BetterLiving: Behavioral EconomicsSHARE POST
Enjoying a healthy work/life balance isn’t something we just talk about; it’s part of our lifestyle and the BetterPros mission. But that doesn’t mean that sometimes we can’t use a few good tips for the “life” side of the equation.
That’s where the idea for Better Living comes from, our new cycle of workshops where A-list speakers share life hacks and ideas to improve our lives.
In this edition, guest speaker Carolina Sur (@holasoycarouy), an economics expert, tackled an issue that we’ve all struggled with: how come we always get to the end of the month in the red?
Well, it turns out that you don’t have to be a Nobel Prize winner to save money. You just need to have Carolina in your corner!
From the optics of Behavioral Economics—and using both personal and professional insights— she spoke to the members of our #BetterCommunity for over an hour about things like:
•The role of rationality and irrationality in economics
•Why hidden spending keeps us poor (or poorer than we should be)
•How to keep track of our spending
•What type of spender (or saver) are you?
•How to prioritize experiences over things
Let’s take a look at some of the most relevant points.
We’re Not Rational
People think they make rational decisions, but they don’t. Behavioral Economics teaches us that we are far more emotional than we think, especially when we make financial decisions.
We all think we’re acting from our heads, but come Black Friday, we may find that we succumb to temptation faster than we think. It’s wild to see how quickly we can lose our heads if we find something we like!
And that type of compulsive spending can have a cascading effect. It leads to more bad choices until they become an ingrained habit.
It’s no wonder we have less money than we think at the end of the month!
And that’s not all that’s killing our bank account. Hidden spending is like a ninja that stealthily creeps in the night to slash your funds. But what is it, exactly?
Things such as:
•Website or app subscriptions that slipped your mind.
•Credit card payments
All of these things—and more—can give you a false sense of security!
Keeping Track of Spending
Apps like Mint, or even a good ol’ notebook, can help you track your spending. But don’t think there’s an expenditure too big or too small! If you spend it, you write it down — that’s how you keep yourself honest.
What Type of Spender Are You?
Carolina also informed us that everyone is a different type of spender based on their psychological makeup. Each has their own experience and lessons they have to learn. Some need to learn how to save more money, some need to learn how to let loose once in a while.
The four types are:
What We Learned
There’s always a temptation to overspend. And Carolina told us a good way to see it is like the siren’s call in Ulysses. In the story, Ulysses tied himself to the mast of his ship in order to resist the song of the sirens.
In a way, we all have to find ways to become stronger to resist the temptation of “live for the moment” spending. We don’t have to tie ourselves to a mast, but if we put our best foot forward, we can at least start saving 10% of our income and work our way up!
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