4 Ways Our Brains Sabotage Our Finances, & How To Fix Them

In this episode, Chelsea shows us the specific ways our brains are wired to work against us when it comes to money, and how we can counteract our self-sabotaging money tendencies.

[clairbear]

Lol, I just took a big hourly wage pay cut of about $15 USD an hour -this was a challenging change and took a long time to accept but I am so much happier doing a job with more flexibility, and that is 10x healthier physically, mentally and emotionally, rather than sticking with the status quo just because I was afraid of change and that the new situation might not have benefitted me. But it did!

[Healthyrunningworld]

She said subscribe and I just realized this is the first channel I subscribed to...back when I was 17.

[mikegb]

It's unrelated to this video, but one of the questions I ask myself before making large purchases is, "What percentage of my net worth am I willing (or is reasonable) to spend on a (whatever)?" You can also flip the question around and ask, "If I'm willing to spend x percent of my net worth on a (whatever), what does my net worth have to be to buy this particular (whatever)?"

For example, if I'm a professional guitarist, it might be reasonable to spend up to 5% of my net worth on a guitar. On the other hand, if guitar playing is a non-income producing hobby, it might be better to stay under 1% on a guitar. If the guitar I want costs $750 and I'm willing to spend 1% of my net worth, then my net worth needs to be at least $750 / 0.01 = $75, 000 to buy it.

Thinking in percentages is one of the best ways I know to put things into perspective.

[DiamondNestEgg]

Vision boards and weekly budget reviews are great against hyperbolic discounting!

[michellesun-forbesunder]

When it comes to bias - "We don't see things as they are, we see things *as we are*"


So important to know these biases when it comes to making sound financial decisions. 🔥

[paigelego]

Its honestly so refreshing and necessary to acknowledge that humans are not perfect logic machines (with anything really and especially with money) but are largely emotional beings relying heavily on animal-instincts just trying to get by.
Ironic how scholars took centuries to figure this out but marketers have been exploiting it from time immemorial

[senseisleepyhead]

The Status Quo Bias part starting at 5:10 reminds me of a saying that used to subconsciously limit me for years: "The devil you know is better than the devil you don't know"... It's like-- no, very often it's not, and it's high time to take a chance to move on from the devil you know!

[LittleLyssMarie]

The movement she made at "next level" is the energy in which I live my life I feel so seen

[Emma-kfkj]

Choice-supportive Bias got me thinking about the opposite, which I think is what I do. I am appalling at making decisions generally, especially when it comes to spending what seems like a big chunk of money or buying something that I need/want to last, so I have to make the "best" decision. Ofttimes, this results in me just not making the decision and living without the thing, even when inconvenient. But sometimes it also means that after making the decision and buying the thing, I then agonise over the purchase, wondering if it was the right one, and leaving the tag on for ages just in case I was wrong. It's stressful af. Anyone else like this?!

[sayleepathak]

Really good things to be aware of. Just the awareness is going to make a difference. Thank you!

[matesafranka]

Another massive saboteur is the sunk cost fallacy, when you keep pouring money (or just time and effort) into a hopeless project, long after the point it loses any chance of paying off, only because you convince yourself that you shouldn't give up after you've come all this way.

[broughttoyoubynmblake]

Once you realise the stuff we buy is in essence borrowed, (we can’t take them to grave with us) so they go on to someone else or just pile up in endless trash. The aha of living in the present with less couldn’t be more grounding.

[LifeofKairo]

"Knowledge is power and preparation is key"

[somedragontoslay]

I recently fell into a similar trap: I didn't own speakers besides the ones in my devices, and I wanted some for a nebulous future, but didn't feel a huge need for them. Yesterday, my mum saw an offer of a small speaker for $15 while we were walking together and made me get into the store to ask for them. When I am not in the buying mode, knowing exactly what I want and the specifications I want, I fall into social pressure, especially if I "can afford it". So, my mum asked "yeah?" And I was with the employee nearby so I said ok, but I thought my mum was paying. And no, it turns out it's for me, so I pay. I was manipulated into buying something I thought was a gift for me, or for her. But I barely needed it! Agh!
That's why I like to decide what I want to buy beforehand, compare on my own and go buying alone.

[aimemaggie]

I already know the mistakes I make but I just need you to repeat them so I can start fixing it.

[loganallen]

If you’re not willing to risk the usual, you will have to settle for the ordinary

[ashleyd]

I don't know why it is, but I feel shame so much for so many different purchases! It's good to remind myself that I shouldn't feel this way, but still be aware of what I'm spending to be better in the future.

[thefinanceadventure]

Building wealth really is 90% psychological! Glad you covered this topic!

[vishnuk]

The content from you motivates me to keep my finances growing 😍😍

[annaswanson]

I try to remind myself that buying things I don’t really need but want in the moment is basically stealing from myself because 9/10 we don’t really want all that stuff in the end anyway