Nerd Alert! Behavioral Economics + Your Money

Money Management Doesn't Always Feel Good

We like to think we always make decisions based on logic and
reason, but it is important to realize emotions can sometimes get
in the way.
 
FACT: emotions have the ability to drive our decisions. 

Often what prompts your financial judgments is based on the
comfort, insecurities, or feelings within ourselves. Instincts
are powerful, and not always bad. However, if your instincts are
negatively affecting your future, it may be time to change your
plan.


The latest Nobel Peace Prize winner, Richard Thaler, would
emphasize there is a gap between rational economic decisions and
human psychology. The important takeaway from Thaler's findings,
is to make sure you do not fall in that gap.


**How Does understanding your behavior Impact Your
future? **


Sound investing is counter-intuitive to our emotions. Buying
stocks when they are low and selling them when they are high may
sound great, but it's one of the hardest things to do.


Up front, your financial planner is responsible for helping you
make a plan, but long-term, your planner should help you stick to
it. A solid financial plan won't always feel good, which is
exactly why a financial planner should be someone to coach you
through it.


It's time for you to challenge yourself. Be uncomfortable for a
moment. Ask yourself, "What financial decisions am I making, or
avoiding,  based on how it makes me feel?"


Coaching our clients is a role we embrace at More Than Money and
something you must demand of your financial planner. 
Listen to The Full Show:

Get the full story on the ways your emotions could be creeping
into your financial decision making. You may feel secure, but you
will be shocked by the examples we witness all the time (Listen
in at 5:52). The last thing we want is for you to fall victim to
your emotions' sneaky ways.


 
Key Quotes:

"Having sat down with hundreds of people, I have learned how
people make decisions. I hate to see people make emotional
decisions that have a painful impact on their future.">
"That's where my job really comes into play. It's not when you
are sitting in my air-conditioned office and you're telling me
how you theoretically want to be invested. It matters when you
are watching the TV telling you the market is going to
drop."
 > "I sit. I coach. We say hard things to each other.
Then, you know what? You get to a point where you reach your
dreams for the future."


 


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GREAT LINKs To LEARN MORE:

Richard Thaler books on Amazon

Richard Thaler Wins the Prize in Economic Sciences 2017