The psychology of money is the study of our behavior with money.Success with money isn’t about knowledge, IQ, or how good you are at math. It’s about behavior, and everyone is prone to certain behaviors over others. Once you become aware of your tendencies, you can harness the power of your own mind, your thoughts and your will—and you can literally change your life.

What Is the Psychology of Money?

Self-awareness is a valuable tool. You need to learn more about the way your mind works if you want to grow. Whether we’re talking about money or life as a whole, knowing yourself is a huge factor in creating meaningful change.Personal finance is 20% head knowledge and 80% behavior. That’s why getting out of debt relies on changing your behavior instead of throwing a bunch of numbers and formulas at you.

Why the Psychology of Money Matters

<ul><li>Spender vs. Saver:  Spenders can see so many creative possibilities when it comes to money. On the other hand, a saver’s first instinct is to not spend their money. </li><li>Nerd vs. Free Spirit: Nerds genuinely look forward to organizing their budget. Free spirits... need the nerds to help them make a realistic budget. </li><li>Safety vs. Status: People who value safety want the security that money can bring.  They need to watch out for living in fear (that keeps them from giving generously, investing in retirement, or even spending money on things they really need).</li><li>Your Family and Childhood: The way you <warningtag>heard your parents talk about money—or not talk about it—definitely influenced your attitude about it from an early age. This alone won’t define your money mindset, but it’s good to be aware of.</warningtag></li></ul>

Ways Psychology Affects Your Money

The truth is that money is just a magnifying glass—it makes you more of who you are. If you’re kind and generous, you’ll be even more kind and generous with money. If you’re rude and self-centered, you’ll be even more rude and self-centered with money. Money is simply a tool, and you get to determine what to do with it.

How the Psychology of Money Affects Your Decisions

Psychology of Money: how to have a better relationship with money and to make smarter financial decisions

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Books

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Money & Investments

Understand yourself and those around you.

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Psychology

The Psychology of Money

The psychology of money is the study of our behavior with money.

The psychology of money is the study of our behavior with money. Learn how the psychology of money affects all your financial decisions.

Understanding the Psychology of Money and What It’s Costing You

<ul><li class="ql-align-justify">Each day we are confronted with hundreds, probably thousands of decisions. Most of which are insignificant or unimportant or both. Do we really need a whole aisle for toothpaste?</li><li class="ql-align-justify">In response to all of these decisions, most of us adopt a strategy of satisficing, a term coined by Nobel Prize winner Herbert Simon to describe something that is perhaps not the best but good enough. </li><li class="ql-align-justify">For things that don’t matter, this is a good approach. You don’t know which pizza place is the best but you know which ones are good enough.</li></ul>

Decisions Decisions

Satisficing is one of the foundations of productive human behaviour; it prevails when we don’t waste time on decisions that don’t matter, or more accurately when we don’t waste time trying to find improvements that are not going to make a significant difference in our happiness or satisfaction.Example: For most of us, we clean our houses until they are clean enough, reaching a kind of equilibrium between effort and benefit. It is this cost-benefits analysis that is at the heart of satisficing.

Satisficing: Not Perfect But Good Enough

In 1976, the average supermarket stocked 9,000 unique products; today that number has ballooned to 40,000 of them, yet the average person gets 80%– 85% of their needs in only 150 different supermarket items. That means that we need to ignore 39,850 items in the store.This comes with a cost.Neuroscientists have discovered that unproductivity and loss of drive can result from decision overload. Although most of us have no trouble ranking the importance of decisions if asked to do so, our brains don’t automatically do this.

Decision Overload

Our world has exploded. Information is abundant. We have a limited number of decisions. After all, there are only so many we can make in a day without compromising quality. Once we’ve hit that limit it doesn’t matter how important they are.The decision-making network in our brain doesn’t prioritize.We can have trouble separating the trivial from the important, and all this information processing makes us tired. Neurons are living cells with a metabolism; they need oxygen and glucose to survive and when they’ve been working hard, we experience fatigue.

