It's All in Our Heads!

It's all in our heads!

New research shows that financial ups and downs are largely related to the way our brains are hard wired...

People make dismal financial decisions for a host of reasons including:

Too much focus on short-term gains and pleasures.

A strong tendency to imitate other people in one's decisions and actions.

Too much of a focus on specific outcomes rather than a consideration of the big picture.

Relatively quick forgetting of negative events experienced in the past.

Why are we buried in debt?

Social comparison: We get into debt because we need to look good. Related to this is entitlement — you need to have the house, the SUV, the lifestyle because you deserve it and other people like you have it. We 'one up' one another, creating a spiral of consumption and debt."

Unrealistic optimism: People in general believe they will be healthier, have fewer accidents and do better in life than the average person. Risks will turn out OK.

Self-delusion: Maybe it's not as bad as it seems. "They" will find a solution.

Interesting reading!