WE CAN THINK of our brains as having two parts. There’s the fast-moving, instinctual part that tells us to pull our hand away from the hot stove, even before we’re fully aware of what’s happening. Then there’s the slower-moving, more ponderous part that tries to override our instincts by, say, persuading us to spend less, eat healthily and go to the gym.
Most of the time, our instincts are in the driver’s seat—and that’s a good thing. Throughout the day, we make countless complicated decisions, and we make them quickly and effortlessly. Our choices may not be ideal, but they’re usually pretty good.
This, alas, isn’t true of the modern financial world, where our instinctual reactions often lead us badly astray. Consider a handful of examples:
What to do? When faced with financial issues, often the best response is to hit the pause button—and wait a few days or even weeks, so we give the contemplative side of our brains a chance to wrestle with the instinctual side.
Next: Future Self