWSLETTER
I PASSED ON MANY activities when I was younger because I didn’t think I could do them. I simply didn’t have a great deal of self-confidence. It was only after I had some accomplishments to my name that my attitude changed and I became bolder in my efforts.
Along the way, a saying I came across helped me overcome my lack of self-confidence. It’s attributed to Henry Ford, the father of the first broadly affordable mass-produced American automobile, the Model T: “Whether you believe you can do a thing or not, you are right.”
Look at the logic of this statement. He doesn’t mention your skills, abilities, gender, height or parents’ wealth. Ford considered your attitude—your willingness to try—as the most important contributor to success.
Think of phrases we frequently use. “I can’t do that.” “That’s too hard.” “We can’t afford that.” As soon as we say such things, we stop trying, and once we stop trying, success is no longer possible.
One way around negative thinking is to be open to possibilities. Instead of “we can’t afford that,” we might turn it around and say, “How can we afford that?” See how our thinking changes from closed-minded thoughts to possibilities? It’s magical.
During my time working in training and development, I learned about a tool that also helped me achieve my objectives: a job aid. It provides clear instructions on how to complete a task. A job aid helps me work in an organized, logical manner.
A common example of a job aid is a pilot’s checklist. No matter how many times a pilot has flown, he or she must follow the checklist to be sure all the requirements are in place for a safe flight. Many pilots could complete the steps from memory, but they’re required to use the checklist.
For years, I was afraid to buy stocks because I worried about buying the right companies. I studied all the aspects of analyzing a company and its stock, and yet I knew there were many ways I could get tripped up. Where would I gather the necessary information to help me make a decision? How reliable is this information? How much will it cost me to secure the information?
All these questions led me to do nothing. I didn’t have a checklist for individual stocks that worked for me. My solution: Buy stocks through an index fund. There was no need for me to decide whether or not to buy a particular stock. Someone had done that work for me—the members of Standard & Poor’s selection committee. They must think these 500 stocks are worth owning. That worked for me.
Owning 500 different companies also reduced my fear of making a bad decision. The way I saw it, the value of 500 companies can go down, but the probability of all 500 going out of business is infinitesimally small.
I’ve always been a saver, and felt comfortable putting money into a savings account or certificate of deposit. Buying shares of an index fund feels as easy to me as putting money into a savings account. You send money to your bank or you send it to Vanguard Group. Either feels the same to me.
Overcoming my financial fears was important to my well-being. Using job aids and the power of positive thinking helped me to move forward. They may help you as well.
Fun fact: Henry Ford is credited with successfully marketing a car powered by an internal combustion engine. Elon Musk is credited with successfully marketing a vehicle powered by an electric motor. Do you know what Henry Ford’s wife drove? A car called the Detroit Electric manufactured by the Anderson Electric Car Company. What goes around comes around.
Yes as a pilot I can tell you that checklists are very important for safety. On start up I use a paper check list. EVERYTIME. When things get busy upon landing I would use a mnemonic. Before landing I would say, G.U.M.P.S. Gas, on the fullest tank. Undercarriage, down and locked. Mixture, full rich. Props & Pumps, prop full in / gas pump on. Safety, seat belt on and pump brakes for pressure.
David,
That’s also my very favorite quote. It totally describes my approach to tackling the unknown although I’ve run across folks who totally scratched their heads “not getting it”.
I had self-confidence issues as well. Always knew I wanted to be self-employed but it took until I was age 49 to give up the security of a steady paycheck. For me it wasn’t a checklist, though that’s certainly a good tool, it was that I had a backup plan. If my plan didn’t work out I could fall back on my commercial driver’s license for income. I actually did end up driving an 18 wheeler, part time, for several years until my tax prep business reached what I called critical mass.
Nailed it, David!
The checklist approach when dealing with financial uncertainty is great – but the designer of this job aid / checklist should have lots of experience with the topic, lest an important step (or two) be bypassed or overlooked in error.
How many of us have purchased an item online that required assembly, only to discover that the enclosed directions had skipped a step or left out some important warning on what NOT to do? Collaborating with a small circle of experienced peers during the design phase of any checklist / job aid helps to mitigate the chance of a “stealth” step being overlooked. In matters involving finance, this type of collaboration is even more crucial. This “crowd-source” approach is where both Humble Dollar and the Bogleheads website can prove to be extremely helpful.
Buying the S&P 500 has been compared with buying a kitchen table with 500 legs. A few dozen of the legs may well fail, but the table itself still remains intact.