Behavioural Finance

How can we not talk about behavioural finance when a designer rambles about personal finance 😅

Secret of human success in just three words, is a twitter contest: healthy, wealthy and happy are the words that topped the charts. We measure these by total wealth, six packs, body fat, body mass and more.

As a cognitive scientist, I am more interested in the inputs and the processing engine that spits the output. My job is to control and predict as a researcher. So i am constantly excited about things I can control. I am not so excited about things out of my control (you must be wondering, what a control freak 🤷🏽‍♀️). Now you understand why outputs don’t excite me as much as inputs. Finance as a domain is no different.

Knowing what can be controlled and what cannot is a huge plus. There are some hard wired aspects of the human brain that will not allow you to excel financially and that is key to know. We are irrational beings.

It hard to be calm and cool when your portfolio tanks. Loss aversion is hard on us. We can’t think straight about good bets. We constantly worry about losing. Every time we loose, our brains are hard wired against loss because it threatens our survival. To overcome this hard wiring in the brain is hard. So we end up making bad decisions when we are in crisis. Mind and money are connected. The more awareness you have about the behavioural finance concepts you will not be so perturbed by your irrationality. That is what we will explore for the next seven days.

This part is all about mistakes to avoid which will hamper your financial independence. Exciting isn’t it? I am recovering from these mistakes which I made before I understood deeply about mind and money. Now I am calm and better than before. That is the secret sauce i want to share with you. Finance is not all about money. It is also about your behaviours and discipline.

🥂to mind and money!