Whether we might technically think of them as economic assumptions, financial assumptions or market assumptions, the fact that we assume anything about money matters without knowing anything about the facts is the cause of a lot of our money problems. Let's learn a new skill!
Financial Assumptions Are Common
A recent discussion I was involved in calls attention to an essential skill that is often little in evidence. The subject related to insurance coverage on a rental car. Assumptions were being made about the extent to which, and under what conditions, a person renting a car needed to provide for insurance.
It seemed that each individual had a different opinion as to the way rental car coverage is provided. They all had different ideas about it. They all had confidence that their opinion was fact.
The intriguing thing to me is how confident some individuals are about their financial assumptions, what they think they know, when they have no actual basis for their beliefs.
I will let you tell me why people think like this—to me it is a mystery. But I can tell you this. People are experiencing a lot of unpleasant surprises because of their habit of making assumptions about things they know nothing about, and a lot of their unpleasant experiences are financial.
The Nature of Financial Assumptions
As someone who has had the benefit of getting a good education, I have observed a strange phenomenon. In general the less people know the more they believe they do know; the more people do know the less they suppose they know.
If you really do know a thing or two you begin to realize that there is so much out there to learn that none of us knows more than a little about anything. As has been insightfully noted, “All of us are ignorant, just on different subjects.” (Gerald Mann)
So far we are talking about an attitude, but the necessary attitude of humility in this case is simply the prerequisite to learning an essential skill. It is the skill that we want to focus on for success, financially.
No Financial Assumptions, Just Facts
The skill we need for financial success is simply this, to learn how and to consistently check out the real costs of any action that might involve financial obligations,
- Don’t assume prices are the same from all providers.
- Don’t assume guarantees are provided with services.
- Don’t assume operating costs are equal with different equipment.
- Don’t assume. Don’t assume. Don’t assume.
In every situation develop a consistent practice of thinking about possible issues and then checking out the facts with valid sources. And don’t neglect those last two words, valid sources.
A friend, or even another insurance agent, would not be a valid source in our introductory situation, for example. If you expect the rental company or their insurance to pay for a rental vehicle's coverage, check the fine print. If you expect your personal automobile insurance to cover the rental vehicle check with your own insurance company.
NOTE:
In a case like this I would check with my personal insurance company before even considering driving off the lot in a rental car, even if I had recently done so. You never know when policies will change.
No More Financial Assumptions
Learn this skill for greater financial success. In every case, in every circumstance, learn to avoid financial assumptions, carefully determine the authoritative source for relevant information, and then take time to check it out. Practice doing this until it is a way of life.
