Financial beliefs and patterns
The psychology of personal finance outlines how our thoughts, feelings and behaviors influence our financial decisions. This includes issues such as how we perceive risk, how we make decisions under time pressure and how our emotions affect our spending, day-to-day decisions and approach to investing.
By understanding the psychology behind our financial decisions, we can make better choices and achieve our financial goals.
Financial beliefs
When it comes to managing our finances, we most often rely on our habits, routines and behaviours learned from the family home. We act routinely and repetitively. Unfortunately, this can be to our disadvantage, as a certain anecdote perfectly illustrates:
One day a woman, while cooking a ham for dinner, cut off both ends of the ham. Her astonished husband, seeing this, asked why she was doing this. – That’s how my mother cooked the ham,” replied the wife.
Just that day her mother was to come for dinner. So when she came, they asked her why she was cutting off both ends of the ham.-My mother cooked the ham this way, so that’s how I did it too, her mother replied.
So they call the grandmother and ask her why she was cutting off the ends of the ham…And the grandmother said: “Because the saucepan was too small!”.Source: “Rich or poor – just mentally different” – T. Harv Eker