Artículos relacionados a Mind over Money: Why understanding your money behaviour...
Mind over Money: Why understanding your money behaviour will improve your financial freedom - Tapa blanda
Sinopsis
Master your mindset and make better financial decisions.
What drives our behaviour and attitude to money? All too often we ignore logic and make decisions around money that we know aren't entirely rational. That's because money isn't just about finances - it's deeply tied up with our emotions, our learned behaviours and our biases.
We are all different in the way we use money: some of us are savers, some spenders, some risk-takers or investors. Mind over Money will help you understand your money personality and how your thinking drives your money behaviour. It will teach you how to make better money decisions by acknowledging your own learned behaviours and working with your strengths to meet your financial goals.
Mind over Money is a life-changing book that will help you clarify what you want from life and your money so you can master your finances, improve your financial freedom and live the lifestyle you desire.
"Sinopsis" puede pertenecer a otra edición de este libro.
Acerca del autor
Evan Lucas is a leading economist and Head of Strategy at InvestSMART. He has loved markets since the days of sitting with his grandfather and mulling over his investment portfolios. An experienced media commentator and financial educator, Evan's biggest learning from his time working in markets, investing, and finance is that our individual behaviour towards money is always different and always changing.
Fragmento. © Reproducción autorizada. Todos los derechos reservados.
Chapter 1
To be human is to
bereasonable
To attain any kind of life in this universe of ours appears to be quite
an achievement. As humans we are doubly lucky, of course: we enjoy
not only the privilege of existence but also the singular ability to
appreciate it and even, in a multitude of ways, to make it better.
– Bill Bryson,A Short History of Nearly Everything
Ivividly remember sitting in a university lecture, wide-eyed and
completely overwhelmed by the things I was learning about physical
anthropology; you know, Homo erectus, Neanderthal man and of
course Homo sapiens – us.
The lecturer unveiled a human skull from a box, looked at us and
asked, ‘Is this a 10-year-old skull or a 10,000-year-old skull?’
No one responded.
‘It’s neither,’ he continued, ‘because it’s not a real skull: it’s just a
mould. But if it was real, you wouldn’t be able to tell just by looking at
it. We modern humans are basically identical to our Stone Age human
ancestors. Our brain size and physique are about the same.’
Think about that: your brain is the same as someone who
walked the Earth 35,000 years ago. It hasn’t changed in that time.
Scientists,anthropologists and historians largely agree that we were as
‘smart’ back then as we are now.
Think about the geniuses who have contributed to humanity over
centuries and millennia: Socrates, Aristotle, Pythagoras, Hypatia,
Galileo, da Vinci, Newton, Einstein, Hawking – the list is long. Then
think about the mind power needed to build structures like the
Pyramids of Giza, the Roman aqueducts and the Great Wall of China,
and the time in history they were built.
The human mind has been able to do a lot of what it does today for
thousands and thousands of years. But what is very clearly different
today is our lifestyle – our life stresses, our work, our wants, our needs
and our desires. Life was relatively straightforward for our ancient
relatives: find food and shelter, reproduce and escape peril. Simple. It
was a lifestyle of immediate return – find food, eat food; find shelter,
sleep; see big hairy beast, run.
The thing about living with immediate returns is that you don’t have
to think about the concept of time. Time just happens; day becomes
night and the seasons flow into each other without being questioned.
In today’s fast-moving, never-sleeping world, however, time is a
commodity. It’s something to be mined or put into intervals and sold –
think lawyers and their six-minute work units. Time is something we
don’t have enough of to do what we need (let alone want) to do.
That means making quick decisions, often very complex decisions,
almost every waking minute of every day. Research says we make as
many as 35,000 decisions daily. And plenty of them involve money.
Think about it. What money decisions did you make before you
even started work this morning? You might have considered questions
like this:
•Should I pack lunch for work to save money?
•Can I justify paying for a latte on the way to work when I have
an espresso machine at home?
•Should I pay for my train ticket with cash or card?
•Is the mortgage repayment due today? Do I have enough cash in
my account to cover it?
