“Yes we can.” “The change we need.” “Too liberal.” “Spread the wealth.” “Lower taxes.” “Drill, baby, drill.” All of these were “sound bites” from the 2008 elections. People make very important decisions, decisions that should require cognitive research and careful deliberations, (like choosing a President) based on easily recalled “sound bites” such as these. Have we become a nation too busy to take the necessary time to make our life changing decisions? Do we make our financial decisions the same way – based on “sound bites”?
All of these financial “sound bites” may be excellent advice in specific situations. But, do we try to apply these money rules without considering the entire situation? Are we too busy to get all of the facts?
Using financial sound bites to influence our financial decisions is a two-edge sword: one, you use the sound bite when it is not applicable to your situation; and, two, you reject good advice, because it is inconsistent with a sound bite. Remember, almost every sound bite is a reminder of good advice in certain circumstances. How do you know if the circumstances are right? There is never a substitute for research, knowledge, and experience. All of these take time.
In financial decisions there can be no substitute for reviewing all of your facts and goals, and then applying various “what if” scenarios to see what is best for you. You can use a “what if” scenario based on a sound bite to evaluate how it would work for your circumstances. Using established methods and proven financial practices, offer the best chance of making the right decisions.
PlanLab® is a collection of financial tools designed to assist in determining how various options will work in specific circumstances. Knowing that the purpose of any financial analysis is to help someone make a financial decision, all of the PlanLab tools use principles from Neil Rackham’s SPIN® Selling.
A brief and simplified explanation of SPIN is that people make major decisions based on getting answers to four types of questions: (1) What is the Situation? (2) What is the Problem of this situation? (3) What is the Implication of the problem? And, (4) what is the Need-payoff for this implication? If a person has the answers to these questions, then the decision is simple: does the cost of the solution have more benefits than the costs of doing nothing? People tend to make the right decisions, when given all of the facts in this manner.
PlanLab provides these decision-making facts. The modeling of monthly cash flow for each “what if” scenario, provides answers for every situation. Users of PlanLab often comment that they are surprised at the various outcomes – for some situations the outcomes do not follow the “sound bites.”
SPIN® is a registered trademark of Huthwaite, Inc. European SPIN® trademarks are held by Huthwaite, Ltd. SPIN® Selling, by Neil Rackham, published by McGraw-Hill, Inc., New York, NY.