Life Transitions- How Emotions Can Dismantle Our Ability to Make Good Decisions

By Cicily Maton, Retired Sr. Financial Planner

Cicily Maton has retired, however, Michelle Maton CFP®, EA, CeFT® Sr. Financial Planner and Andy Baxley CFP®, CIMA®, CeFT® Sr. Financial Planner carry on her legacy in the Chicago office.

life transitions

Most of us do not even think of “life events” as transitions. Unless, of course, it is one of the biggies, like death of a spouse or loved one or a divorce. In fact, there are numerous life events that trigger transitions, like selling your business, getting married, having a baby, buying a house, retiring, losing your job, and living through a pandemic.

If all of these life events are transitions, what is a transition? A transition is the end of your life as you once knew it – the ending. You know you are out of the transition when you have arrived at the “new normal.” That messy period from the ending to the new normal is known as the passage. The passage is filled with fear, chaos, uncertainty, confusion, hopelessness, fatigue but also hope, possibilities, energy, and resilience.

Just review the emotions that you have personally experienced since the start of Covid-19 pandemic. Or think back to a time when you experienced a major event in your own life. During transitions the emotions may fluctuate from distress to euphoria. And during that rollercoaster ride you are making decisions that will impact your future life, for good or not so good. There is research that suggests that we lose cognitive function during times of change and transitions. So, at a time when you need your brain to be at its best, you actually have less of your normal ability to make sound decisions.

If you have been on The Planning Center website you may have noticed a quote, “Every Decision is a Financial Decision.” Stop and think about that for a moment. Assume you are 18, just finishing high school and you decide to go to Dream University because your Dreamboat is going to Dream U. You have just made an emotional decision that has financial consequences not just now but will continue to have financial consequences for the rest of your life. I am not saying that those consequences will be bad, they may be very good. However, few of us stop to consider the unintended consequences of our decisions.

Let us take the case of Sally and Jim. They are a fairly traditional couple. They have been married 19 years and their children are off to college. They have been waiting for this date to get a divorce. For most of those 19 years Jim has worked hard, climbing the corporate ladder while Sally’s main responsibly has been maintaining the family home and tending to the demanding needs of their children. Both parents have done a great job and they want their divorce to go smoothly. But they run into trouble when faced with major financial decisions at a time of diminished mental capacity. In dividing the marital assets, Jim wants the company pension. The pension has an emotional label on it – “it’s mine, I worked hard to get it”. On the other side Sally wants the family home. The house has an emotional tie for her – “I decorated that house, I maintained that house, it has all our memories in it.”

The pension and the house may be of equal value, but they are not equal. While one can provide income, the other will require money to maintain. Of course, there are a number of other issues that are not presented here, but Jim and Sally will struggle to find a solution because of their emotional attachment. But we are not left without some helpful tools to arrive at better decisions.

Whatever phase of a transition you are in (anticipation, ending, passage or new normal) there are three questions you should consider:

  1. What do I need to protect? In other words, what do you hold so dear that you would not be you without it? It may be peace mind, it may be the summer cottage, it might be your relationships.
  2. What do I need to let go? Letting go is never easy, but it may be required after a life event. This question helps to identify any aspects of the old life that no longer fits into the new situation you are moving into.
  3. What do I need to create? Explore your hopes and dreams, map out what you would like the next stage of your life to look like. You may not know yet what that may be, but that is okay. This is an opportunity to build a life of your own choosing.

TPC has four planners who are Certified Financial Transitionist® CeFT®. They are trained to guide and collaborate with clients who are in any one of the phases of transition. All of the planners at TPC have been asking their clients how they are dealing with the problems, disruptions, anxieties, fears, isolations, and uncertainties of the pandemic. We have tools, worksheets, and exercises to assist you. Reach out to us, we are prepared to help.