A Limited Mind, An Unlimited World

The processing capacity of the conscious mind has been estimated at 120 bits per second. That bandwidth, or window, is the speed limit for the traffic of information we can pay conscious attention to at any one time. While a great deal occurs below the threshold of our awareness, and this has an impact on how we feel and what our life is going to be like, in order for something to become encoded as part of your experience, you need to have paid conscious attention to it.

The Speed Of Our Mind

In order to understand one person speaking to us, we need to process 60 bits of information per second. With a processing limit of 120 bits per second, this means you can barely understand two people talking to you at the same time. Under most circumstances, you will not be able to understand three people talking at the same time.With such attentional restrictions, it’s clear why many of us feel overwhelmed by managing some of the most basic aspects of life.

The Limited Bandwidth Of Our Brain

Attention is the most essential mental resource for any organism. It determines which aspects of the environment we deal with, and most of the time, various automatic, subconscious processes make the correct choice about what gets passed through to our conscious awareness. For this to happen, millions of neurons are constantly monitoring the environment to select the most important things for us to focus on. These neurons are collectively the attentional filter. They work largely in the background, outside of our conscious awareness.

Our Most Important Mental Resource

Most of the perceptual remains of our daily lives don’t register.When you’ve been driving on the freeway for several hours at a stretch, you don’t remember much of the scenery that has whizzed by: Your attentional system “protects” you from registering it because it isn’t deemed important. This unconscious filter follows certain principles about what it will let through to your conscious awareness.

Missing The Beautiful Sunset

The attentional filter is one of evolution’s greatest achievements. In nonhumans, it ensures that they don’t get distracted by irrelevancies. <ul><li>Squirrels are interested in nuts and predators, and not much else. </li><li>Dogs, whose olfactory sense is one million times more sensitive than ours, use smell to gather information about the world more than they use sound, and their attentional filter has evolved to make that so. </li></ul>If you’ve ever tried to call your dog while he is smelling something interesting, you know that it is very difficult to grab his attention with sound— smell trumps sound.

Dogs And Squirrels

Successful people— or people who can afford it— employ layers of people whose job is to narrow the attentional filter. That is, corporate heads, political leaders, spoiled movie stars, and others whose time and attention are especially valuable have a staff of people around them who are effectively extensions of their own brains, replicating and refining the functions of the prefrontal cortex’s attentional filter.These highly successful persons have many of the daily distractions of life handled for them, allowing them to devote all of their attention to whatever is immediately before them.

Buying Freedom From Distractions

The brain’s change detector is at work all the time, whether you know it or not. If a close friend or relative calls on the phone, you might detect that her voice sounds different and ask if she’s congested or sick with the flu. When your brain detects the change, this information is sent to your consciousness, but your brain doesn’t explicitly send a message when there is no change. If your friend calls and her voice sounds normal, you don’t immediately think, “Oh, her voice is the same as always.” Again, this is the attentional filter doing its job, detecting change, not constancy.

The Attention Filter Reports Anomalies, Not Routine Signals

If you’re driving, a billboard for your favourite music group might catch your eye (really, we should say catch your mind) while other billboards go ignored. If you’re in a crowded room, at a party, for instance, certain words to which you attach high importance might suddenly catch your attention, even if spoken from across the room. If someone says “fire” or “sex” or your own name, you’ll find that you’re suddenly following a conversation far away from where you’re standing, with no awareness of what those people were talking about before your attention was captured.

Catching The Mind

The human brain has evolved to hide from us those things we are not paying attention to. In other words, we often have a cognitive blind spot: We don’t know what we’re missing because our brain can completely ignore things that are not its priority at the moment— even if they are right in front of our eyes. Cognitive psychologists have called this blind spot various names, including inattentional blindness.

The Mind Makes Us Intentionally Blind

iPhones and iPads, email, and Twitter are the new revolutions.Each was decried as an addiction, an unnecessary distraction, a sign of weak character, feeding an inability to engage with real people and the real-time exchange of ideas.Our brains have collectively gone over the danger mark as information gets fed into it in truckloads.

