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drawing of instincts getting in the way of good financial behavior

❝There's a great deal of human nature in people.❞ -Mark Twain

People can often feel a host of negative emotions regarding money. Often, these emotions have their roots in the fact that we know better but can’t get ourselves to do better. And when we don’t do what we know we're supposed to do (or do what we know we're not supposed to), we can get ourselves into a guilt cycle that can turn into a shame spiral if we're not being careful.

We tend to be too hard on ourselves. It’s easy to think that there’s a problem with us. However, we are not wired for money. It’s not in our genes, and when we understand that our financial instincts can get in the way, we can give ourselves a break because it’s not our fault. An increased awareness of how our instincts get in the way can help us put guardrails.


The basics of healthy eating are pretty simple. We should strive to consume about the same number of calories that we burn to maintain our weight and consume fewer calories than we burn if we want to lose weight. Similarly, author Michael Pollan is famous for saying, “Eat food. Not too much. Mostly plants.”

Mowing my grass is also pretty simple. As long as I know how to start the mower, there isn’t much complexity to mowing my grass. All I do is start the mower and move it over my grass.

Something that is simple is something that is straightforward. The opposite of simplicity is complexity. In other words, the basics of healthy eating and mowing grass are not complex.

drawing of things that are simple

Many people confuse simple things and easy things. Something that’s easy is something that can be readily done or accomplished. The opposite of easy is difficult. Thus, something that’s easy is something that is not difficult.

For example, it's pretty easy to mow the grass. It’s also pretty easy to learn and play the game Rock, Paper, Scissors.

Something being easy and something being simple are different concepts.

drawing of things that are easy

Some things are both simple and easy. Mowing my grass is neither complex nor difficult. Things that are both simple and easy can be done with little conscious effort. Other examples are tying your shoelaces, sending a text, turning off your alarm, or making a sandwich.

drawing of things that are simple and easy

There are things that are easy but are not simple. For example, the game Rock, Paper, Scissors isn’t difficult to learn to play, but the strategies involved can be quite complex. Chess is another example. Even making noise on a musical instrument is easy, but doing it well involves some complexity.

drawing of things that are easy but not simple

Of course, there are things that are neither simple nor easy. Take rocket science as an example. Rocket science is both difficult and complex. Other examples are quantum mechanics and neurosurgery.

drawing of things that are neither simple nor easy

That brings me to things that are simple but not easy. Meditation, for example, is mindfulness training that will have you focus your attention on, say, your breath. As simple as it sounds, it is difficult, especially at first. You might even think of other examples like time management or exercising. And yet many people still procrastinate and go without exercise.

Personal finance falls into this bucket of simple things that are not easy. Author and financial planning pioneer Richard Wegner once said, “Save more, spend less, and don’t do anything stupid,” to summarize the basics of personal finance.

So personal finance may be simple, but is not easy. It’s not easy because our instincts are not wired for money.

drawing of personal finance being simple, but not easy


Not doing the things we know we are supposed to do can be stressful. And when we look around and see that everybody else seems to be doing just fine, it starts to feel like we’re by ourselves. We can feel like we're all alone on an island as the only ones experiencing any financial stress. That’s when we might look around and start to replicate what others are doing because they seem to have it together.

drawing of the perception that we are the only ones experiencing financial stress

Yet it’s an illusion, and this illusion has gotten worse as social media has gotten more prominent. We only see the version of people that they want us to see. We see a curated version of people’s lives. And on top of that, money is a taboo topic that we're not allowed to talk about, even with things going well. So we have a situation where nobody will talk about their financial stress.

Even though everybody feels some financial stress, nobody talks about it, and we know exactly how it feels to be us, so it feels like we're alone.

drawing of money is a taboo topic of conversation

One might argue that money is the biggest taboo because it touches every area of our lives. One can go on our daily business without discussing sexuality, religion, politics, health problems, and death. Yet it’s difficult to not signal something about money based on where we live, what we drive, what we wear, and so on.

There are very few life decisions that don’t have a financial component and few financial decisions that don’t impact your life somehow.

drawing of money touches every area of our lives

And so the reality is that everybody experiences financial stress. True, some stresses are worse than others, but the stress is always there.

In other words, you’re not alone.

drawing of everyone experiences financial stress

Money Scripts® are subconscious beliefs we have about money that we learn these we are growing up in our family systems. A Money Script can be anything, but they tend to fall into four categories. Learn what categories your Money Scripts fall into.


Understanding our financial instincts comes down to understanding how we think. We can generally think about our minds as having a subconscious component – that is, decisions that “we” make without even being aware of it, and having a conscious component – things that we know we are doing or should know we are doing.

Thinking about our mind being divided has its roots in Plato and Aristotle. Sigmund Freud developed the id, ego, and superego a hundred years ago. More modern ideas come from (or were popularized by) Daniel Kahneman, Tim Urban, and Jonathan Haidt.

Daniel Kahneman talks about System I and System II in his book Thinking Fast and Slow. He calls System I our fast-thinking brain, which is intuitive and automatic. This is the subconscious component because it operates without our knowing. System II, on the other hand, is our slow-thinking brain which is more deliberate and analytical. This is the conscious component of our mind.

