The Psychology Of Money: 8 Ways To Improve Your Money Mindset


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Long-term growth and success rely more on our habits and behaviors than on complex knowledge and advanced strategies.

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Learning a few key points on the psychology of money can go a long way to building the right mindset for prosperity.

Understanding each of the money psychology concepts will help you approach your finances more rationally.

1. Optimism Bias

Optimism bias is the natural tendency to overestimate  the likeliness of positive outcomes and underestimate negative ones.

Negativity bias can cause us to subconsciously exaggerate the impact of market downturns in our minds and overreact to perceived financial dangers.

2. Pessimism Bias

3. Hedonic Adaptation

Due to hedonic adaptation, many spend most of their adult lives buying bigger, fancier, and nicer things.

The sunk cost fallacy describes the human tendency to keep doing something we have started, even if it isn’t  working out.

4. Sunk Cost Fallacy

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