Behavior is hard to teach, even to really smart people!

Everyone has their own unique experience with how the world works. What you’ve experienced is sometimes more compelling than what you’ve learn.

I’ve been reading “The psychology of Money” by James Clear since past few days. I completed reading 20% of book and all the instances till now definitely changed the perspectives I had towards money.

There are these beautiful lines written by Michael Batnick:

Some lessons have to be experienced before they can be understood.

We are all victims, in different way, to that truth. Doing well with money isn’t necessarily about what you know. It’s about how you behave. And the behavior is hard to teach, even to really smart people.

Managing money, investing it are considered to involve plenty of calculations, where figures are calculated with the help of data and formulae. However, in the real world, people don’t make financial decisions on a spreadsheet. They make them considering their personal history, with their view of the world, ego, pride, marketing.

A solid foundation of psychology states that people are poor forecasters of their future selves. Imagining a goal is easy. But imagining it in the context of the realistic life stresses that grow with competitive pursuits is entirely different. This has a big impact on our ability to plan for future financial goals. In fact, the most important part of every plan is planning on your plan not going according to the plan.

While going through the book, I came across a topic where it said, “Rich is what people look at, wealth is what people forget to look at”. Many people stay in this misconception their whole lives to understand the difference between rich and wealth. Rich is a current income and wealth is something that you develop with time. It is an income not spent and it is hidden. It’s value lies in offering you different options, flexibility and growth.

The book has definitely explained about the most underrated topics. Looking forward to read the whole.