Then you might have gotten even further ahead of yourself:
•Do I need a new job?
•Have I planned for my future?
•Have I planned for my kids’ futures?
•Do I need to find more income?
•Do I want to go on a holiday soon?
•Should I think about buying a house?
The list goes on... 35,000 times every day.
It’s a mind-boggling array of decisions – and that’s before you’ve
even reached midday and started wondering if you should ditch your
homemade lunch after all and buy something more appealing from
the sushi joint downstairs.
The key point here is that each of these potential questions
is a delayed-return decision. The decision you make now has no
immediate return; that comes later (or so you hope) – like tomorrow
or next week or next year or even next decade, or somewhere even
further into the beyond.
This point is core to investing. Can you make a delayed-return
decision? Are you able to resist something now to get a greater reward
in the future? Can you embrace the concept that time has value, too?
We have to deal with rational and irrational decision-making
almost every second of the day. We can all crunch the numbers to
make rational decisions. I know if I’m taking a brown-bag lunch to
work, I’m probably going to save $10 and spare myself at least 10
minutes queueing at the sushi bar. So, it would be a rational decision
to skip the takeaway. But sometimes, that sandwich just seems a bit
meh by midday.
All too often we ignore logic and make a choice we know isn’t
entirely rational. That’s because money doesn’t just involve finances –
it’s deeply tied up with our emotions. And emotions are inherently
linked to one of the greatest psychological tools humans from ancient
times to now possess – choice.
Philosopher Alan Watts said we often experience anxiety about
decision-making. We wonder whether we thought the choice through
enough, if we considered all the data. The fact is, he says, we can
never take enough data into consideration – because data is infinite.
Choice, he said, is an ‘act of hesitation’ before we make a decision.
We always doubt whether we’re behaving the right way or doing the
right thing; we lack confidence. And, he said, ‘if you see you lack self-
confidence, you will make mistakes through sheer fumbling. If you do
have self-confidence, you may get carried away doing the entirely the
wrong thing.’
We will talk a lot about choice, decision-making, confidence and
doubt in this book: why we have these traits, how they interact and how
they are formed. They all affect our interactions with money. What
I find so interesting about Watts’ view on choice, though, is his sug-
gestion that we make choices that are not necessarily logical but rather
irrational, self-deprecating and sometimes against self-interest – yet
they are still the ‘right’ choices. This is where the very analytical, struc-
tured, rule-driven world of money clashes with human nature.
Economists like to think they are very rational beings. In the early
1830s political economist John Stuart Mill derived an anthropological
being called ‘Homo economicus’ – the economical man, sometimes
also called the ‘rational being’. This being has the ability to make infinite
rational decisions due to its perfect access to information, its complete
self-interest and consistency giving it maximum benefit from its choices.
That description alone should make you realise that the economical
man is a robot. Even in this day and age of mass technology, with
its algorithms, high-frequency trading, limitless information and
artificial intelligence, robots still make the wrong decisions. Why?
Because they’re programmed by humans. Homo economicus is a
unicorn – a mythical being.
Political scientist Herbert A Simon debunked the economical man
theory and went on to win a Nobel Prize in economics for his work on
bounded rationality. His paper suggested that human beings have a
limited capacity to process information, which makes them incapable
of being totally rational in their decisions.
We all know from our day-to-day lives that we don’t always make
rational decisions. Rather than being Homo economicus, we more
resemble what German political scientist Timm Beichelt coined
‘Homo emotionalis’.
Homo emotionalis has four traits: emotional, social, prone to
innate bias and prone to error. Really, it’s just another way behavioural-
ists like to simplify human nature, but it does invite us to consider
broader notions as to why we behave the way we do.
The biases, emotions, social cues and errors that lead to so-called
irrational behaviour are learned through experiences. They can be
positive for our social functioning but detrimental to rational decision-
making. Biases, emotions, social cues and errors are not just an issue
for today, but can see us making the same mistakes with money
throughout our lives.
