Nurturing Your Realism Mindset

Last year, we introduced the WealthConfidence Scorecard to highlight the eight key mindsets that enhance wealth confidence: gratitude, open-mindedness, cooperation, respectfulness, abundance mentality, connectedness, optimism, and realism. Wealth confidence is not static—it naturally fluctuates based on personal circumstances and broader economic conditions.

Given today’s uncertainties, you may find your confidence shifting. That’s why it’s more important than ever to cultivate these mindsets, to help you make informed financial decisions and stay on track toward the future you envision for yourself and your family.

The mindset to nurture today is realism.

Re·al·ism (noun) the attitude or practice of accepting a situation as it is and being prepared to deal with it accordingly.

Sometimes, accepting a situation is easy – like the weather. You may not like it when it rains for days, but there is obviously nothing you can do to change the weather. You can either accept it and adjust your actions accordingly or reject it and feel even more miserable. But at other times, acceptance might be your second choice. Your first response to a situation could be to exert your influence over a person, place, or thing to align them with your expectations. It is only when that doesn’t work that you accept the situation. This can waste much of your energy and damage your wealth confidence.

It has been said that expectations are the yardstick of disappointments, and this is especially true of unrealistic expectations. If your wealth confidence depends on winning the lottery or making a 15% rate of return on your money every year, you will be disappointed because these expectations are unrealistic.

A version of the serenity prayer written in 1932 by American theologian Reinhold Niebuhr says, “God, grant us the serenity to accept the things we cannot change, the courage to change the things we can, and the wisdom to know the difference.”

While there are many things about the financial world you cannot control, there are plenty you can. You can invest your money in a low-cost, globally diversified portfolio to help capture market returns instead of gambling with your savings through market timing or concentrated investing. You can develop the discipline of saving regularly and avoid high-interest rate credit card debt. You can avoid conspicuous consumption and instead allow compound interest to help magnify your savings so you can pursue your ultimate goal to stop working if you so desire.

If you are more realistic about your income expectations, investment returns, living expenses, how long you plan to work, etc., your expected future results in your financial plan will be more accurate, and your likelihood of successfully pursuing them may increase. You’ll be able to make decisions and feel confident about the effect they will have on your future, increasing your wealth confidence.

If you’d like to learn more about your mindset and discover the eight money mindsets that can help you stop worrying about your wealth and start living, download the WealthConfidence Scorecard here.

This is intended for informational purposes only. You should not assume that any discussion or information contained in this document serves as the receipt of, or as a substitute for, personalized investment advice from Savant. Please consult your investment professional regarding your unique situation.