All the Personal Finance Books are Wrong?
POSTED BY: 6IXSTRINGJACK
UPDATED: Thursday, September 8, 2022 20:20
VIEWED: 823
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https://www.msn.com/en-us/money/personalfinance/all-the-personal-finan
ce-books-are-wrong/ar-AA11lHCj
I found this article about human psychology vs. logic when applied to budgeting and saving to be pretty interesting. The title of the article (the thread title minus the "?") is not the title I would have chose for it though, since nobody said that... other than the guy writing the article, I guess.
Humans are illogical. I get extremely frustrated sometimes with people I care about and the stupid way they handle money, but then I have to remember that I've got plenty of behaviors that they would also consider odd and probably find just as frustrating too.
And everybody's situation is different, even if just in minor ways. It probably isn't good advice to make a blanket statement that everybody should save 10% of their income, no matter what their circumstances are. And I do like how the economist says that somebody would find a night out eating dinner with friends at 23 years old to have been a lot more valuable to them than a few hundred extra bucks in their retirement years when they're 73 years old.
Personally, I'll never forget those early years working that first job and partying 6 nights a week. I've got a pretty good memory, and it's always fun to bring up things that happened back then when I see friends I haven't seen in a while and give them a good laugh about something they forgot happened or hadn't thought about in decades. But I should have at least saved SOME of that money. When the rug got pulled out on that gig, it was a lot of years of rough living until the next good gig came around.
I say that, but at the same time if I had a big cushion from saving, who says I wouldn't have just wasted it anyhow and possibly not learned from my mistakes and changed my behavior so drastically? It's certainly not out of the realm of possibility. Not only was I blowing my cash on the newest tech, an expensive wardrobe, and high priced import beers while my friends were drinking Budweiser, but it wasn't so long ago where I did that very same thing, but in a much sadder and lonelier and pathetic way by squandering a good portion of my cushion getting nothing accomplished and isolating myself from the world and drinking myself into oblivion with high volumes of low quality beer. Something I wouldn't have even been able to do for 5 years straight had I not been saving all the money that I had to that point without losing my house and/or starving to death.
And that wasn't even fun. There were no memories being made. No funny stories to tell.
So... I get it. I get why I could never get my brother to put 2 dependents on his Payroll form at work so he wasn't giving the government a free loan every year because in his words "I'm not good at saving and it's nice to get that big check every year". I get why people do a lot of irresponsible things with their finances because they need it on a psychological level.
But how do you reach them? How do you get people who can't seem to find any balance reach an equilibrium that works for them, and makes their money work for them? Make them see that they don't have to spend their lives chasing money because they've already got more than they need coming in if they just did right with at least some of it?
I'd never wish my life on somebody to get them to do right with their money. And I know full well that had I not lived my life I probably wouldn't be as good with money as I am now.
Maybe another Great Depression is the antidote to the problem? And it wouldn't just be this problem either. Society kind of sucks in the 2020's. And as I get older I start thinking more and more that the behaviors of the generations that came before me and the things I took for granted about how the world "works" were all of the residual effects of an entire generation of people who, save for an elite few, were all objectively poo
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Quote:It depends. If an extra $200 means you can eat for another 2 weeks when you're 73, then that extra $200 is more valuable at 73 than at 23. So that's a stupid point.
Having that special dinner with friends at 23 is, for instance, more valuable than having a couple hundred extra dollars in your retirement fund at 73.
But you bring up a lot of interesting points about money, decision-making, and life, SIX.
-----------
Pity would be no more,
If we did not MAKE someone poor - William Blake
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Quote:If the discussion is just about money, money is an easy metric.
Originally posted by 6IXSTRINGJACK:
https://www.msn.com/en-us/money/personalfinance/all-the-personal-finan
ce-books-are-wrong/ar-AA11lHCj
I found this article about human psychology vs. logic when applied to budgeting and saving to be pretty interesting. The title of the article (the thread title minus the "?") is not the title I would have chose for it though, since nobody said that... other than the guy writing the article, I guess.
Humans are illogical. I get extremely frustrated sometimes with people I care about and the stupid way they handle money, but then I have to remember that I've got plenty of behaviors that they would also consider odd and probably find just as frustrating too.
A problem with people is that they're contextual.
EXAMPLE: You have a $20 ticket to see a show, and $20 in your pocket. Standing in the lobby, you lose your ticket. Do you buy another and see the show anyway?
That's you, standing in the lobby and you lose $20 out of your pocket. Do you refund your ticket and go home, or keep your ticket and see the show anyway?
When people think about what to spend their $ on, they think in silos. The old lady with six cats keeps spending money on her cats despite the fact that she's eating cat food herself. She never reconsiders the money she has (mentally) budgeted for "cats".
Since "I may want to retire someday" is an abstract goal, one way to break siloed thinking is to create an alternate possibility for that money. "Do I want this latte, or would I rather have (fill in the blank)? That takes spending out of one context and puts it an another. But it has to be an alternative that resonates. It could be a reliable car, independence, a vacation, buying a house, investment... it has to be meaningful to the person who is deciding and big enough so that it can't be decided on a whim.
