Understanding human psychology unlocks the secrets to why we do the things we do and may help us recognize why we may not always act in our best interest. Many are reluctant to practice good financial habits because consumption is sexier than saving.
It is exciting to buy, to eat, to watch movies. It is not as exciting to buy insurance, save for retirement or save for your children's education. Our senses control much of what we do and how we spend money. Things that we touch, taste and smell drive our decision making.
Other concepts that may be holding us back are a little less obvious. When offered two similar rewards, people show a preference for the one that arrives sooner rather than later and often discount the value of the later reward depending on the length of the delay.
Long-term activities require more cognitive resources and we often put off doing these things believing that we will have more time to do them tomorrow. The lack of financial literacy is also holding back Canadians.
People who do not save as much as they should know they do not save as much as they should.
If you would like to get on track and get peace of mind, please give me a call.