“To develop a complete mind: study the science of art; study the art of science. Learn how to see. Realize that everything connects to everything else.”
-Leonardo Da Vinci
I have always been intrigued with psychology, the study of mind and behavior, and how it connects with finance. Many great institutional investors discount this concept (to their detriment) as a piece of the Efficient Market Hypothesis, while the retail side of things work exclusively in the world of emotions, e.g. your guy at Fidelity or wherever.
This book, Save More Tomorrow – Practical Behavioral Finance Solutions To Improve 401(k) Plans may not be exactly what I would recommend to the average investor. However, Shlomo does a fantastic job outlining the emotional and psychological forces at work when someone decides to become and OWNER and no longer a CONSUMER. There is a paradigm shift happening in the conscience that most don’t realize.
One experiment he ran was regarding the future self. It’s easy to save money TOMORROW, but what about TODAY?!? Essentially, he showed participants an image of themselves in their own virtual realities 10-20-30-50 years in the future.
Aged to a point where only virtual incarnations can capture a moment of AWE. He showed them broke, median, and wealthy. After showing participants these images they immediately started to save more, the image of their future-self was clear and their goals were going to be achieved.
My challenge to all is to distinctively imagine their future-self, and create short-term goals that will lead up to that ultimate goal. The financial industry has done a great job overcomplicating something that should not be complicated, building wealth.
I am looking forward to tackling more concepts such as art, science, creativity, psychology, patterns, plus more and how they connect to you and your finances.
PS. Check out Shlomo Benartzi’s TED Talk, it’s killer!