It is the first working day of the week, and the last day in the month of September, it has been an eventful year for me; there have been loads of down, there have been ups too; there have been promises made and those broken; i have learnt a lot, and taught others a lot; i have given voice to many dreams and shied away from others; i have fallen in love and fallen out of love; i have rejoiced with some and cried with others; i have made money and lost money too; so much has happened in life, love, business, etc but it has all made me a better person. If you haven’t been involved in much, you would probably say the year just went by without you knowing; for some, the year traveled too fast.
My thoughts are roving around the fact that we are in the…
I have being out on a business trip and thus have being out on this platform. The month of September has come to a close. This is also the end of the third quarter of 2013 and gradually the year closes. I read through the timeline of my mentor on twitter (@deoluakinyemi) today and was moved to action by his tweets. I felt sharing it would make an impact. Don’t forget to drop a comment and have a great month of October.
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As we advance in years our life reserves get reduced and we embark on the process of dying. #WhatIsLiving
Living is dying; like d pages of a book, as d left piles up, d right diminishes until we hit d back cover & turn d book over.. #WhatIsLiving
It is however interesting that in order then to live life fully; one must embrace the possibility of death. #WhatIsLiving
I trust you had a wonderful weekend. Let’s kick start this week with the right decisions especially spending and borrowing decisions. Don’t forget to drop your comments.
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A professor recently conducted a research to determine how nature and nurture impact spending and borrowing habits. SIMON EJEMBI writes on the outcome of the study
Many people have struggled to develop satisfactory financial habits over the years. For some, the efforts have been rewarding; for others, they have been in vain. Some have concluded that there is nothing they can do to successfully develop healthy financial habits. “It’s just the way I am; it is natural,” some of them may say.
Could it be that financial habits are genetically transferred?
A study by Dr. Hersh Shefrin, Chair in the Department of Finance at Santa Clara University’s Leavey School of Business tries to answer the question.
In the executive summary of the study entitled, ‘Born to spend? How nature and nurture impact spending and borrowing habits, Shefrin says, “Many people have poor spending and borrowing habits, but what is the reason? Is it because they are genetically predisposed to make bad financial decisions or is it because they have poor financial literacy due to ineffective education? It is the classic“nature vs. nurture” question and, unsurprisingly, the answer is “it’s complicated.”
According to him, understanding what drives our financial behavior is important because strong financial literacy and good spending and borrowing habits are closely linked.
The study, which was published in April, 2013, concludes that when it comes to spending and borrowing, there is a wide spectrum of behavior.
“Some people are born with traits that lead them to make good decisions but many others are not,” it says.
It, however, explains that while an individual’s genes play a role in financial decision-making, nurture and education play a significant role as well, meaning that there are opportunities to teach people better financial habits.
How people make financial decisions
For people to make better financial choices through smart nurturing and education, it is important for them to understand how they make financial decision and the impact of nature.
According to the study, most decisions, including decisions about spending and borrowing, feature a combination of one’s habitual instincts known as fast thinking, and one’s purposeful and strategic thought processes utilized to override habits known as slow thinking.
It adds that as with other habits, like smoking or overeating, it is difficult to overcome one’s fast thinking instincts, because the brains are hard-wired to resist the acceptance of immediate pain and the delay of gratification.
It says, “The way our brains make decisions can be equated to a human rider atop an elephant. The elephant represents our habitual, fast thinking processes – things like walking, breathing, brushing our teeth, taking care of simple chores. The elephant is strong yet difficult to control.
“The rider on the other hand represents our ‘strategic’ processes – activities like planning, list making, and other deliberate efforts to overcome our instincts. Often, people try to guide their behaviour relying on rules of the thumb, known as heuristics.
“However, our own biases lead to misjudgments often and put us on the wrong paths. The question we all wish to answer is: How do we overcome natural instincts and our habits to successfully equip our riders with skills to point their elephants in the right direction?”
Shefrin notes in the study that while financial literacy is important for making sound financial decisions, studies have shown that traditional financial education has largely been ineffective in increasing the degree of financial literacy.
“Unfortunately, the existing efforts to promote sound financial decision-making, while well-intentioned, have not kept pace with what psychologists, economists and others have learned about how the human mind works,” he stresses.
According to the study, in order to make real progress, people need to harness innovations that can make it possible for them to overcome poor spending and borrowing habits. It explains that smart nurturing programmes, new technologies, and new educational techniques, such as using educational gaming software, are all underutilized ways to get people to make better financial decisions.
It says, “It is the time to use our knowledge and resources for a collaborative approach across public and private sectors to instil mindful spending and borrowing habits in our classrooms and beyond. The private sector and the public sector, members of the media, educators, and individualsthemselves can all play a role in improving financial practices. We can help people become more mindful spenders and borrowers; we just need to embrace the new knowledge and technology available.”
According to the study, fast thinking processes and numeracy skills are part of people’s natures. It explains that smart nurturing is suitable in helping people overcome their nature because it involves using psychology to help them make better decisions by changing the interactions between their slow thinking processes and fast thinking processes.
While the study admits that changing behavior is difficult, it says the fact is that some people manage to do it.
To successfully change behavior, it says three principles are involved. They are:
1.Articulating the change to be made and laying out the steps necessary to get there.
2. Finding ways of generating appropriate emotional rewards along the path leading to change.Emotions are part of fast thinking. Emotional rewards come in many forms, but one important form pertains to identity. People who want to change often want to change their identities, and so part of the reward is behaving in a way that supports the vision the person has of who he or she wants to be.
3. Manipulating the environment to foster change, using a variety of techniques such as the cultivation of new habits and modifying the choice architecture, which means intentionally structuring the choice environment to influence the choices people make, essentially, to “nudge” them to make different decisions.
As ‘complicated’ as this may appear, Shefrin says, “The research is clear that many people would like to make better decisions about spending and borrowing, but lack the knowledge or the motivation to do so. It is time to harness new innovations in order to help them to do a better job of making ends meet, taking on less debt, reducing unnecessary financial fees, and setting aside funds for unexpected expenses.”
I have been out on a business trip and so far I have not been chanced to share some of my thoughts on a blog. I saw this great and inspiring little piece by a friend (Olugbenga Stephen Asaolu, a great motivational speaker) and thought to share it with you.
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Being generous is not a function of income…it’s a function of the heart.
It doesn’t come from the top of the purse, but from the bottom of the heart.
You don’t need to be a multi-billionaire to be generous.
Money is not the only thing you can give.
Ordinary people spend their most valuable time making money
But extraordinary people utilize their time in making people
An encouraging word from you can give hope of a better tomorrow to a promising youth
A smile from you can help someone on a suicide mission reverse it!
It’s all about serving others…
Looking for ways to add value to them…
That’s the way to achieving significance in life.
Your purpose in life is not only “to have and to hold” but also “to give and serve”.
A highly successful steel merchant and philanthropist once said; “No man becomes rich unless he enriches others”.
Go do something!
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As the ember months unfold, I wish you draw closer to achieving your set goals and become more.