TED Talks are insightful, inspiring, and motivating—especially when it comes to money. Blogger Stephanie Taylor Christensen offers six ways watching a TED Talk can improve your financial outlook.
If you’re a fan of TED Talks, you know they’re great for insights, creativity, and motivation. Here are six takeaways, aimed specifically at personal finance, from TED speakers.
1. Remove your tendency to financially procrastinate. In Saving for Tomorrow, Tomorrow, economist Shlomo Benartzi says the reasons that most people think they cannot afford to save has more to do with the perceived loss they associate with saving than their ability to set money aside.
He uses the example of self control to illustrate his point: Most of us can visualize eating better tomorrow or managing to spend more carefully once we make more money in the future.
When we think about that same goal in the present tense, self control becomes a real challenge. We consider what we need to give up here and how to make the goal happen. Often, we determine it’s not worth the loss.
Benartzi suggests we get out of our own way: Stop thinking about saving in the present tense, and view it through the lens of a future aspiration—where you almost always perceive you’ll have success. Automate contributions to your savings account, for example, or automatically direct a percentage of your annual raise to your retirement account each year. Remove the potential to imagine you’re taking a loss, and you’re more likely to succeed.
2. Acknowledge that your financial thoughts aren’t rational. When cognitive psychologist and Yale professor Laurie Santos gave monkeys grapes to barter, trade, and invest in a monkey marketplace of sorts, she and her research team realized that monkeys make the same kinds of faulty financial decisions as humans.
In a Monkey Economy as Irrational as Ours, Santos explains that’s partly because most of us (including monkeys) base perceptions of financial risk relative to where we started—not based on the actual risk, or the potential return on investment. Further, we think in absolute terms: I have more, or I have less.
To cloud our logic further, humans are heavily influenced by the bias called loss aversion: We unintentionally become more risky in our decision making, in a misguided attempt to avoid loss. (For example, you may risk not saving enough money to retire because you’re afraid to lose money investing.) When Santos’ team observed the decisions monkeys made with their grapes (their form of currency), they consistently weighed losses more heavily than gains when making trades.
There’s considerable power in knowing your financial thinking may not be correct—despite your instincts. In turn, you can make better choices. “The irony is that it might only be in recognizing our limitations that we can really actually overcome them,” says Santos.
3. Connect your two selves. As Daniel Goldstein explains in The Battle Between Your Present and Future Self, most of us think we have a future, but we usually don’t give it the same weight as our present.
To identify ways to make the future self less abstract, he and his research partners used various images depicting the future to measure how they would impact study participants’ decision making about future goals. In some cases, they used images of the types of homes a person could afford to live in during retirement, based on their current retirement strategy. In other tests, they used age-morphing software to show people what they’d look like in their 60s, 70s, and 80s to make the future feel more concrete. In all cases, participants made better decisions when their future life was put into pictures.
Use Goldstein’s work to prioritize your own future: Print pictures of a home you’d like to live in retirement, and measure your retirement savings progress as you become closer to being able to afford that lifestyle. Snap a pic on your smartphone and morph it with an aging app: It’s harder to justify spending only in your present self when your 65-year-old self is staring back at you.
4. Give a little. In How to Buy Happiness, Michael Norton explained the results of an experiment he conducted to test how money correlates to happiness. His global research revealed that those who spent money on someone else reported feeling happier after the fact. In all cases, the amount given did not impact happiness; it was simply the act of having given to someone else.
5. Ask your friends what they spend. In How Behavioral Science Can Lower Your Energy Bill, energy software entrepreneur Alex Laskey shares the results of his team’s efforts to reduce people’s energy consumption. While the team expected that messages communicating how much money a person could save by changing their household energy use habits would be most impactful, they found that people who were told that their neighbors had reduced energy consumption (and how they did it) were far more moved to change.
His findings can impact your behavior: Ask friends, colleagues, and family members you respect what they do to be more successful in their financial lives. You may find that the element of social pressure is all you need to adopt some positive new money habits.
6. Stop being silent about your salary. Not discussing how much money you make may be social etiquette, but as management researcher David Burkus says in Why You Should Know How Much Your Coworkers Get Paid, not knowing the salaries of those who have comparable skills and professional histories as your own hinders your earning potential, along with that of every worker.
As he explains, salary secrecy is only in the best interest of the hiring company.
When you don’t know what others make, says Burkus, you don’t have the tools you need to negotiate, or determine what the marketplace says your skills are worth. “Openness remains the best way to ensure fairness, and pay transparency does that,” says Burkus.
Stephanie Taylor Christensen is a former financial services marketer
turned freelance writer who covers personal finance,
career, health, and small business news.
She is the owner of Om for Mom prenatal yoga in Columbus, Ohio.
Connect with her on Twitter.
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While Society of Grownups hopes the information is useful, it’s only intended to provide general education. It’s not legal, tax, or investment advice, and may not apply or be useful to your specific financial situation. If you need recommendations geared to your personal financial situation, schedule time with a financial planner.