Investing time in learning how to manage our finances can be a great idea, as we often make important mistakes without realizing it, so financial psychology can be our best ally these days.
In this article we will explain the relationship between financial psychology and economics, what is financial psychology, the benefits of making assertive use of our finances and some measures to avoid becoming our own enemies in the economic sphere.
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? Don’t you ever spend your money before you have it? -Thomas Jefferson-
Psychology draws attention to the cognitive, behavioral and emotional aspects of human beings. Economics, according to the dictionary, is “the science that studies the most effective methods to meet human material needs through the use of scarce goods”.
What’s the connection between them? Both study humans and focus on their welfare-oriented behavior. Everyone considers the needs of the human being and how they relate to those needs to feel better.
Thus, they both seek to analyze behaviors and their effects on decisions, but they do so from different perspectives.
For example, the economy focuses more on explaining collective behavior. In addition, the search tools are different.
In this sense, does the economy use the deductive hypothetical method more, as suggested in the article?Psychology and economics from a multidisciplinary perspective? (“Psychology and Economics from a Multidisciplinary Perspective”, in free translation), written by Margarita Billon Currs, professor at the Autonomous University of Madrid.
Psychology, depending on its approach, can approach health sciences and see beyond the influence of culture, spending management and relationship with materials.
Here are some of the areas of common interest in both sciences
Financial psychology is the discipline that studies and intervenes in money-related behaviors, in particular analyzes the interaction of financial markets with human nature.
Thus, through the analysis of our behaviors, it shows the psychological barriers that affect the decisions we make in relation to our finances.
In this way, it brings us closer to a better understanding of our own decisions, that is, it helps us increase our financial awareness.
In addition, it also intervenes by showing us the role that unconscious aspects play in making money-related decisions, and guides us to be more assertive.
Finally, it not only emphasizes individual aspects, but also takes into account the influence of the environment and the practices they have taught us in relation to money.
James Montier, one of today’s best-known investors and author of the book Financial Psychology. Cemo not being your worst enemy (Financial Psychology. How not to be your worst enemy, in free translation), shows our relationship with money and what needs to be done to overcome obstacles when making financial decisions that highlight our behavior.
Then we’ll list a few steps to avoid becoming our own financial enemies:
On the other hand, we must keep in mind that we are not perfect and that we should not be perfect, so it is important to know each other, be authentic and follow strategies that are in favor of our well-being. Being.
In addition, it is important to know that there are unconscious mechanisms that are present in our relationship with money, and that our personality traits also influence, so some people spend more and others less.
We should not be afraid to ask for help, a financial specialist, psychologist or financial psychology professional can guide us to be more assertive.
There are great advantages of applying the principles of financial psychology or having a professional in this field who can guide us. Let’s take a look at some of them:
To open a space to financial psychology in our lives is to learn the wonderful art of knowing how to invest, it is not a simple question, but an unpublished path with which we can learn every day, because every decision will reveal something about ourselves.
Financial psychology leads us to be more assertive with our money, it is a great way to recognize our relationship with it and know where to go, always looking for our well-being.
“To make more money, you don’t need to work harder, you need better ideas. -Steve Jobs-