Avoiding the pitfalls of psychology and money

Saving ourselves, from ourselves – preventing the psychology behind money getting in the way of our best possible lives.

Understand how your decisions and actions today may affect your financial security tomorrow. Get in touch.

Last month we discussed the Psychology of Money. Clearly, we shouldn’t go solo when it comes to steering our financial ship. So, if we can’t go alone, what should we do?

There are a number of things we can do to minimise the risk of making bad financial decisions.

1.  Know what you really want. Having clarity of what is most important about money to you can help you avoid the ‘social norms’ – keeping up with the Jones’. Map out your ideal future. 
2. Talk. Talk. Talk. Talking about money can be scary and in our current society, you can feel safer discussing sex, religion and politics! But by sharing your insights, asking questions and hearing from others you learn more. The more you learn the better placed you are to make smarter decisions. Just be careful who you ask and ensure they have the credibility to their advice.
3. Honour Reality. The fact is that markets are unpredictable and financial plans are guesses about what the future holds. When we have a clear picture of where we are and know what we are aiming for, we have a better chance of getting there. Thinking you can predict the future is a fantasy so let it go.
4. Get help. We just cannot do everything ourselves. NO one has the time to remain current in all subject matters that relate to our lives. We take on advice from medical professionals about our health. We allow trainers to help guide us towards fitness. We don’t cut our own hair. Work with an adviser who you feel comfortable with. One who has a depth of experience and support around them. One who understands you and who helps you understand you. Financial planning is about helping you achieve your best possible life.
5. Own our behaviour. There is so much about our financial picture that we can not control. But even if you could pick the best investments every time, you will not out-earn poor financial discipline.
6. Avoid the traps. Being aware of the common errors humans make is the first step in avoiding them yourself.
7. Check in with yourself as objectively as you can. Try our Investment Report Card or undertake our Financial Health Check.

Get in touch with us so we can help you on your journey and live your best possible life. We are here to help you understand yourself and your situation better, be clearer about where you want to go and how you are tracking, and to help you make smarter financial decisions.

What you need to know

This information is provided by Invest Blue Pty Ltd (ABN 91 100 874 744). The information contained in this article is of general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice with regards to those matters and seek personal financial, tax and/or legal advice prior to acting on this information. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relations to products and services provided to you.  https://www.apa.org/pubs/highlights/peeps/issue-105.aspx  https://www.behavioraleconomics.com/resources/introduction-behavioral-economics/

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