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How Monkey Brain Chatters in Your Ear
- or –
The Five Most Common Psychological
Biases That Affect Your Money
Jason Hull
H...
We Think Winning With Money Has to
Do With This

http://www.hullfinancialplanning.com
How Many Times Have You Said This?
• “I just have to find the right answer…”
• “There has to be a shortcut…”
• “There’s so...
If Education is the Answer, Then Why

http://www.hullfinancialplanning.com
…or…

http://www.hullfinancialplanning.com
…or…???

http://www.hullfinancialplanning.com
Personal Finance Isn’t Just About Math

• Math is immutable

• But behavior isn’t

http://www.hullfinancialplanning.com
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 ...
My Story
• Then, I’d put $800 on the credit card…

http://www.hullfinancialplanning.com
My Story
• AND withdraw $500 from savings

http://www.hullfinancialplanning.com
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
...
What Caused This?

http://www.hullfinancialplanning.com
Who is Monkey Brain?
• It’s your limbic system

http://www.hullfinancialplanning.com
What Does Monkey Brain Love?

http://www.hullfinancialplanning.com
A Little Story
• 25 year old couple

http://www.hullfinancialplanning.com
A Little Story
• Earns median family income: $51,017
• Will work for 40 years and retire
• Assuming
– 7.5% annual return
–...
Anchoring Bias
• Employer says
“We’ll match 401k contributions up to 3%!”
- instead of “We’ll match 50% 401k contributions...
Status Quo Bias
• Many investors never change their equity
allocation as they age

http://www.hullfinancialplanning.com
Dunning-Kruger Effect
• When we think
we’re better
than everyone
else, we try to
time the
market
• Loss aversion:
we’ll ri...
Hedonic Adaptation
• Allowing lifestyle rather than savings to
expand

http://www.hullfinancialplanning.com
Hyperbolic Discounting
• We treat our future selves as strangers and
discount future pain and pleasure

(1) http://blogs.m...
Bonus Trait of Monkey Brain
• He wants to know who the people are in his
neighborhood
– This

– Is better than this

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

www.hullfinancialplanning.com
It’s Not This

http://www.hullfinancialplanning.com
It’s This

http://www.hullfinancialplanning.com
The Winning With Money Course
Lesson 1: Answering the
Question Why
Lesson 2: Monkey Brain’s
Common Weapons
Lesson 3: Money...
The Winning With Money Course
Worksheets
Lesson 4: Measuring how well you stick to your budget
Lesson 10: How often you sh...
Winning With Money Course
Two Options

http://www.hullfinancialplanning.com
But Wait! There’s More!

http://www.hullfinancialplanning.com
A Coupon Just for FINCON Attendees
• $100 off of either option
• Good through October 20, 2013
• MUST use this link:

http...
Not Ready Yet?
• Subscribe to my 52 week Financial Game Plan
• At the end of the course, you’ll receive
another coupon for...
Disclaimers
• THE INFORMATION PROVIDED IN THIS PRESENTATION
SHOULD NOT BE CONSIDERED INVESTMENT ADVICE OR A
RECOMMENDATION...
Thanks!

www.hullfinancialplanning.com
How to Reach Me
• http://www.hullfinancialplanning.com
• jhull@hullfinancialplanning.com
• (817)476-0584

http://www.hullf...
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  • Market timers underperform their index counterparts by 35.8%
  • Mention auto-escalation
  • Sit or stand still with your eyes open.Take a deep breath.Count to five.Now clap your hands.Change really is that easy. It’s a matter of choice. You all have the power to choose.
  • Transcript of "Jason Hull"

