Faulty Perceptions That Lead To Financial Disaster

Are you bankrupt at the moment? Have you suffered huge money losses? If I ask these questions in the present times, you’ll obviously point to the recession as the culprit. Agreed; recession did have a huge impact on bringing many of us out onto the streets, but you should know that many a time we ourselves are responsible for the plight in which we are now. My friend Joe had a good job with a software company before the recession. He sailed through every month smoothly as he spent his entire salary on living life without saving even a dollar. The recession came and he went jobless. He and his family are starving. Who’s to blame for this? You ask Joe and pat comes to his reply “recession, it’s not me!” Tell me, friends, do you agree with Joe?

You’d better check some faulty perceptions so that you don’t make the same mistake that Joe’s done.

Days Will Remain Sunny Forever

Just like Joe, I’ve found people leading apparently smooth lives living entirely on their salaries or current monthly incomes. Had it not been for the recession, people like them would laugh at you for asking them to save for the rainy day. They also don’t think of making any further investments with their money and make it grow as they are simply complacent with the way life’s going. Life for such people goes smoothly for as long as they are lucky. In the case of any eventuality, they succumb badly to the adversities.

I Know Everything I Don’t Need To Take Advice

My friend Cathy had some really bad financial problems. She’d invest her entire salary in her side businesses and would wait with high optimism for good results. You know how the recession was, the businesses failed and now she’s not having money to even feed her children. She denies the fact that she’s to blame for her situation and says its recession Financial Disaster that’s the actual culprit. Long before this happened I could sense Cathy’s fault. She was making investments without saving enough for any hardships. She was too optimistic of getting good results. When I’d warn her, she’d simply say that she knew what she was doing and didn’t need any advice. I say, confidence is good, but overconfidence always leads to downfall.

Giving Excuses for Everything

You make a wrong investment and then you lose the game. Do you blame yourself or anyone else for that? There are so many people who don’t want to accept their foolishness at any cost. They’ll keep blaming external conditions for that. My friend started selling imported garments once. He priced them double their normal price thinking that because of their high qualityfinancial problems and chic looks people would buy them. Out of 10 only 2 sold. The reason was obviously the very high price. But my friend would never admit to his fault. He’d say that people did not have the right taste or recession lowered their spending capacity.

On the whole there are many such faulty perceptions that put us into trouble. It’s best to recognize and admit your faults so that you rectify them and become efficient financially.

About: Claude Ford

American economist. Nobel Laureate in Economics in 2017 for his contribution to the field of behavioral economics. Honorary Professor of Behavioral Science and Economics at the School of Business of the University of Chicago.

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