There comes a point in every important financial decision when looking back has done all it can do.

You've thought about what happened.

You've considered the experiences that shaped the way you think about money.

You've begun to understand your financial backstory.

Now comes the next question:

What do you do with what you've learned?

Understanding your financial backstory doesn't make the decision for you.

It gives you perspective.

And perspective can change the way you look at the decision sitting in front of you.

Mary had been thinking about her financial past.

Breed Holloway, her financial advisor, had encouraged her to look beyond the numbers and consider some of the experiences that had influenced the way she made financial decisions.

They had talked about what happened.

Now Mary had another question.

"So what am I supposed to do with all of this?"

Breed smiled.

"That's the right question."

Mary waited.

"Understanding where some of your thinking comes from doesn't mean your past gets to make today's decision," Breed said.

Mary thought about that.

"Then what does?"

"That's up to you."

She looked at him.

"Then what was the point of all this?"

Breed leaned back.

"Perspective."

"Perspective?"

"Yes. Knowing more about your financial history can help you look at the decision in front of you more clearly."

Mary was quiet for a moment.

"So I don't have to forget what happened."

"No."

"And I don't have to let it control what I do next."

"Exactly."

Your financial history matters.

Maybe you watched someone close to you lose everything.

Maybe you inherited money unexpectedly.

Maybe you experienced a layoff that changed the way you think about financial security.

Maybe an investment decision you made years ago worked out—or didn't.

Those experiences are part of your story.

But when you're making a financial decision today, the question isn't simply:

"What happened to me?"

It's also:

"Knowing what I know now, what decision am I actually trying to make?"

That question brings you back to the present.

And that's where financial decisions belong.

Before making an important financial decision, it may be worth asking yourself three questions:

What did my past teach me?

What perspective has that experience given me?

And finally:

Am I using that perspective to look at today's decision more clearly—or am I simply repeating an old reaction?

You don't need to erase your past.

You don't need someone to analyze it for you.

You simply need to recognize that your past is part of the information you bring to the decision.

Backstory can give you perspective.

Perspective can help you see the decision more clearly.

And the decision is still yours to make.

Mary thought she understood what Breed was saying.

Then she asked one more question.

"What if the decision I'm making today isn't really the decision I think I'm making?"

Breed smiled.

"Now you're asking the right question."

We'll start there next Wednesday.

Richard Sowa, Founder – Read The Money Mirror

FINANCIAL DECISIONS ARE NEVER JUST FINANCIAL.

Disclaimer: this newsletter is for educational purposes only and does not constitute investment, legal or tax advice. Always consult a qualified professional before making financial decisions.

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