    1. 1. How Monkey Brain Chatters in Your Ear - or – The Five Most Common Psychological Biases That Affect Your Money Jason Hull Hull Financial Planning http://www.hullfinancialplanning.com http://www.hullfinancialplanning.com
    2. 2. We Think Winning With Money Has to Do With This http://www.hullfinancialplanning.com
    3. 3. 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…” http://www.hullfinancialplanning.com
    4. 4. If Education is the Answer, Then Why http://www.hullfinancialplanning.com
    5. 5. …or… http://www.hullfinancialplanning.com
    6. 6. …or…??? http://www.hullfinancialplanning.com
    7. 7. Personal Finance Isn’t Just About Math • Math is immutable • But behavior isn’t http://www.hullfinancialplanning.com
    8. 8. 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) http://www.hullfinancialplanning.com
    9. 9. My Story • Then, I’d put $800 on the credit card… http://www.hullfinancialplanning.com
    10. 10. My Story • AND withdraw $500 from savings http://www.hullfinancialplanning.com
    11. 11. 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 http://www.hullfinancialplanning.com
    12. 12. What Caused This? http://www.hullfinancialplanning.com
    13. 13. Who is Monkey Brain? • It’s your limbic system http://www.hullfinancialplanning.com
    14. 14. What Does Monkey Brain Love? http://www.hullfinancialplanning.com
    15. 15. A Little Story • 25 year old couple http://www.hullfinancialplanning.com
    16. 16. 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? http://www.hullfinancialplanning.com
    17. 17. 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 http://www.hullfinancialplanning.com
    18. 18. Status Quo Bias • Many investors never change their equity allocation as they age http://www.hullfinancialplanning.com
    19. 19. 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 http://www.hullfinancialplanning.com
    20. 20. Hedonic Adaptation • Allowing lifestyle rather than savings to expand http://www.hullfinancialplanning.com
    21. 21. 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 http://www.hullfinancialplanning.com
    22. 22. 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 http://www.hullfinancialplanning.com
    23. 23. What’s the One Asset You Have That Can Never Grow? www.hullfinancialplanning.com
    24. 24. It’s Not This http://www.hullfinancialplanning.com
    25. 25. It’s This http://www.hullfinancialplanning.com
    26. 26. The Winning With Money Course Lesson 1: Answering the Question Why Lesson 2: Monkey Brain’s Common Weapons Lesson 3: Money Comes and Money Goes Lesson 4: Cracking the Whip on Your Money Lesson 5: Christmas Comes Once a Year Lesson 6: A Contract on Your Life Lesson 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 Leg Lesson 9: Long Term Care Lesson 16: Making Your Insurance House Your Home and Not Lesson 10: Investing a Money Pit Doesn’t Mean Playing Lesson 17: Papers, please! the Markets The important documents Lesson 11: An IRA Isn’t in your life an Account Lesson 18: Getting People Lesson 12: Retirement – Who Live in Houses to Pay Paying for Knee-High You Socks and Hammocks Lesson 19: Starting Your Lesson 13: How Much Own Gig and Managing Should I Be Saving? the Band Lesson 14: Social Security Lesson 20: Tying It All – Neither Social nor Together Secure, But It’s Something Lesson 15: Kids – Raising Them, Feeding Them, and Educating Them http://www.hullfinancialplanning.com
    27. 27. The Winning With Money Course Worksheets Lesson 4: Measuring how well you stick to your budget Lesson 10: How often you should invest Lesson 12: Calculating your retirement expenses and your “target number” Lesson 13: How much to save each month Lesson 14: Social Security contributions and taxes Lesson 15: How much will your children cost you Lesson 15: How much to save for the kids’ college education Lesson 18: Calculating the profitability of potential rental properties http://www.hullfinancialplanning.com
    28. 28. Winning With Money Course Two Options http://www.hullfinancialplanning.com
    29. 29. But Wait! There’s More! http://www.hullfinancialplanning.com
    30. 30. A Coupon Just for FINCON Attendees • $100 off of either option • Good through October 20, 2013 • MUST use this link: http://bit.ly/1515Moy http://www.hullfinancialplanning.com
    31. 31. 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/fourplaces-your-monkey-brain-should-never-live/ http://www.hullfinancialplanning.com
    32. 32. 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. http://www.hullfinancialplanning.com
    33. 33. Thanks! www.hullfinancialplanning.com
    34. 34. How to Reach Me • http://www.hullfinancialplanning.com • jhull@hullfinancialplanning.com • (817)476-0584 http://www.hullfinancialplanning.com
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