What are the tools and knowledge that will help you most in your money quests?
If you’re like most people, you probably picked something to do with numbers, formulas, or knowledge of credit, stocks, or whatever. But guess what? You’d be wrong!
I’m going to stake my claim that the single biggest area of upside with managing money is recognizing this wet organ inside our heads, and especially its quirks and kinks. The brain is the most wonderful human phenomenon, being able to perform feats effortlessly that are impossible for even the most advanced supercomputers.
Yet the irony is that even with all this fancy footwork, it repeatedly fails us in very predictable ways, especially when it comes to managing money. You see, the problem is that the brain evolved over hundreds of thousands of years to give us the best possible shot at survival. But money and its management is a very recent phenomenon, and one that unfortunately plays right into all the brain’s blind spots.
So I take the view that techniques that harness the magnificent power of this wetware between our ears, and also soften, or nullify all its negatives, are the best investment we can possibly make in improving our odds of successfully achieving our money goals.
And to make the job easier, I’ve pulled together seven brain-based tricks and tips that can supercharge your efforts right now.
Trick #1: Start with heart.
The part of the brain that registers and handles emotions is much older and more powerful than the johny-come-lately part that handles logic and rationality. So starting with things that stir emotions more than appeal to logic is will always be a winning strategy, especially with things that appear wholly rational, like your debt and finances.
What does this look like? First and foremost, always start with why you’re doing whatever it is you want to do. For example, if you want to pay off your student debt, the logical reason might be that it is more prudent to have less debt than more, that financial freedom is important, and so on. But the lizard brain inside you is just yawning at all this mumbo-jumbo and won’t be bothered.
And remember that the lizard brain will win every single time over logic.
A better way is to call forth the deep, driving emotional reason why this goal is important to you. The only right answer is the one that really moves you deeply and consistently. What really fires you up about having zero debt for example? Is it the fact that you can finally chuck your soul-sucking job and start that business you always wanted to? Is it because you can finally think about having a family or work for that cause that moves you so deeply?
Whatever it is, dig deep to mine all the powerful and positive emotions that that vision inspires, and use that to fuel all the hard steps you have to take to achieve your goal.
Trick #2: Take laughably small steps consistently
If you’ve been following any self-improvement blogs at all, then you’ll know that “habit lit” is all the rage these days – with good reason. The brain hates hard work, and it hates having to think. Easy is good, habitual is best.
So rather than taking big resolutions to conquer your big monster goal with heroic measures, just pick a step so small that it’s laughable. The easier it seems, the better off you’ll be.
Then just commit to doing something about it every single day.
If you want to get the winners’ super-secret method, go one step further and keep a place on paper where you track your daily progress. A simple page in your journal with check marks against the date is excellent, and more than enough. Remember a key element of our manifesto: Simple always trumps complex
Want to pay off your student loans? Commit to finding one small saving opportunity of a $1 or less everyday. That’s it. Then keep it up for 30 days. Soon the trickle will build to a roaring torrent. Patience and consistency is all you need.
Above all, go small!!
Trick #3: Play at working
Do you know why games are so addictive? It’s no accident. Whether you like a simple analog game like checkers, or the latest Fortnite craze, all good games engage the human mind richly and deeply, buy incorporating a few key elements:
- A big inspiring goal
- Feedback on performance and the ability to craft your own path
- Smaller parcels of effort that lead up to more and more complex challenges
- The ability to learn from your mistakes
- Opportunity to practice and improve
- Rewards throughout the journey
- The prospect of communing with fellow players
- The threat of losses for missteps, but most not fatal
- Variable and unpredictable rewards and events
You can pick up most if not all of these levers to up your own money game. Rather than thinking about what a bore it is to file your taxes, you can make it into a game where the goal is to earn the prize (of a refund). Steps can be broken down into smaller quests with their own steps, with a small reward you set yourself for completing each little quest.
Penalties (maybe the opportunity to do your favorite activity cut off) if you miss your own self-imposed deadlines. Rewards for finishing them ahead of time (a Netflix binge?). You get the picture.
But the more you make your activity resemble a game, the more likely it is that you’ll not only finish it, but will also get better at it. If that’s too much of a stretch, break it into little projects, with rewards and penalties attached to each.
Trick #4: Invite abundance
Ever feel like you’re constantly stressed and overwhelmed with the amount of stuff you have to get done? Feel like you don’t have enough time / money / space to do what you need to get done?
Turns out that a mind that is feeling pressured by scarcity actually loses a significant amount of its firepower. Yes, you read that right. Feeling constantly pressed for any resource, whether it’s time, money or space, can actually make you dumber and take much worse decisions.
