The Psychology of Money | maijson GKB.
Image source: Commons Wikimedia Although money is a vital part of our lives, our relationship with it is frequently complicated and motivated by factors other than rationality. How we earn, spend, save, and invest can be greatly influenced by our thoughts, emotions, and past experiences. This is where knowledge of the complex relationship between our thoughts and our financial decisions—the psychology of money—comes into play. Framing and Biases: Cognitive biases might influence our financial decisions since our brains are programmed to make mental shortcuts. Following are a few typical examples: Loss aversion: We get twice the pleasure from a gain in the same amount of money. Missed investing opportunities and risk-averse behavior may result from this. Anchoring: When making judgments, we place far too much weight on the first piece of information we are given. This may affect how we view the worth of investments or the r...