When The Internet Happened

The industrial revolution brought along a rapid rise in discovery and advancement. Scientific information increased at a staggering clip.Today, someone with a PhD in biology can’t even know all that is known about the nervous system of the squid! Google Scholar reports 30,000 research articles on that topic, with the number increasing exponentially. The amount of scientific information we’ve discovered in the last twenty years is more than all the discoveries up to that point, from the beginning of language.

Information Overload

Learning how to think really means learning how to exercise some control over how and what you think. It means being conscious and aware enough to choose what you pay attention to and to choose how you construct meaning from experience. Because if you cannot exercise this kind of choice in adult life, you will be totally hosed. Think of the old cliché about the mind being an excellent servant but a terrible master. This, like many clichés, so lame and unexciting on the surface, actually expresses a great and terrible truth.

Learning How To Think

Attention is created by networks of neurons in the prefrontal cortex (just behind your forehead) that are sensitive only to dopamine. When dopamine is released, it unlocks them, like a key in your front door, and they start firing tiny electrical impulses that stimulate other neurons in their network. But what causes that initial release of dopamine? Typically, one of two different triggers:<ul><li>Something that is salient to your survival, with evolutionary origins.</li><li>You effectively will yourself to focus only on that which is relevant to a search or scan of the environment.</li></ul>

How The Attention Process Works

<ul><li>As knowledge becomes more available— and decentralized through the Internet— the notions of accuracy and authoritativeness have become clouded. </li><li>Conflicting viewpoints are more readily available than ever, and in many cases, they are disseminated by people who have no regard for facts or truth. </li><li>Many of us find we don’t know whom to believe, what is true, what has been modified, and what has been vetted.</li></ul>

Why Curation Is Important

Highly successful people have many of the daily distractions of life handled for them, which allows them to better focus their attention.

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Philosophy

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Mindfulness

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Problem Solving

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Leadership & Management

The History of Cognitive Overload - Farnam Street

I have no special talents. I am only passionately curious.

“Self-education is, I firmly believe, the only kind of education there is.”

We are born curious. Children learn from their surroundings by touching, smelling, and looking at everything. It is our best and most effective tool for discovering new things. However, some people are born with a deeper sense of curiosity that allows them to learn constantly.We can also cultivate curiosity. Whether traveling, reading, or finding yourself in a new situation, be curious and present. It is a great first step in your journey to becoming more knowledgeable and accumulating new and innovative perspectives.

Curiosity

Geniuses are completely focused on their work and prioritize it.Take the case of Albert Einstein, for instance. If you think of him, you probably picture him in a solitary study or behind a dusty blackboard in a lecture hall working on his groundbreaking ideas. In reality, Einstein was able to maintain his concentration regardless of his surroundings.

The power of focus

<ul><li>Be open to new and unfamiliar experiences. Push yourself to do something that scares you. Let yourself get lost in the wonders of nature or a new city.</li><li>Learn about geography, history, and local culture.</li><li>Ask questions. When you’re in the role of student or employee, don’t be afraid to reveal what you don’t know. </li><li>Once you ask, listen to understand. You’ll always learn something.</li></ul>

Rediscovering a lust for creativity

It is not unusual for geniuses to wreak devastation on their surroundings. The boat sways as a result of their actions. Whether we like it or not, they are altering the course of history. They also don’t do it in a way that is compliant with the law.

Defying the established order

Being brilliant entails more than simply being able to focus. It also involves the capacity to unwind, which is the polar opposite of exerting oneself and concentrating intensely.According to the creative habits of many geniuses, the most effective method to come up with new ideas is to take a vacation from your job for a period of time, enabling your fatigued mind to slacken and relax as much as possible.