So do yourself a favor: for the brief amount of time that you can afford for your money activities, create a buffer by first putting yourself in a positive and uplifted mood of abundance. Do whatever does the trick for you: whether it’s listening to music or looking at your treasured collection of widgets or whatever floats your boat. Only then should you even think of approaching your money tasks. And no matter what, don’t ever try to squeeze in money-related tasks when you’re stressed, tired or under the gun. Run other errands instead.
Trick #5: “Kiss” the problem away
If I stopped you on the road and asked you the one thing that was characteristic of managing money, what would say? If you’re like many people, chances are you probably said “the math” or “the complexity” of tasks and decisions involved in managing your money. In fact, entire industries have come into being, and making very good profits, thank you very much, premised on this fundamental construct that effective finance means complex finance.
Yet new research is showing increasingly that the old-fashioned “Keep it simple, stupid”, or KISS principle for short, surprisingly trumps much more sophisticated and complex rules of decision making and choice, even in fields as advanced as medicine and finance.
Underlying this entire phenomenon is a quirky aspect of human behavior, called a “heuristic”: a heuristic is a fast and frugal rule that is applied when a situation meets some high-level criteria, without going into the depths of the details. You may know these as rules of thumb.
So next time you need to make a decision that recurs fairly often, try to come up with a much simpler rule that spares you a lot of work: for example, “no more than $x” for an item’s price, spare change always goes in the “vacation fund” box, etc.
Trick #6: Talk to friends, even (especially) if they’re not experts
One of my vices is a confessed weakness for geeky research papers. I recently ran across a very interesting research study that came to a startling conclusion: not only do individuals with less financial knowledge gain less from listening to the advice of “experts”, but they actually benefit and make better financial decisions after talking to peers who know only about as much as they do on financial matters, especially if it’s not a lot.
Why would this be? There could be many reasons but I suspect that there are a couple of important ones at play. When someone who is evidently in the same boat as you are seeks to explain their understanding of a concept to you, it’s likely that:
- they use simpler terms that you’re more likely to know, and also explain more basic concepts without assuming that you already know them (perhaps because they also didn’t)
- you feel a greater sense of identity with them, and this unconscious or conscious sense of “liking” will make you more open to their input, and
- you’re more comfortable asking the real questions in your mind without fear of shame or of looking ignorant, leading to more learning occurring
Result: you’re likely to engage more actively, use more of your gray cells and take an active part in coming up with a decision that’s likely to work out much better than if you blindly followed some “expert”.
So next time you’re battling a money problem, pick up the phone or hook up for coffee and chat it over with your friend. Chances are, you’ll end up much better off.
Trick #7: Mind the language
In another of these geeky studies that I gleefully discovered, I saw yet another frustrating but totally relatable finding.
Starling Bank is a millennial-oriented mobile-only UK bank I became aware of recently. The bank seeks to re-imagine how banking is done, and did a study on how money messages are targeted to women earlier this year, as part of its campaign to “Make Money Equal”.
The analysis covered a linguistic study of 300 articles that talked about money. Among the findings that were truly astounding:
- Two-thirds of money articles in women’s magazines define women as excessive spenders, while 60% of articles aimed at men recommend investing apps (the implication being that men are investors, and women, reckless spenders
- Women are encouraged to maximize their economic contributions through forms of thrift like saving small sums, earning small amounts, or finding a means of financial support, like a parent. Or a husband. On the other hand, articles aimed at men suggest monetary success and financial literacy are essential to enhancing personal status and getting ahead of colleagues or peers.
- Articles aimed at women advise them to limit, restrict and take better control of shopping ‘splurges’. Articles targeting men rely on masculine stereotyped aspirations, leveraging codes of combat, strength, power, competition and performance to drive greater financial success and achievement.
You’d hardly be human if you were exposed to this pervasive type of messaging and not be influenced by it.
So the last but most important trick: if you’re a woman, be very careful and vigilant about the kind of money talk you allow into your mind. Say no to “dirty” money talk that belittles your power to take charge of your own money or manage it well. Build positive and strong self-talk about your improving progress and skill in managing money for your highest benefit. This small investment alone will reap you riches beyond imagining.
There you have it: these tricks cost nothing, don’t require math, and don’t need you to have a doctorate in finance. Yet they probably will reap you riches much greater than all the finance knowledge in the world, if it’s not applied with a dollop of common sense and a solid understanding of your own mind.
So super-charge your engine right now, and deploy these brain-smart techniques in whatever money project you’re about to take up next!