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  • #3: Your relationship with money is complex. But it needn't be complicated.
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  • #24: My favourite way to think about investing, part 1
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  • #27: The ABC of money, part 2: financial nobility, an overview
  • #28: My favourite way to think about investing, part 2
  • #29: The ABC of money, part 3: financial nobility, step 1
  • #30: My favourite way to think about investing, part 3
  • #31: The ABC of money, part 4: financial nobility, step 2
  • #32: The idiocy of ignoring impermanence (the ABC of money, part 5)
  • #33: The six financial stress responses: what's yours?
  • #34: My favourite way to think about investing, part 4: betting beyond the basics
  • #35: The ABC of money, part 6: financial nobility, step 3
  • #36: My favourite way to think about investing, part 5: cost-benefit investing
  • #37: The ABC of money, part 7: financial nobility, step 4
  • #38: The best diet advice and the best financial advice are the same
  • #39: The ABC of money, part 8: The Eightfold Path and interdependence
  • #40: The dance of becoming wiser with money
  • #41: Building a better money brain (the ABC of money, part 9: neuroplasticity)
  • #42: The dumbest damn thing I’ve ever read in personal finance (part 1)
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  • #45: The ABC of money, part 10: what meditation isn’t
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  • #53: Money for many means happily ever after… but after what?
  • #54: The ABC of money, part 13: financial enlightenment
  • #55: Identifying your hidden money addictions
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  • #57: Idiot Money Maths #1: How much does it cost to keep you happy?
  • #58: The ABC of money, part 14: the secret shackles of financial freedom
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  • #61: Idiot Money Maths #2: What is your default unit of spending?
  • #62: Balance isn’t stillness
  • #63: A problem shared
  • #64: How to live well, even in a palace (the ABC of money, part 16)
  • #65: Denunciation is still attachment (the ABC of money, part 17)
  • #66: “What do Blackheath people do?” (a story about how not to do financial planning)
  • #67: The ABC of money, part 18: Addicted to a dream
  • #68: What hot new financial knowledge are you likely to find in 2022?
  • #69: Red Pill Financial Planning: Escaping the Money Matrix
  • #70: The nasty narrowness of number-governed living
  • #71: Getting into Financial Flow
  • #72: The ABC of money, part 19: Denunciation bad, renunciation good
  • #73: I, Robot? Money and the misleading mechanisation of life choices
  • #74: Kondo your credit-card statements
  • #75: The rule of 72 (and its oft-overlooked implications)
  • #76: Forget about improving your decisions. Focus on improving your decision-making skills
  • #77: Seeing your financial world more clearly (the ABC of money, part 20)
  • #78: How to lose 2 1/2 stone in 6 months: an intro to the best non-fiction book I've ever read
  • #79: Your money worldview is (literally) half-brained
  • #80: Cost-consciousness beats cost-cutting
  • #81: Financial change that doesn’t start from your financial worldview is selling you short
  • #82: The overlooked truth of reality that is messing up how you live with money
  • #83: How money hijacks your hierarchy of attention
  • #84: The value of (almost) everything to you is nothing
  • #85: Financial philosophy > Financial psychology > Hot investment tips
  • #86: Five regrets of the rich
  • #87: Sum malfunction: a sure-fire way to spot if you’re being a financial idiot
  • #88: The Micawber Fallacy, or what your Dickensian maths misses about spending wisely
  • #89: The tell-tale signs of a poor financial worldview
  • #90: Wanting wisdom, craving financial fortune cookies
  • #91: You don’t need a scammer to be scammed: your desperation for an ‘answer’ will do almost as well
  • #92: Are you reading the wine list the wrong way around?
  • #93: Some personal finance puzzles and how not to solve them
  • #94: The main reason your relationship with money is so messed up
  • #95: The tyranny of the takeaway
  • #96: Deep wealth v shallow wealth
  • #97: What seeing your financial life more clearly looks like
  • #98: Making more of your money isn’t a maths problem
  • #99: Is what you’re doing for and with money working?
  • #100: Where to start, where to go, what to do about what’s stopping you
  • #101: The life cycle of a financial idiot
  • #102: I can read your financial mind
  • #103: Don’t worry about playing a game better when there’s a better game to play
  • #104: Reflections on two years of this newsletter, and why I’m taking a six-month break
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  • Healthy choices, or healthy mind?
  • The mysterious monotony of miscellaneous expenditure
  • Helping hands aren’t always handy or helpful
  • Your mental machinery isn’t mechanical

