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Humans are imperfect. We make mistakes, miss the mark, and often, let emotions get the best of us. This happens in our financial life too, but rest assured, it’s all part of the process.READ THE ARTICLE
The dynamics of decisions: Many of the choices we make stem from our System 1 (the impulsive, irrational, fast-thinking core processor part of our brain). Then, we leverage our System 2 (the thoughtful, procedural, slower-thinking processor), to rationalize our decision. The fact of that matter is, we are complex as humans, and often have trouble separating from our emotions. It’s how we function, and we’re bound to come across mishaps as a result. However, there are ways to make the most of these instances, as listed here:
📌Reflect on your experiences: We can effectively retrain our future behavior by engaging our rationale and reflecting on our reaction.
📌Form habits and set defaults: You have greater ability to form a new habit once you’ve reflected on a past mistake, and know not to repeat it. Understanding how your psyche works and setting yourself up for success now will help lead to better decisions down the road.
📌Build margin: Preparing ahead of time for future money mishaps can be accomplished through a buffer of savings. Ask yourself, what amount of liquid cash will help you sleep well at night?
Look forward: While it’s easy to dwell on your financial mistakes, keep your focus on how to learn and grow from them.