Welcome to the Making Margin podcast! Greenway’s team is here to discuss common financial mistakes and to help you navigate them.
Meet the voices behind Making Margin:
Today we’re talking about changing your mind, which seems abstract, but actually has a lot of applications to finance.
- As we start to get to know our clients, we like to find out about their background; then we talk through where they are now, then where they (think) they want to go
- Reality is that a financial plan is just a lot of assumptions about an unknown future, and we’re creating it with our current selves
Discussion Topics:
- Tell me something you were convinced about that you’ve changed your mind on (style, preference, whatever). Do you think you’ll change your mind about that thing again?
- Are there other things you’re convinced you will/won’t change your mind about?
- How can we build plans that allow for people to change their mind (a potentially expensive reality)?
- We all have inherent biases due to our way of thinking. Here is just a small sample of common cognitive biases:
- Law of small numbers: We bias towards anecdotal examples rather than statistically significant data. So we may generalize one incident to an entire population.
- Confirmation bias: We may be too quick to seize on limited evidence that confirms our existing perspective. And we may be too quick to dismiss contradictory evidence for the same reason.
- Over-optimism: We tend to come up with plans and forecasts that are unrealistically close to best-case scenarios.
- Assigning cause to random chance: We are quick to assign causality to events that may in fact be unconnected.
- Recency bias: We bias towards recent events when we make judgments and decisions.
Resources:
“Strong opinions, weakly held”: https://medium.com/@ameet/strong-opinions-weakly-held-a-framework-for-thinking-6530d417e364
How Risky Is It, Really?: Why Our Fears Don't Always Match the Facts
https://www.amazon.com/gp/product/B003O86EZK/ref=dbs_a_def_rwt_bibl_vppi_i0