There's a problem with "saving money" tho, and that's inflation. Maybe I'll tackle that later.
But you're talking about life in general, not just money.
Quote:I already addressed that.
And everybody's situation is different, even if just in minor ways. It probably isn't good advice to make a blanket statement that everybody should save 10% of their income, no matter what their circumstances are. And I do like how the economist says that somebody would find a night out eating dinner with friends at 23 years old to have been a lot more valuable to them than a few hundred extra bucks in their retirement years when they're 73 years old.
Quote:If your friends have forgotten those times, it probably wasn't as well-spent for them as it was for you, since it didn't create any lasting memories. Experiences are only good if the memories endure!
Personally, I'll never forget those early years working that first job and partying 6 nights a week. I've got a pretty good memory, and it's always fun to bring up things that happened back then when I see friends I haven't seen in a while and give them a good laugh about something they forgot happened or hadn't thought about in decades. But I should have at least saved SOME of that money. When the rug got pulled out on that gig, it was a lot of years of rough living until the next good gig came around.
Quote:
I say that, but at the same time if I had a big cushion from saving, who says I wouldn't have just wasted it anyhow and possibly not learned from my mistakes and changed my behavior so drastically? It's certainly not out of the realm of possibility. Not only was I blowing my cash on the newest tech, an expensive wardrobe, and high priced import beers while my friends were drinking Budweiser, but it wasn't so long ago where I did that very same thing, but in a much sadder and lonelier and pathetic way by squandering a good portion of my cushion getting nothing accomplished and iNOTIFY: Y | REPLY | REPLY WITH QUOTE | PERMALINK | TOP | HOME
Quote:
Originally posted by SIGNYM:Quote:If the discussion is just about money, money is an easy metric.
Originally posted by 6IXSTRINGJACK:
https://www.msn.com/en-us/money/personalfinance/all-the-personal-finan
ce-books-are-wrong/ar-AA11lHCj
I found this article about human psychology vs. logic when applied to budgeting and saving to be pretty interesting. The title of the article (the thread title minus the "?") is not the title I would have chose for it though, since nobody said that... other than the guy writing the article, I guess.
Humans are illogical. I get extremely frustrated sometimes with people I care about and the stupid way they handle money, but then I have to remember that I've got plenty of behaviors that they would also consider odd and probably find just as frustrating too.
A problem with people is that they're contextual.
EXAMPLE: You have a $20 ticket to see a show, and $20 in your pocket. Standing in the lobby, you lose your ticket. Do you buy another and see the show anyway?
That's you, standing in the lobby and you lose $20 out of your pocket. Do you refund your ticket and go home, or keep your ticket and see the show anyway?
If I had a $20 ticket in my pocket, somebody gave it to me. And if scalpable, I'm scalping it.
When my buddy took me to the casino for that awesome buffet after I helped with his exhaust fan, he gave me $20 afterward to gamble and told me specifically I'm not to put that in my wallet and watch him play and it was to be used for gambling purposes only.
My friends know me too well.
Quote:
When people think about what to spend their $ on, they think in silos. The old lady with six cats keeps spending money on her cats despite the fact that she's eating cat food herself. She never reconsiders the money she has (mentally) budgeted for "cats".
Since "I may want to retire someday" is an abstract goal, one way to break siloed thinking is to create an alternate possibility for that money. "Do I want this latte, or would I rather have (fill in the blank)? That takes spending out of one context and puts it an another. But it has to be an alternative that resonates. It could be a reliable car, independence, a vacation, buying a house, investment... it has to be meaningful to the person who is deciding and big enough so that it can't be decided on a whim.
Yeah. And it's got to be small goals too. Abstract is BS pie in the sky thinking. It's fine to have abstract goals, as long as you buoy those with real-world, tangible goals that can lead to the bigger ones.
Independence has always been my abstract goal. I will never truly get there. But, at least in my case, it's a great catalyst to push forward on the smaller goals, even if rational minded me knows that true independence is an impossible goal*... and perhaps it's not even all that desirable a goal in some ways as well.
* Impossible, of course because of external factors like inflation and the government. But also because there are always times you're going to need a favor or to actually pay somebody to do something that is completely out of your skillset. And, of course, because everybody gets old before they die. I don't think you truly appreciate what life is going to start being like in the back half of your life until you step through that doorway in the middle. I won't whine about my issues now, but I'll just say that I can appreciate just how much harder it is to get around and do things when you're in your 70's than when you're in your 20's, even though I still barely have a clue what's in store for me.
Quote:
There's a problem with "saving money" tho, and that's inflation. Maybe I'll tackle that later.
Oh... I know about it. I've talked in length about this issue before.
"Why aren't you working?", "Don't you want any
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square root of 2 is not 1.4142 New Common Core terrence howard math theory the number Zero 0 is wrong and According to Howard, one multiplied by itself should equal two
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