The fact is, we are emotional beings, so the way we manage money
is driven by our emotions. Think about it: we feel elated when we
score a bargain; we feel ripped off if we buy something on the cheap
only to find it’s priced a few bucks less at another store; and we feel
despair when a letter from the tax man that we thought would be a
nice refund cheque turns out to be a notice to pay.
Bias, emotion and error are what make us human. Rather than
trying to argue that point, maybe we should be celebrating the fact
that we are all different, and that’s what makes us so unique and
wonderful? Our unique humanness explains why our behaviours can
be so diverse, even when we’re experiencing the same life situation as
another person. Money is something we all see differently.
This is something I have always pondered; it is why I wanted to
write this book. I have seen highly educated, rational people do the
most irrational and human things with money. I’ve often wondered,
how is it that someone making over $300,000 a year can have no
money at all? It’s most likely because they spend every cent on things
they don’t need – because they want to keep up certain appearances,
or because they have a complete disregard for money and believe it
will always be there. Because that’s how money has always been to
them – available, without a worry it won’t be.
This behaviour may seem completely irrational when presented
like this, but I have seen examples like this play out time and time
again. Because to them it’s ‘normal’; it’s what they have always done
with money.
Money is different for everyone. How you use it is unique to you.
What is money to you?
I want to pose a question for you to ponder as you read this book:
what does money mean to you?The emotional connection we have
with money is driven by a wide variety of factors, many of which
I’ll cover in later chapters. You must identify your unique view on
money, because this will influence every financial decision you
make. Becoming financially self-aware is key to your financial
wellbeing and freedom. No one understands your views on money
better than you.
So, are you the kind of person who looks at money with
indifference? Is it the stuff of nightmares? Is it just a tool to get you
from A to B? Is it something you crave? Or is it something that is
attached to your personal identity?
Everyone is different, and everyone behaves in unique ways when
it comes to their finances. The main takeaway for now is that emotions
have the potential to derail even the best-laid plans. Achieving
financial security and freedom means making decisions with your
head, not your heart – but this is something we rarely do.
It’s important to remember that ‘irrational’ is not the opposite
of ‘rational’ when it comes to money – far from it. As humans, we
arereasonable. The reason we react to social cues and form biases,
personal characteristics and traits is so that we can navigate life as best
we can in a timely and sociably reasonable manner.
And that is a core point to make. As Herbert A Simon said, we
are incapable of being totally rational. What is as close to rational as a
human can get? Reasonable.
Humans are reasonable because we understand the necessity of
trade-offs in decision-making. We can make difficult choices when
shock and hardship arises. We know that always making cold,
calculated, rational decisions is impossible and will lead us to give up
on what we are trying to do.
If we were financially rational all the time, it would probably
mean going against the very thing most of us are wanting to achieve:
financial choice.
Being reasonable means we can identify when rational decision-
making is necessary and when it’s not. That is what makes usus. We
can see when an instant return is the reasonable choice over a delayed
return, and vice versa.
The first step in making reasonable financial decisions is to
understand the factors that influence your decision-making. Getting
your head around this will make your relationship with money and
the choices you have that much better.
Reflection
•When did you last make areasonablemoney decision, rather
than choosing the mostrationaloption?
•What does money mean to you?
•Do you consider yourself skilled in delaying gratification
"Sobre este título" puede pertenecer a otra edición de este libro.
Resultados de la búsqueda para Mind over Money: Why understanding your money behaviour...
Imagen de archivo
Mind over Money: Why understanding your money behaviour will improve your financial freedom
Publicado por
Major Street Publishing, 2023
ISBN 10: 1922611484
ISBN 13: 9781922611482
Nuevo
paperback
Librería: Running Numbers, Grand Rapids, MI, Estados Unidos de America
Calificación del vendedor: 5 de 5 estrellas
paperback. Condición: New. Brand New Condition - Ships Fast! Nº de ref. del artículo: mon0000002716
Comprar nuevo
EUR 33,57
Envío por EUR 4,52
Se envía dentro de Estados Unidos de America
Se envía dentro de Estados Unidos de America
Cantidad disponible: 2 disponibles