Predicting future can be difficult and mostly impossible. Especially if one’s trying to predict things which are completely out of their hands. Like, entirely! But guess what, surprisingly (not really that surprising to the scholars of human behaviour), most of predictions are made about exactly those.
We’re in the second week of the New Year and the mainstream media are already saturated with headlines about market predictions, interest rate predictions etc..
So I made my own list. However, the difference is, that these are about the one thing we can all fully control, if we choose to – our own behaviour.
I’m almost certain that my forecast won’t make the headlines because it doesn’t contain the information ‘the people want’. It’s not the sensational news or ‘the secret’ information that will bring them wealth. Well, actually it will, but not in the immediate form as they all expect.
So without further ado, here are my top 5 behavioural predictions for this year (and in fact every year thereafter, since human behaviour just doesn’t change):
1 . We will keep looking for ‘the right’ product that will ‘save’ us
Most corporations spend ridiculous amounts of money to employ top marketing agencies to sell their products. These behaviour wizards understand too well how human brain works and create wonderful campaigns that simply fool us. They play to our basic emotions - fear and desire, but lately also pride, frustration and self-esteem. And vast majority of population will follow and buy whatever they’re selling, not realising, the new product won’t make any difference in their long term well-being - financial or emotional. They will happily keep chasing it, year and year again, with their super fund, insurance company, mortgage provider…
2. We will ignore the behavioural (please read boring) issues that actually make all the difference
After over a decade of my professional practice, I’m yet to see a prospective client who will come to me asking for assistance with their patience, disciplined spending or emotional decision making. They all come asking to check if their super can be ‘’invested better’ (whatever that means) to deliver greater returns, for mortgage with a better rate or a cheaper insurance.
When I start explaining to them that it’s not the product that will deliver the outcomes they’re after and that it’s actually themselves who can do that via better money habits and mindful consideration of how they go about things, they get disappointed. Many don’t believe me. And subsequently leave and they continue pursuing the ‘whatever other crazy issues they’re convinced are important’ as everyone else and which will eventually drive them to the ground.
3. We will continue focusing on (out)performance
The ‘timing and selection’ culture we live in is obsessed with being better than average. We were told by our parents we can be the best so we expect nothing less from the results of financial products we buy. Not realising that the consistently best performance can’t be delivered year in, year out, we allow ourselves participate in the rat race we can never win.
Most of us will not want to see that it doesn’t have to be that way. That the best product performance (or the outperformance) isn’t required to pay off our debts fast, educate our kids or retire early (whatever that means).
Most of us will not accept that the only real outperformance is the one we can deliver ourselves via long term and disciplined plan, with a help of third party coach, keeping an eye on our vulnerable money behaviour.
4. We’ll keep buying things we don’t need
A decent number of books, movies and pieces of research has been done on how buying stuff does not make us happy (in the long term). Most of us just don’t want to (?) get the memo. It’s actually getting worse and more pathetic, with big companies now skipping parents and market directly to our children. And oh boy, do we all know what a kid shit behaviour does to a parent who is tired, lacking sleep and just wants to have a quiet moment or just wants to pop in the grocery store to only buy milk. So what do we do? We give in. To our kids, to fashion, to our marketing and social media driven culture. … but it’s so hard to save money these days, isn’t it…?
5. We won’t listen to financial advice professionals
Less than 5% of population has a dedicated financial coach who overlooks their family’s finances and long term interest. How can we expect to get ahead, to live lives on our own terms, to get financially independent, to retire early or whatever the headlines we buy into says, if we choose not to have hard conversations about the way we spend money?
Well, because it’s easier and so much more exciting, to look up stuff online or chat to our friends or read an article about the latest products and hottest suburbs to buy in right now.
Therefore, we will continue to choose to not engage a financial advice pro because we’ll continue to justify it to ourselves – don’t you read the paper or watch a TV report about them? It makes us feel better to say that and we won’t have to look for anyone (and use our brain). So we’ll just continue to Google…
Well, there you go. My top five (although the list goes on). I’ll be delighted to check in again in December to see if they came true. But I’m pretty bloody confident... Because they do every year.
All the best.
Michal 'Misho' Bodi
I've dedicated my career to educating people about what really matters about money, what they need to know and what is just noise. I believe that having practical understanding of what can appear to be a very complex issue and having a clear plan empowers people to achieve greatness.
I make money issues look simple, elegant, easy to digest and practical. I'm convinced it’s the only way to accomplish anything in the busy and dynamic environment we live in. You only need to know what's relevant to you. Everything else is commentary…
My specialty is helping people to open up and have an honest conversation about where they are financially and why. Then inspiring them to get proactively involved in the process of planning their lives by providing practical guidance and ongoing money coaching.
mbodi@sydneyfinancialplanning.com.au