System I makes most of our decisions based on shortcuts, and in essence, we trade speed for accuracy.

drawing of system one and system two, speed vs. accuracy, daniel kahneman

Tim Urban, founder of the blog Wait But Why and author of What’s Our Problem, writes about our divided mind as having a primitive mind responsible for impulses, instincts, and emotions. We also have a higher mind, which represents the conscious part of our mind, allowing us to plan and analyze.

My favorite view of the divided mind was popularized by Jonathan Haidt in his book The Happiness Hypothesis. In it, he talks about the metaphor of the elephant and the rider. The elephant represents the subconscious mind which is more emotional, intuitive, and impulsive.

drawing of elephant from elephant and rider jonathan haidt

Adding to the metaphor, he asks us to imagine a rider on top of the elephant, with the rider representing rational thought. The rider is like the conscious mind.

The metaphor works because the elephant can make most of our decisions, especially when it is used for things that don’t need our conscious effort. Additionally, the rider can control the impulses of the elephant when need be. Thus, in normal times, the rider can control the elephant.

drawing of elephant and rider jonathan haidt

But we are not always in normal times. In times of high stress, the elephant takes over because it works about five times faster working by itself versus waiting for approval from the rider. I call this emotional flooding, where we are acting without understanding the consequences of our decisions.

Emotional flooding is more likely to happen when one of our basic needs isn't being met.

drawing of elephant and rider jonathan haidt emotional flooding


Wagner reminds us that there are no equivalents of money in nature. Our brains, and especially the “elephant” part of our brain, are wired for nature.

drawing of money doesn't exist in nature

Thus, unfortunately, the skills our ancestors passed on to us are different from skills that are good concerning money. The primitive part of our brain – the elephant – is still the same brain we had when living in tribal times. It still views the world through the lens of danger, even though most of us don't live in a constant state of danger.

Think about some of the things that constitute good financial behavior like saving resources for the future or not using all of your resources now. If you have resources in tribal times and didn't use them, then they got stolen or spoiled. We were in no position to save things for the future. The wiring that we have is to use what we have now; thinking about future versions of us is completely foreign to the elephant.

drawing of money skills aren't genetic

As a result, we end up with a negativity bias, where we will notice bad things, remember bad things, and think for longer about bad things than the good things that exist in our lives. We take the good for granted because we need to focus on the bad. This is because our ancestors had to focus more on threats than opportunities. Missing an opportunity meant you survive until tomorrow to look for another opportunity. Missing a threat put you out of the game and out of the gene pool. People who missed threats didn't survive to become our ancestors.

drawing of negativity bias

So even though logically you might think you want to be happy or to thrive, that part of your brain isn't in control.

drawing of elephant and rider thriving

The part of our brain that is in more control is focused on survival. And when the elephant feels like one of our needs is a being that (even if it's not true) that it takes over.

drawing of elephant and rider surviving


When we rely on our elephant, we are relying on impulse. This is autopilot. When the elephant makes the decisions, we are floating around life from circumstance to circumstance, reacting to everything.

drawing of reactions when action is too close to impulse

Bringing awareness of some of our default patterns into conscious awareness helps us live more intentionally. If we can grow the space between impulse and action, we move more decisions from the elephant to the rider. The elephant is still going to be susceptible to these instincts, but if we slow down and put some space between stimulus and response, we can counteract those impulses.

drawing of intention happens when you put space between stimulus and response

And when you start to expand your awareness of how you're feeling, what you're doing, what your triggers are, and so on, you put yourself in the position to make better financial decisions to counteract the primitive wiring that go against good behavior.

drawing of growing awareness to make better decisions

If it feels like you know what you're supposed to do but can't get yourself to do it, try to take a step back and see if you can identify the message your brain is trying to tell you. It's trying to protect you; it just isn't aware that it's not in as much danger as it thinks.

You get one life; live intentionally.


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Related Reading
References and Influences

Adams, Scott: Loserthink

Ariely, Dan & Jeff Kreisler: Dollars and Sense

Gilbert, Daniel: Stumbling on Happiness

Haidt, Jonathan: The Happiness Hypothesis

Hanh, Thich Nhat: You Are Here

Hanson, Rick & Richard Mendius: Buddha’s Brain

Housel, Morgan: The Psychology of Money

Irvine, William: You: A Natural History

Kahneman: Daniel: Thinking Fast and Slow

Klontz, Brad, Rick Kahler & Ted Klontz: Facilitating Financial Health

Klontz, Brad & Ted Klontz: Mind Over Money

Newcomb, Sarah: Loaded

Note: Above is a list of references that I intentionally looked at while writing this post. It is not meant to be a definitive list of everything that influenced by thinking and writing. It's very likely that I left something out. If you notice something that you think I left out, please let me know; I will be happy to update the list.



About the Author

Derek Hagen, CFA, CFP, FBS, CFT-I, CIPM is a speaker, writer, and coach specializing in financial psychology, meaning and valued living, resilience, and mindfulness.


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