Money & Psychology – Part 4

This week concludes our discussion on money and psychology. What are some of the tactics of marketing that can cause us to consume irrationally and how do we counter them?

Podcast Details:

Podcast Title:  Money & Psychology – Part 4

Podcast Series: The Maven’s Keys to Financial Contentment

The Maven’s Keys to Financial Contentment is my idea that true financial contentment can be found when an overlap of money and beliefs occur.  Many people ask the question of how to be “financially content” and this is a discussion to uncover those answers.

Link to Show Episode

Part 1 – we discussed the 5 ways to spend money
Parts 2 & 3 – we covered the irrational behaviors that marketing can bring out in us when it comes to what we consuming a good or service.

Today, we will have some Big Ideas or (the “so what”) as to what all this means when it comes to you as a consumer or investor…

 -Be Aware-

Marketers are out to sell a product or service. And they use “weapons of influence” as Bob Cialdini puts it to influence our behaviors. Your and my awareness of this fact should help us think twice before we buy or consume something. We should no longer just mindlessly buy something anymore. Ask yourself these questions:

“what is this for?”,

“what is the short-term and/or long-term benefit to my well being?”,

“will I need this tomorrow, next week, next month, next year?”

– Be Selfish –

Recently, I was having a conversation with a group of bartenders and they talked about how much they spend on drinks out of “obligation”.  Here’s the idea: when someone does something nice for you, don’t you feel like you owe them something?   The answer is “yes”.  Because you are experiencing the reciprocity rule which means you feel “obligated” to pay something back what you’ve been given something. But in the case of my bartender friends, they ended up spending way too much money on “reciprocity” drinks (and subsequent tips) just because they were returning a favor. My advice….pay for what brings you value–not from obligation.

– Be “in-consistent” –

What I mean by this is avoid doing something out of routine, for the sake of routine. I think this is used against us when we stay with a certain service provider although we are dissatisfied with their service or product.

#finlit
#behavioralfinance
#behavioraleconomics
#moneymindset
#psychology

 

Helpful Links:

Rob Cialdini’s Influence Book

Charlie Munger Talk on YouTube

About Me:
Dominique Henderson, CFP® is founder of DJH Capital Management, LLC., a fee-only, registered investment advisory firm specializing in comprehensive financial planning and wealth management.

#FinancialLiteracyBootCamp

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