Rest and relaxation

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Productivity

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Personal Development

7 Books on Habits

“An unusually engaging book on the forces that fuel originality across fields.” --Adam Grant Looking at the 14 key traits of genius, from curiosity to creative maladjustment to obsession, Professor Craig Wright, creator of Yale University's popular “Genius Course,” explores what we can learn from brilliant minds that have changed the world. Einstein. Beethoven. Picasso. Jobs. The word genius evokes these iconic figures, whose cultural contributions have irreversibly shaped society. Yet Beethoven could not multiply. Picasso couldn’t pass a 4th grade math test. And Jobs left high school with a 2.65 GPA. What does this say about our metrics for measuring success and achievement today? Why do we teach children to behave and play by the rules, when the transformative geniuses of Western culture have done just the opposite? And what is genius, really? Professor Craig Wright, creator of Yale University’s popular “Genius Course,” has devoted more than two decades to exploring these questions and probing the nature of this term, which is deeply embedded in our culture. In The Hidden Habits of Genius, he reveals what we can learn from the lives of those we have dubbed “geniuses,” past and present. Examining the lives of transformative individuals ranging from Charles Darwin and Marie Curie to Leonardo Da Vinci and Andy Warhol to Toni Morrison and Elon Musk, Wright identifies more than a dozen drivers of genius—characteristics and patterns of behavior common to great minds throughout history. He argues that genius is about more than intellect and work ethic—it is far more complex—and that the famed “eureka” moment is a Hollywood fiction. Brilliant insights that change the world are never sudden, but rather, they are the result of unique modes of thinking and lengthy gestation. Most importantly, the habits of mind that produce great thinking and discovery can be actively learned and cultivated, and Wright shows us how. This book won't make you a genius. But embracing the hidden habits of these transformative individuals will make you more strategic, creative, and successful, and, ultimately, happier.

education

Learning & Education

“An unusually engaging book on the forces that fuel originality across fields.” --Adam GrantLooking at the 14 key traits of genius, from curiosity to creative maladjustment to obsession, Professor Craig Wright, creator of Yale University's popular “Genius Course,” explores what we can learn from brilliant minds that have changed the world. Einstein. Beethoven. Picasso. Jobs. The word genius evokes these iconic figures, whose cultural contributions have irreversibly shaped society.Yet Beethoven could not multiply. Picasso couldn’t pass a 4th grade math test. And Jobs left high school with a 2.65 GPA. What does this say about our metrics for measuring success and achievement today? Why do we teach children to behave and play by the rules, when the transformative geniuses of Western culture have done just the opposite? And what is genius, really?Professor Craig Wright, creator of Yale University’s popular “Genius Course,” has devoted more than two decades to exploring these questions and probing the nature of this term, which is deeply embedded in our culture. In The Hidden Habits of Genius, he reveals what we can learn from the lives of those we have dubbed “geniuses,” past and present.Examining the lives of transformative individuals ranging from Charles Darwin and Marie Curie to Leonardo Da Vinci and Andy Warhol to Toni Morrison and Elon Musk, Wright identifies more than a dozen drivers of genius—characteristics and patterns of behavior common to great minds throughout history. He argues that genius is about more than intellect and work ethic—it is far more complex—and that the famed “eureka” moment is a Hollywood fiction. Brilliant insights that change the world are never sudden, but rather, they are the result of unique modes of thinking and lengthy gestation. Most importantly, the habits of mind that produce great thinking and discovery can be actively learned and cultivated, and Wright shows us how.This book won't make you a genius. But embracing the hidden habits of these transformative individuals will make you more strategic, creative, and successful, and, ultimately, happier.

Craig Wright is an accomplished writer whose work has resonated with readers around the world. Craig Wright has published several books that explore a range of topics, from fiction to nonfiction, and has received critical acclaim for the ability to weave compelling narratives. Craig Wright's writing style is known for its depth and authenticity, and has earned quite a loyal following of readers.

Understanding the Psychology of Money and What It’s Costing You

The History of Cognitive Overload - Farnam Street

The Hidden Habits of Genius

Roy Sutton