Openness to Change in Personal Finance

You’ve probably spent time thinking about how you might improve your health, career, finances, family, spirituality, or another essential element of your life. During this contemplation, you may inevitably conclude that a change is required. Many readers of our blog and books share a common problem: they acknowledge a change is necessary (either for themselves or their client), but they also instinctively know that making the needed change will be tough. Why? First, Let’s …
The phenomenon of the “sunk-cost” bias or fallacy is often discussed in the context of investing behaviors to refer to a mindset where we hang on to a perpetually under-performing investment as a result of our attachment to and focus upon the amount we paid for it. Our brain instinctively focuses not on the stock’s objective performance over time, but instead anchors the perception of value around the amount originally paid for the investment. …
Imagine this: it’s the day after Halloween, and you are about to enter your local big-box store retailer. EVERYTHING about the store flashes “SALE!” Who or what is in control of your actions in this situation? Let’s consider two different mindsets and possible outcomes related to how we might approach our shopping trip in this scenario: Mindset 1: I can positively affect the wealth my household accumulates. Potential Outcome: I will shop and spend …
Have you ever dismissed a concept because it sounds too “soft,” that it won’t help or be applicable to your practice, life, or clients? One of those concepts that has suffered from a branding problem in the financial world is mindfulness. However, with the increased focus on holistic financial planning, it’s gaining some ground a an increased reputation as a way to help achieve financial success. Let’s consider it in light of spending. News-flash: Excessive spending …
We define volatility composure as a combination of past experiences and behavioral patterns that describe how an investor typically reacts to changes in the market value of his or her investments as well as overall changes in the value of the stock market. How will the individual actually behave–as opposed to how they think they will behave–when the stock market goes haywire (as it is doing now for the first time in quite some time)? …

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