behavioral finance

Taking action will make you feel like you have at least a little control, which is a great remedy for anxiety.

A good mental model can help you determine what’s essential and what’s not essential. This is critical as we’re flooded with information regularly. Think about the amount of data that’s thrown at us even just related to investing. It’s a lot.

Richard Thaler won the Nobel Prize last year for showing that not only do humans make financial mistakes, they make predictable mistakes. He joked about calling his research ‘Dumb Stuff People Do.’ But today, it’s called ‘Behavior Economics,’ and it has changed public policy across the world.

They’re kind of like an actor’s script in a movie. We just continue to read the lines in our heads or out loud to our family and friends, and believe that they’re true! When in fact, they are often quite distorted, and can limit our success or even hurt us. For most of us, our money scripts are unconscious, but they drive all of our financial behaviors.

In a year, you’ll be 38 times a good if you get one percent better each day. That seems like a such a crazy number — it’s just to illustrate the power of compounding.

Basically, it boils down to this: despite having a good education and a respectable job, you feel like you are a fraud, a fake, an impostor. On the outside, you might look calm, cool and collected, but if others only knew what a hot mess you really were!

I don’t have the greatest self-control in the world. It’s a problem. But, it’s something I know about myself, so I can do something about it.