jason hull

How Monkey Brain Chatters in Your Ear - or –

The Five Most Common Psychological Biases That Affect Your Money

Jason HullHull Financial Planning

http://www.hullfinancialplanning.com


http://www.hullfinancialplanning.com/



We Think Winning With Money Has to Do With This



How Many Times Have You Said This?

• “I just have to find the right answer…”• “There has to be a shortcut…”• “There’s someone out there with a secret that

I just don’t know about…”



If Education is the Answer, Then Why



…or…



…or…???



Personal Finance Isn’t Just About Math

• Math is immutable

• But behavior isn’t



My Story

• When I was a lieutenant in Germany, I’d put $1,000 in a savings account and $300 in an IRA every month (limits were lower back then)



My Story

• Then, I’d put $800 on the credit card…



My Story

• AND withdraw $500 from savings



My Story

What I told myself• I’m a saver!• I’m being

responsible!• That credit card

debt isn’t bad.• It’s OK to spend

some because you’re saving.


The truth was• I was racking up

debt• I was putting

money in savings while carrying a credit card balance


What Caused This?



Who is Monkey Brain?

• It’s your limbic system



What Does Monkey Brain Love?



A Little Story

• 25 year old couple



A Little Story

• Earns median family income: $51,017• Will work for 40 years and retire• Assuming – 7.5% annual return – 3% inflation with employer match of 50% up to 6%

in 401k contribution– $4k/month in Social Security @ age 66

• Needs to save 12.16% annually• What could go wrong?



Anchoring Bias

• Employer says

“We’ll match 401k contributions up to 3%!”

- instead of -

“We’ll match 50% 401k contributions up to 6%”

• 3% reduction in savings because of anchor 19.8% retirement target shortfall



Status Quo Bias

• Many investors never change their equity allocation as they age



Dunning-Kruger Effect

• When we think we’re better than everyone else, we try to time the market

• Loss aversion: we’ll risk more to get back to breakeven



Hedonic Adaptation

• Allowing lifestyle rather than savings to expand



Hyperbolic Discounting

• We treat our future selves as strangers and discount future pain and pleasure


(1) http://blogs.marketwatch.com/encore/2013/06/05/more-retire-with-mortgages-credit-card-debt/(2) http://money.usnews.com/money/retirement/articles/2013/05/13/the-baby-boomer-retirement-crunch-begins


Bonus Trait of Monkey Brain

• He wants to know who the people are in his neighborhood


– This – Is better than this

You make $50,000 per year and your

neighbors make $40,000 per year

You make $60,000 per year and your

neighbors make $70,000 per year


www.hullfinancialplanning.com

What’s the One Asset You Have That Can Never Grow?

It’s Not This



It’s This



The Winning With Money Course


Lesson 1: Answering the Question WhyLesson 2: Monkey Brain’s Common WeaponsLesson 3: Money Comes and Money GoesLesson 4: Cracking the Whip on Your MoneyLesson 5: Christmas Comes Once a YearLesson 6: A Contract on Your LifeLesson 7: What if You Can’t Work (and Not Just From Lack of Coffee)?Lesson 8: Don’t Pay an Arm and a Leg to Keep Your Arm and LegLesson 9: Long Term Care

InsuranceLesson 10: Investing Doesn’t Mean Playing the MarketsLesson 11: An IRA Isn’t an AccountLesson 12: Retirement – Paying for Knee-High Socks and HammocksLesson 13: How Much Should I Be Saving?Lesson 14: Social Security – Neither Social nor Secure, But It’s SomethingLesson 15: Kids – Raising Them, Feeding Them, and Educating Them Lesson 16: Making Your House Your Home and Not

a Money PitLesson 17: Papers, please! The important documents in your lifeLesson 18: Getting People Who Live in Houses to Pay YouLesson 19: Starting Your Own Gig and Managing the BandLesson 20: Tying It All Together


The Winning With Money CourseWorksheets


Lesson 4: Measuring how well you stick to your budgetLesson 10: How often you should investLesson 12: Calculating your retirement expenses and your “target number”Lesson 13: How much to save each monthLesson 14: Social Security contributions and taxesLesson 15: How much will your children cost youLesson 15: How much to save for the kids’ college educationLesson 18: Calculating the profitability of potential rental properties


Winning With Money CourseTwo Options



But Wait! There’s More!



A Coupon Just for FINCON Attendees

• $100 off of either option• Good through October 20, 2013• MUST use this link:

http://bit.ly/1515Moy





Not Ready Yet?

• Subscribe to my 52 week Financial Game Plan• At the end of the course, you’ll receive

another coupon for $100 off good for 30 days• You will also receive a free e-book “Four

Places Your Monkey Brain Should Never Live”

http://www.hullfinancialplanning.com/four-places-your-monkey-brain-should-never-live/






Disclaimers


• THE INFORMATION PROVIDED IN THIS PRESENTATION SHOULD NOT BE CONSIDERED INVESTMENT ADVICE OR A RECOMMENDATION TO PURCHASE, HOLD OR SELL ANY SECURITIES

• You may not receive returns explained in this presentation– Returns projected using a proprietary Monte Carlo simulation based on

historical S&P 500 and U.S. 10 year Treasury bonds• Certain statements in this Web Site may constitute "forward-

looking" statements that involve known and unknown risks, uncertainties and other factors that may cause the actual returns and values of the Notes to be materially different from any future returns or values expressed or implied by such forward-looking statements.


www.hullfinancialplanning.com

Thanks!

How to Reach Me

• http://www.hullfinancialplanning.com• [email protected]• (817)476-0584



mailto:[email protected]


jason hull

Economy & Finance

money lesson

year lesson

month lesson

account lesson

life lesson

taxes lesson

band lesson

hammocks lesson