Building Feedback Loops for Return on Life
Are you tracking your Return on Life (ROL) as closely as your steps or social media likes?
When it comes to our lives, work, and finances, data surrounds us. Finding out how many likes our latest social media posts received is easy. We recognize how our blood pressure reacts to a workout and how many steps we’ve taken during the day. We realize how our work performance affects our income. While it’s easy to track market movements minute-by-minute, doing so can unnecessarily raise stress levels. We recommend focusing on long-term trends instead. But what about our most important metric: our ROL, which measures how well we are living in alignment with our goals and values?
But how often do we stop to think about how this data cycles back and affects our behaviors – positively or negatively? More importantly, how frequently do we use that data to make adjustments to improve our ROL, which measures how well we align our use of capital (Time, Energy, Attention, and money – our TEAM) with our goals and values?
This ongoing cycle of input, output, and influence is called a feedback loop. Here’s how we can master the two types of feedback loops to make better decisions and build better habits.
Positive Feedback Loops: Reinforcing What Does – and Doesn’t – Work
A positive feedback loop provides reinforcement or affirmation of an existing behavior. For example, carrying a reusable water bottle helps you stay hydrated, avoid unhealthy drinks, and reduce plastic waste.
Despite the name, positive feedback loops can reinforce positive and negative behaviors. If you’re an older employee, you might find you have trouble relating to and working with the new crop of Gen Z employees. As a result, you may avoid interacting with them during lunch breaks or volunteering to work with them on team projects. This keeps you apart from your younger colleagues, which you might perceive as a positive outcome. But all you’re doing is reinforcing your discomfort. This could also hamper your work performance and limit your chances of moving up in the company.
If a particular habit or behavior serves you well, think about ways you can further grease the wheels of that feedback loop and keep the data trending in a positive direction. Try exercising one more day every week to boost your energy and endurance. That can lead to more exercise and better health. Increasing your monthly contributions to your savings and investments by just 5% can help your wealth compound and grow even more. This creates a positive financial feedback loop.
Negative Feedback Loops: Restore Balance That You’ve Lost
And if a habit destabilizes part of your life? Stop reinforcing that habit and look for ways to achieve balance.
That’s where negative feedback loops come in. Instead of perpetuating and strengthening a behavior, these loops stop behaviors that could throw a system out of whack. A simple example: when you’re hot, your body sweats. The sweat cools you off and helps to prevent overheating.
So, where could you use a little more balance in your life? If a sudden rush of negative customer service reviews is threatening your business’s bottom line, listen to that feedback and train your employees on new protocols that will turn critics into superfans.
If work is encroaching on family time, set hard boundaries on your daily calendar. These boundaries will remind you to protect your personal time and prioritize balance. You’ll stop scheduling an extra weekly meeting that stretches into dinner time and learn to leave your work computer off during family movie night.
And if you need help curbing your spending, boosting your investment contributions, and preparing financially for major life transitions, we can help.
Schedule a call so we can start work on – or update – your life plan. We’ll help you develop a comprehensive plan to help keep your life and your money in sync. We strive to help you live your most fulfilling life – a life you’ve worked hard for.
This Week’s Favorite Reads
This week’s favorite reads include articles discussing the following topics: the best age to start claiming Social Security benefits, cybersecurity and staying safe online, the benefits of opening a Roth IRA regardless of age, adjusting and finding balance amidst life’s daily challenges, and steps to help you get started with your estate plan.
Here are the links to this week’s articles as well as a brief description of each and why you should check it out:
1. When is the best age to take Social Security?
Social Security benefits often represent a key component of retirement income. While you can claim your benefits as early as age 62, you can also wait up to age 70 to start claiming benefits. What is the best age to start claiming benefits? It depends. Personal factors, including your health, financial situation, and marital status are all part of the equation. Claiming at age 62 provides immediate benefits. It also results in permanently reduced monthly payments. Waiting until the full retirement age – 67 for those born in 1960 or later – allows for full benefits, and delaying until age 70 offers an 8% annual increase from 67 to 70, significantly boosting the payout.
We generally recommend waiting, if possible, as research suggests most retirees claim too early and lose out on potential income. However, early claiming may make sense for those with immediate financial needs or shorter life expectancy. If you’re married, don’t forget to consider your spouse when deciding when to start claiming benefits, too.
2. How Safe Am I Online?—and Other Questions Readers Asked About Cybersecurity.
Hardly a day goes by without some kind of attempted scam landing in most of our inboxes. Hopefully, you have a good spam filter. If you do, these emails may go directly to your junk folder. When it comes to cybersecurity it helps to be proactive. The article answers common cybersecurity questions from readers, focusing on practical steps to protect against online threats. It addresses risks such as stolen passwords, public Wi-Fi dangers, and the effectiveness of tools like VPNs and password managers. You will also find reminders about the importance of updating operating systems, enabling firewalls, and using two-factor authentication. While built-in security features may be adequate, the article suggests additional third-party antivirus software and identity-monitoring services can offer extra protection in today’s increasingly risky digital landscape.
3. Why Opening a Roth I.R.A. May Be a Good Move, No Matter Your Age.
It’s rarely too late to open a Roth IRA. While Roth IRAs are traditionally recommended for younger investors, older workers can benefit, too. Apprise regularly helps both retirees and those getting close to retirement with Roth conversions. Why? Roth IRAs offer tax-free growth and withdrawals, making them ideal for covering future expenses, such as healthcare or long-term care, without pushing individuals into higher tax brackets. The current low tax rate system is set to expire after 2025. As a result, converting existing retirement funds into Roth accounts can provide long-term tax savings and estate-planning benefits. (See this blog for more.) While Roth conversions come with considerations like income limits and potential Medicare premium increases, they can provide long-term financial flexibility when done gradually.
4. Unhinged.
Holding it together in structured environments can cause us to “fall apart” at home, where we feel safe. “Restraint collapse” refers to the emotional outbursts children (and adults) experience after maintaining self-control all day, such as at school or work. Supporting this transition requires patience, offering space to decompress, and intentional connection. It’s important to validate emotions, establish routines, and model self-care to help navigate these moments of stress. Over time, with empathy and understanding, families can adjust and find balance amidst life’s daily challenges.
5. How to Tackle Estate-Planning Basics in 7 Steps.
Many individuals, including some clients, put off working on their estate plans. It’s easy to understand why. While we know we’re going to die someday, many of us prefer not to think about it. Working on our estate plan means we must confront the discomfort we have with our mortality. Estate planning also doesn’t seem urgent, which makes it easy to delay. However, while estate planning might seem daunting, you may have already begun without realizing it by designating beneficiaries or choosing a guardian for your children. Apprise asks clients to name beneficiaries for all managed accounts. We also ask clients to review them annually. The estate-planning process involves seven key steps:
- Find a qualified attorney.
- Take stock of assets and liabilities.
- Identify key individuals.
- Prepare essential documents.
- Safeguard and share these documents.
- Address personal preferences.
- Keep the plan updated.
Following these steps can help you ensure that your wishes are carried out and your loved ones are protected. Read the article for more information about each of the above steps.
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For firm disclosures, see here: https://apprisewealth.com/disclosures/
Phil Weiss founded Apprise Wealth Management. He started his financial services career in 1987 working as a tax professional for Deloitte & Touche. For the past 25+ years, he has worked extensively in the areas of financial planning and investment management. Phil is both a CFA charterholder and a CPA.
Located just north of Baltimore, Apprise works with clients face-to-face locally and can also work virtually regardless of location.