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#76: Forget about improving your decisions. Focus on improving your decision-making skills

28th February, 2022

Previous#75: The rule of 72 (and its oft-overlooked implications)Next#77: Seeing your financial world more clearly (the ABC of money, part 20)

Last updated 3 years ago

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Welcome to the Idiot Money newsletter. This week, becoming wiser with money by understanding that your financial decisions are a system, not a series of snapshots, including:

  • Why you want to focus not on better individual decisions but on improving your decision-making skills, so you make better decisions by default, rather than by way of a constant battle based on denial.

  • Recognising the pervasive and pernicious problem of believing yourself to be a robot when it comes to money.

  • And the age-old puzzle of why we ‘reward’ ourselves for doing a thing we want to be doing by doing a thing we don’t.

The common, idiotic way of living with money is characterised by a belief that how you live with money is a mechanical series of isolated decisions. This leads to a focus on ‘improving financial decisions’. Yet this focus can entrench the behaviours we want to change. It is not your isolated decisions, but your decision-making skills that you want to improve.

Do you know why supermarkets stock the fruit and veg at the front of the store, despite the fact that, as the stuff that bruises most easily, it would make more sense to have it at the end, where it would naturally sit on top of everything else you’d bought along the way?

You probably do.

It’s because smugly lining your basket with some fresh green stuff makes it more likely you’ll fill it full of crap later, as some sort of perverse ‘reward’ for your earlier healthy choices.

Most people are aware of the panoply of profit-maximising psychological tricks that supermarkets play. But they’re not wise to them. Wisdom requires action. And spotting a trick doesn’t reliably stop a trick.

And even when it does, battling past one trick doesn’t transfer to being blissfully unmoved by the ambush of others waiting around the corner.

Contemplating the implications of why the tricks work even when we know they’re tricks is far more fascinating than the basic psychology of why they work in the first place.

You don’t need a supermarket psychologist to trick you, of course. You’re perfectly capable of tricking yourself.

Which makes it even more fascinating.

Healthy choices, or healthy mind?

Consider someone who wants to live more healthily (or maybe just lose some excess fat) so decides to do some exercise.

They pop on their trainers and go for a run.

At the end of the run they ‘reward’ themselves with a cookie or a croissant. Which, if they’re a typical person going for a typical run, probably contains more calories than they just burnt.

The point, however, isn’t the equation of calories consumed versus burnt. There’s way more going on beyond the numbers, such as habit formation, the theoretical consumption of counterfactual cookies and croissants, and the interplay of intentions and identity in the process of behaviour change.

The point is that as long as the counteracting behaviour – the cookie or the croissant – is seen as a ‘reward’ then you haven’t changed the one thing that matters: your mind, and because of that, you’ll be fighting the impossible task of trying to win a battle that never ends.

The mysterious monotony of miscellaneous expenditure

Every client I’ve ever met, when asked to analyse what they’ve spent their money on, has described each and every year as ‘exceptional’.

This ironic overwhelm of ‘one-off’s isn’t only an issue for millionaires dealing with addictions to architectural overhauls.

It affects everyone.

When it comes to a human life, there’s no such thing as a one-off. Every decision is linked to every other. Every decision both expresses and shapes who that human is in a process of becoming. How you do anything is how you do everything.

