Automation…
This demands we allocate a predetermined portion of income for fixed and variable costs…
to run on autopilot on a given time frame, say biweekly or monthly.
The goal of this automation is to feed your financial goals such as emergency funds, investments, vacations, and big-ticket items
Putting your distribution system on autopilot reduces the risk of the monkey 🐒🐒🐒 hijacking your financial vehicles…is a winning psychological hack.
See this beautiful Article by Jasmin. S in the Select column of CNBC https://www.cnbc.com/select/present-bias-why-automating-your-savings-works/
Remember about cognitive biases attacking our financial decisions?
As humans, we tend to have the need for immediate satisfaction, yes, we do because we are hard-wired to!
This is called present bias…. Using the autopiloting approach to your finances, AKA the pot system, we can fend off present bias…
Take, for instance, you just received a fat paycheque and faced with a decision to splurge on that high-end coat or invest the money…
We defer to buying the coat because it gives us instant gratification; we are biased toward our present selves, rather than our future selves,
so we’re likely to make the choice that will benefit us most in that moment. This thought process is called the present bias.
See this intelligent article by Elizabeth Gravier in the CNBC Select column on the cost of delayed retirement savings https://www.cnbc.com/select/savings-by-age/
Are you digging into present bias more than future bias?
