Image source: Professorgalloway.com

Professor Steve Peters in his book, The Chimp Paradox, talks about how all of us harbour an inner chimp. This restless, unthinking, instinct and emotion driven part of our inner selves, is not you, it’s like an alter ego, the part of you that can show up unannounced. 

Often when there is a sudden or important decision to be made, your chimp will try to have a say. You are hungry and there are two eating joints in front of you, a fast-food place and a salad and soup café. Your chimp who feels this uncontrollable urge to eat anything, will insist on heading into the fast-food place. You have two choices, follow your chimp or override it. You realise that it’s unhealthy and ultimately will not satiate your hunger, so you reason with that impulse and get to the healthier option next door, so you box your chimp and tell it to quieten while you get yourself a healthy and satisfying meal. 

The chimp in reality is neither good nor bad, it just is. When it comes to money matters, the chimp can often reflect your impulsiveness in anxious moments. Someone offers you an assured double-digit return and the chimp jumps up to grab it without understanding the risks. You see the equity market correcting and the chimp wants to sell immediately, without understanding the fundamentals of the events surrounding this change. 

Letting your chimp overtake your rational self when it comes to money can result in even more anxiety in the days to follow. Why? Because dealing with the consequences of impulsive money decisions is harder than making and accepting though through choices. 

Money may not be the reason you are anxious, but how you handle money decisions can make you anxious. In that moment of anxiety, don’t let that inner chimp take over. Instead take a pause and think about the decision you have already made or that you will make. Think about the risk you are taking, think about the time line of your decision and think about the worst-case scenario. The trick is to not allow your chimp to do the thinking, box it up and you will find that the anxiety settles too. 

In the book, Thinking Fast and Slow, Noble prize-winning author Daniel Kahneman talks about taming intuitive predictions. You may think it’s rational to pull out money from the markets when a negative event sends stock prices falling down. However, if you pause and reflect calmy, you will realise that corrections are a market of the equity journey, if quality of your stock is intact and if you are invested for the long term, you needn’t panic. 

You buy a flat in a city like Mumbai and you intuitively feel like it’s a good choice, maximum city and maximum gain. However, it’s not a given that prices of property in all of Mumbai will grow at a rate that beats inflationInflation is a common term thrown around in economics lessons and by politicians around election time. What it means in simple language is that prices of things you buy, stuff, keeps increasing every year. It happens because the economy in... More. 

Ultimately, money and investing decisions in the short term can be very emotional and you have to make a conscious choice to slow down that thinking. Fast thinking when it comes to money decisions can easily lead to unwanted anxiety.

Monday Musing

Mastering money means understanding it’s emotional weight. Embrace the journey; conquer anxiety and find financial peace. 

If you want to gain awareness into the emotions that are driving your money choices and decisions or if you want to curb the anxiety around some money choices and decisions, you can take step one and first admit that sometimes money matters are emotionally driven. Step two, is to acknowledge that controlling emotion and through that your behaviour and actions, is not an automatic task, you have to build awareness and then change habits. 

Once, habits form which allow you to be more rational, less emotional and make slower decisions around money, you can truly transform the outcomes that you seek. To achieve this change, to step into this transformation, don’t be afraid to ask for help. 

Begin the new financial year, with a resolve to solve this piece of the puzzle, one step at a time.

Thank you for reading.

Live. Laugh. Learn. Transform

Lisa Pallavi Barbora

Financial Coach and Personal Finance Writer.

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