We can overcome financial self-sabotage by understanding our behavioural psychology. The ideas and remedies from The Art of Thinking Clearly offer a perspective of how we self-sabotage our finances unintentionally, because of our ingrained decision making skills.

Here’s the plausible explanations of why we do, what we do. By challenging our actions and thoughts, we can become better thinkers.

The trouble with numbers, averages and probability

Anchors: when we guess something, we start from something we are sure of, and go from there. Unfortunately, we also use anchors when we don’t need to. The ‘recommended retail price’ printed on many products is nothing more than an anchor.

Honestly it’s quite a tricky situation to navigate. I have touched on this point previously. When it’s not easy to determine the absolute value (of something foreign), we tend to make comparison. The remedy (if we are purchasing something) is to consider the amount we are actually going to spend.

Advertisements