How our brains make us poor and how to avoid it

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You are at an online store on the Internet and you are eager to buy something. And thatthing is a bit expensive in terms of the amount in your bank account but now it has become the most important thing in the world for you

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And you wonder what would happen if the price went up and you lost the opportunity to buy it. Or what if it's over?

In this emotional state, you calculate in your mind and decide to buy it. You do not even have to enter your bank card number because it is already stored in your computer browser.

All you have to do is press the button. But after a few days, you start to regret it or even worse, you go into debt.

Recent research and studies in the field of behavioral economics and neuroeconomics have shown that situations in which we make irrational decisions often harm our financial health.

But what are our most common financial mistakes in this regard and how can we avoid being fooled by our 'mind'?

A good way to do this is to understand what habits we can adopt in our daily lives.

Are you a conscious person?

Renata Taviros, professor of neuroscience and neuroeconomics at the Foundation Institute of Administration of Brazil, says: And he would like to improve his interests as much as possible.

Unconscious decision-making, which does not happen logically, is considered a defect and therefore is not part of this research.

But in the late 1970s, a group of researchers looked at the shortcomings and conducted a study that revolutionized the world of economics.

This was followed by the Department of Behavioral Economics, which was presented by a psychologist, Daniel Kahnman, a 2002 Nobel Laureate.

Explaining this, Professor Renata explains: "This research has led to the debate that we should realize that some other factors also influence our decision-making power and that it is only for benefit, good health and maximum functioning." Not at all. '

More research was done in the 1980s. Behavioral economics and the techniques of neuroscience and neuroeconomics were used.

The study looked at how a person reacts when they decide to buy something unnecessary.

"Now it is possible for us to open the black box that economists call the decisions of the human mind," says Professor Renata. In fact, if you look at it, you will understand what is going on in a person's mind when he starts making decisions.

"When you read Neuroeconomics, the idea is that we can control our attitudes, our decision-making, and what we do will end," she said. Because the motivations for decision making are not logical, rational and analytical in nature. These decisions are very much emotionally charged.

Learn to say 'no' to yourself

First of all, it is good to know that emotions and feelings do not always have to be bad. On the contrary, they are essential to our survival.

"Nature has given us both love and logic, and they are not in vain," said Elvaro Makhado Dias, a professor and neuroscientist at the Federal University of Sao Paulo. When you are emotionless, you do not feel for others. Our decisions become more selfish and this society as a whole is ruined.

But it is also a fact that emotions make us make serious mistakes that push us into remorse or debt.

In this sense, Behavioral Economics and Neuroeconomics can be beneficial for us to account for our irrational decisions and avoid making wrong decisions

The first step is to learn not to say it yourself

"Don't make a hasty decision until you can review it, so as not to hurt your party by regretting it later," warns Alvaro. Understand your future better and understand your needs and requirements. Telling yourself not to is like denying a child, it's hard, but it's positive. '

According to Renata Taviros, the obstacle to preventing this kind of reaction is actually due to the increase in easier payment methods.

Examples of this are QR codes and credit cards used on websites.

In addition, the nerve hormone dopamine, which gives the brain a 'feeling of reward', interferes.

"When dopamine enters the bloodstream, it stimulates our thinking without thinking. How does it work? You expect to achieve something. Be it a good effect on wealth, health, pleasure or other And this emotional attitude creates a desire for you to receive this reward immediately.

An example of this is the use of methods that are often used in games during the buying process. That is, the task of shopping has been turned into a game.

Supermarkets and online shopping apps promise rewards such as discounts or freebies in exchange for a certain number of purchases and points.

Taviros points out that such bad decisions can be attributed to the huge debt owed to citizens in Brazil.

An August 2021 study by the National Confederation of Commerce, Services and Tourism found that one in four Brazilians (25.6%) could not pay their debt this month.

"We have serious problems in Brazil and all these things that prompt us to buy are exacerbating the situation."

Hence, it is advisable to 'take a turn' before buying anything, to avoid the habit of making reckless decisions.

She says: 'I often stick a sticker on customers' credit cards saying 'go ahead, wait a minute, take a breath'.

This chemical takes effect over time and soon the concept of 'I want it' disappears and the person is convinced that he can use the money elsewhere.

 don't think about it

But these wrong decisions can be avoided even before making a purchase.

Renata Taviros said, "It's hard to get a loan when you know what your financial situation is."

To be aware of financial position and have the courage to keep track of their accounts. "It's important to everyone. Many people say it's difficult but they feel good after doing it.

One of them is 'counting in the mind'. Most of the psychological calculations we make about our financial situation are wrong

"we count." If I earn a hundred, I can only spend 50 at the supermarket, 20 at the bar, and 10 for the food. Plus I have 15 expenses. So you compare 15 to hundred and 10 to hundred, but that calculation doesn't work. Then it was found that the servant was missing.

All you have to do is write down your expenses. If you write all your earnings and expenses clearly, then you will get a sure idea of ​​how much money you can spend.

Take care of your 'future'

One of the most important decisions we make is to think and plan for our future.

Unemployment, informal trade and inflation make it very difficult for people in many countries.

But why is this so difficult to do when the conditions are right?

One of the financial aspects, 'intertemporal discounting', helps to understand this.

"Pick up the telescope and hold it upside down," said Renata Taviros. what happens? The smaller it looks, the bigger it gets.

"We need a reward right now because it looks bigger and is more hidden from us than a benefit we don't know about in the future."

When neuroeconomic studies think about saving money for the future, the same parts of the brain are activated as the idea of ​​giving money to a stranger.

This shows that saving money for the future and giving the same amount to someone else is equivalent to our mind.

According to Renata Taviros, one solution is to make a small 'effort' that helps you think better about your future.

'One of the things I do often is to use apps that make you look old. It allows you to associate yourself with the image. Then you need to think about what that person wants. So you create a psychological connection between yourself and your future.

Learn to Say yes to Yourself

Neuroscientist Lavaro Makhadu Dias warns that while saving money is important, you should allow yourself to do the same.

"Let yourself spend and don't fall into the misconception that it is important to keep yourself happy. Don't think bad is always bad, today we see an ocean of people who have no desire to live.

According to lvaro, the decisions we make about life, whether economic or not, are not and should not always be logical.

"Sometimes we get overwhelmed with emotions and this can have really bad consequences, including sadness."

"But logical decisions lead to better outcomes for our group and our society."

It is therefore advisable that you know where to use your energy and your worries.

“This is not the time, it is not right for you to judge your decisions logically,” he said, adding, “You have to choose your own battle. Consider the options that are most important to you. These are the things that will make you famous.