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Tag: behavioral finance

By Erin @ Team Afford Anything

#263: How to Build Financial Resilience in 2020, with Dr. Brad Klontz, financial psychologist

Brad Klontz - Afford Anything PodcastDo you feel like you’ve spent the last few months on an emotional rollercoaster? Especially with your finances?

Many of us have experienced one — if not all — of the following situations since March:

  • Volatility in the stock market rattling our retirement portfolios
  • Inconsistent and sometimes delayed unemployment benefits
  • Uncertainty around employment, including reduced hours, reduced pay, furloughs, and safety issues
  • Fears about our own health and safety
  • Fears about the health and safety of loved ones

It’s been a tough year, and we’re only halfway through it.

Today’s guest has insights and actions to help you build financial resilience in 2020. Not only will you emerge from the events of this year stronger, you’ll also face future personal challenges and economic downturns with more confidence and knowledge.

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By Paula Pant

#257: How to Stop Screwing Up Our Finances, Even in a World That Leads Us Astray — with Dr. Dan Ariely

“The checking account is like the trash can of personal finance.”

Today’s podcast guest, the famed behavioral economist Dr. Dan Ariely, is not a fan of checking accounts. Or supermarket end caps. Or anything that distracts us from our financial goals.

In this episode, he explains why.

Dan Ariely is one of the world’s most renowned behavioral economists. He’s the James B. Duke Professor of psychology and behavioral economics at Duke University.

His TED Talks have been viewed more than 15 million times. In 2018, he was named one of the 50 most influential living psychologists in the world.

He’s the New York Times bestselling author of many books, including Predictably Irrational, a book that challenges our assumptions about our ability to make rational decisions. He also wrote Dollars and Sense, a book about our cognitive biases, and The Honest Truth About Dishonesty, a book about how we lie to everyone, including ourselves.

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By Erin @ Team Afford Anything

#255: How Your Personality Affects Your Finances, with Dr. Sarah Stanley Fallaw

When a crisis hits, do you stay calm and collected, or do you launch yourself down a rabbit hole of worry and worst-case scenarios? 

When the stock market spirals downward, do you shrug and stay the course, or do warning bells explode in your brain? 

When news of the pandemic hit, was your first instinct to form a calm and reasoned action plan, or rush to the store to buy months of supplies?

Your personality influences your reactions to these scenarios. 

Personality traits influence our thoughts, feelings and responses, which affects how we manage our money and investments. 

What personality traits are we talking about?

The Big 5 Personality Traits are conscientiousness, agreeableness, introversion/extraversion, openness, and emotional stability. 

Once we understand how the Big Five personality traits influence us, we can make better-informed, less harmful financial decisions.

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By Erin @ Team Afford Anything

#253: The Thinker’s Guide to Market Volatility, with Dr. Steve Wendel and Sam Lamas

It’s the spring of 2020, and the market is incredibly volatile.

It soars up one day and plummets down the next.

No one knows what to expect from the market or the economy.

No one knows what to expect, period.

What can we do in the midst of such turbulence? What should we do?

What our minds want to do and what we should do are at war with each other. 

For example, your mind might want you to panic sell after a sharp market downturn.

“Take me off this roller coaster!” it screams. 

But in reality, turning paper losses into real losses is a mistake. Investors often lose more when they panic and sell than they would have if they stayed the course. 

Unfortunately, your mind is nowhere near that conclusion. It’s too busy having an emotional reaction to the news. 

How can you protect yourself from reacting to panic? Is it possible to let some semblance of logic shine through?

Today’s guests say yes. It’s possible to save yourself from yourself, as long as you learn to recognize the cognitive tricks your mind plays on you. 

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By Erin @ Team Afford Anything

#238: How to Stop Making So Many Money Mistakes, with Jeff Kreisler

Have any of these thoughts ever crossed your mind?

If I had more willpower, I’d achieve my financial goals.

I’m doomed to fail with money.

Budgets suck. They only show me what I did wrong and make me feel horrible.

If so, you’re not alone.

It’s not that you lack willpower.

It’s not that you’re doomed to fail with money.

It’s not that you’re a horrible person for blowing your budget.

It’s that you’re human.

And humans make emotional decisions all the time. Decisions that often defy logic.

But making emotional decisions doesn’t have to be a financial death sentence. Money management is a skill, which means we can improve.

When we understand the “why” behind our decisions, coupled with the marketing tactics that retailers use, we can guard ourselves against cognitive biases and sales strategies.

That’s what today’s guest is here to discuss.

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By Paula Pant

#218: Why We’re Irrational with Money, with Kristen Berman

Kristen Berman is co-founder of Irrational Labs, a behavioral product design company, along with Dan Ariely.

She has a fascinating job that involves looking into why people behave the way they do with their money, and discovering the easiest solution to help them create more positive financial behavior.

In short, she’s a proponent of redesigning the current financial system to make saving automatic and easy, and that’s part of what we discuss in this episode.

If creating better financial habits has been a challenge for you, or if you have trouble framing spending as a positive thing, rather than a loss, then Kristen has awesome advice for you.

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Written By Paula Pant

Maybe you don’t need to figure out what’s wrong

A few months ago, I interviewed a behavioral economist named Dr. Stephen Wendel on my podcast. He suggested an idea that’s so crazy it might work.

We were discussing the fact that people often stand in their own way; there’s a gap between intention and action. We know what we “should” do, but we don’t follow through. We procrastinate. We make excuses. We act against our own self-interests.

We have an image of our ideal self, we have the reality of our current self, and it’s harder than expected to bridge that divide. Why?

Most people try to figure out the problem. “Why can’t I stick to my goals?” But during our interview, Stephen turns this conventional wisdom on its head.

Maybe we should approach this as treatment first, diagnosis second.

He suggests that you try a handful of solutions. When you find the one that works, you’ll know the problem.

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