Yet how many financial decisions (or food decisions, or whatever decisions) do we earnestly believe are ‘just this once’ transgressions from who we ‘really are’, rather than the most reliable indicators of it?

Helping hands aren’t always handy or helpful

Because people perceive that the ‘problem’ for which they are seeking a simple solution is one of making better decisions, rather than cultivating better decision-making machinery, that is what the ‘solutions’ that fill our shopping baskets focus on.

The hot new supplement. The smarter app. The simpler step-by-step guide.

If you seek a cleverer app or a simpler step-by-step because you believe finance is scary and complicated, then you are entrenching that belief, not dealing with it.

People seek financial advice for the same reason they seek any advice: because they feel stuck. Someone can want to change, can imagine what being changed would look and feel like, can attempt all sorts of ways to change, but never actually change. The way clients saw it, however, was that they were paying not to get unstuck, but to ‘allow’ them to be unaware of being stuck. This has the advantage of being easy, but the disadvantage of not working. It looks like it works, because it works better than nothing, but it doesn’t work on the meaningful sort of level that leaves someone feeling like they can comfortably fire the adviser.

It doesn’t work because to feel stuck is to experience an existential inertia, and external treatments can only salve, not solve existential issues. Etymologically, to suffer from inertia is to be ‘unskilled’, ‘inactive’. Unable to go anywhere under one’s own steam. To basically be dead. Even if you’re drifting somewhere, you’re essentially going nowhere. The inert body is both not changing and resistant to changing because it is resistant to self-propelled changes of motion.

Your mental machinery isn’t mechanical

You are not a robot.

You do not transform into a robot when you come into contact with money.

If anything, money amplifies your emotional engagement with every decision it touches.

Each little decision may feel innocuous, but their daily volume means in context – i.e. as contributors to the quality of your life, and your ability to use your money to make that life better – they quickly become deadly.

A focus on a destination may start you going somewhere, but maintaining it gets you nowhere, and invites a constant struggle in the process. Dreams of a somewhere may ignite a spark, but it’s nurturing the fire within us, not the light on the horizon (or across the bay), that warms our lives.

Like the post-cardio croissant, if your ‘nudge’ is a ‘reward’ that’s working against the very mindset you’re trying to alter, then it’s clearly never going to work.

There’s a strong temptation for the truly stuck to believe that these, even if imperfect, can be a helpful kickstart, before . However, it’s a bit of leap of faith to believe that a path picked because it enables delay is the same path that’s going to magically defeat delay later.

As I wrote , in the context of face-to-face advice (which of course is just the slightly-richer person’s version of the exact same issue):

However, if you start from trying to improve not your decisions, but your decision-making skills – which in the context of your financial decisions, is – you’re walking along a far more productive path; one that leads not to a dead end, but to an end of feeling dead.

In robot world, healthy choices add up to a healthy mind. Do everything right, and out pops the result of a good life. In human world, it’s more complex. And that’s the point. .

From bananas in your shopping basket, to ‘rewarding’ yourself for doing a thing you want to be doing by doing a thing you don’t, to tactic number one in the , there’s no easier way to be manipulated into making mistakes than to live as if your decisions were a series of isolated snapshots rather than a systematic expression of your inescapably integrated patterns of thinking.

And while it’s possible, through environment control, and other assorted psychological nudges, to make better decisions often enough that your decision-making machinery changes as a side-effect, this is both unreliable and – where it lacks the overriding intention to face fears rather than flee from them – .

We need both a . The flourishingness or fucked-up-ness of our fate flows like a waterfall from a cascade of droplet-sized decisions. Little lifestyle choices add up to big brainstyle choices.

sorting it ‘properly’ later
here
the way your relationship with money is mapped in your brain
To human is to complexify
unscrupulous salesperson’s vision-narrowing playbook
doomed to fail
zoomed-out view to check we’re on the right path, and to zoom-in on each individual step that keeps us there