Common Sense Financial Podcast
Our Mindset about Money and The Impact It Has on Our Finances
The older I get the more I realize the impact our mindset has on every aspect of our life including our finances. What you think about, what you believe and the way you go about making decisions and living life is a direct result of how we think.
This is a very powerful thing to understand about yourself and I hope you allow me the opportunity to explain why this has everything to do with your money and your future.
We all know that there is no shortage of information and opinions on the topic of money. Turn on the TV and you are inundated with commercials for products, services, books and seminars that are screaming for your attention.
Meanwhile, we read blogs, listen to podcast, and hear friends and family discuss things you should and shouldn’t do with money.
It is an overwhelming amount of content that seems impossible to sort through and understand. In fact, it is said that the brain processes 400 billion bits of information per second and it is estimated that we consume 34 gigabits of information per day.
Our brains are set to overdrive trying to sort through and make sense of what we are consuming. It seeks short cuts as it associates information with something we are already familiar with. It is like an assembly line grabbing things and throwing them into predefined categories you have already established for yourself. This process reduces the amount of thought that goes into figuring out what something means.
It is only when something new comes along that we cannot categorize that we pause and seek just enough additional information so that our brains can get it categorized as quickly as possible.
The challenge is that once you have created this association or pathway in your mind about something, it is difficult to redefine it unless you stop to consider what is happening.
This is why when it comes to money, people tend to lump much of what they think they know about money together into a mental “dollar sign” file and anything that has a dollar sign associated with it gets thrown into it. In reality this is more like a mental junk drawer full of mismatched information.
The take away from all of this is that a lot of what you hear about money may seem like it is all-similar since it has a dollar sign but the fact is that it is not. And unless you take the time to really understand what you are consuming you run the risk of making mistakes and missing opportunity.