The psychology of wealth accumulation is one of our key research areas here at DataPoints. Our research efforts began with a deep analysis of the findings from The Millionaire Next Door. This book demonstrated the habits and lifestyle of those who accumulate wealth on their own, and the key behaviors that allow individuals to transform income into wealth were confirmed in The Next Millionaire Next Door. This body of research, as well as research from other academic fields, demonstrates we can build wealth without rock-star status or a rich relative. We’ve written several articles on different psychological aspects of personal finance and financial planning. Financial psychology impacts how we save, spend, and invest. If you’re looking to understand how your own unique characteristics play into the role of household CFO, here are a few posts to consider.
Planning & Monitoring: Planning & Monitoring: The Obvious Wealth Factor We Love to Ignore – Our ability to create a plan and monitor what’s happening in our financial lives are key predictors of future financial success.
Responsibility/Attribution/Locus of Control: Financial Success & A Mindset of Control – Do you view financial success as something within your control? If so, you have a better chance of building wealth.
Investing – Volatility Composure: What is Volatility Composure? – Investment managers and advisors often focus on a generic concept of “risk tolerance” to understand investors. We argue that these need to be broken down into different components to help us improve, with special consideration for our composure related to changes in the market.
Frugality, Spending, & Budgeting: What’s the Difference between a 7% and 17% savings rate? – There’s no doubt that living below your means is conducive to building wealth. But, understanding and improving a wide range of habits lead to better overall outcomes.
Focus: Building Wealth: The Magic of Focus – For some, financial management comes easily. For others, it may require all we have to concentrate on the fine details.
Self-Control & Finance: Not Just Literacy: Some Control Required – Financial literacy is a critical competency for household CFOs. In this post, we argue that discipline and self-control are just as critical to building wealth.
If you’re looking for additional (and more in-depth) content on the psychology of wealth and finance, check out The Next Millionaire Next Door or The Millionaire Mind. Or, learn more about financial psychology here.