How to avoid money mistakes
2:02
4 areas of money management
- cash
- debt
- risk
- wealth
Common money mistakes are lack of budgeting and over borrowing
Behavior finance
Lock-in profit
Gambler fallacy
When it comes to loose change, people find ways to spend it.
Glass half-full solution
- Can you save 20% of income? (outright loss)
- Can you live on 80% of income? (Foregone gain)
Money illusion / bigness bias
To us, when something is small it's insignificant and when something is big, it's more valuable.
0.99/ month, 14% annual interest
Emotions affect the way we look at money.
11:05
Jesse livermore:
"If there are ABCs in investing, there are also FGHIs... FEAR, GREED, HOPE and IGNORANCE"
Financial denial - acceptance of money mistakes
14:30
grocery store shopping - alternative brand - grouch low
More expensive - eye level
15:14 Answer questions
18:52
Question:
Most days I spend more than what I should. How can I stick to my daily budget?
Answer:
grocery store shopping - alternative brand - grouch low
More expensive - eye level
15:14 Answer questions
18:52
Question:
Most days I spend more than what I should. How can I stick to my daily budget?
Answer:
- Discipline yourself
- Start saving
- Live within your income level
Question:
Her mom sold a house. How does she invest the money?
Answer:
- Investing not just about the return you want.
- It also involves risks
- Ask a financial planner to do a projection of what's needed to live a certain life style.
Balanced fund, less risk - a doctor earns good income
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