Afford Anything - Key Takeaways: Best Lessons from the Last Year

Episode Date: February 4, 2023

#426: Behavioral researcher, Vanessa Van Edwards, talks to us about the critical importance of charisma - and how to use the perfect blend of warmth and competence to be charismatic. Dr. Michael Slepian walks us through what secrets mean, what they cost, and how we think about them. We dive into the world of long distance real estate investing, and talk about two of the major components of investing - Cash and mindsets - to help you determine if long distance real estate investing is right for you. International best selling author, Julie Winkle Giulioni, reviews eight dimensions of career development and how to navigate them. Chris Hutchins, entrepreneur and life hacker extraordinaire, spills his best secrets on optimizing spend to travel more cheaply. Kiersten and Julien Sanders join us to discuss money topics for couples, and their framework for being financially independent in 15 years. Stanford professor Jeremy Utley breaks down the art of creativity and producing new ideas - and shares actionable tips on how we can be more creative and have better ideas. Dr. Daniel Crosby discusses how we are not wired to be good investors, and how to overcome our evolutionary wiring. Enjoy this compilation of our favorite episodes to air in the second half of 2022. For more information, visit the show notes at https://affordanything.com/episode426 Learn more about your ad choices. Visit podcastchoices.com/adchoices

You can afford anything but not everything. Every choice that you make is a trade-off against something else. And that doesn't just apply to your money. That applies to your time, your focus, your energy, your attention, to any limited resource that you need to manage. Saying yes to something implicitly carries trade-offs. And that opens up two questions. First, what matters most?

And second, how do you make choices that reflect that? Answering those two questions is a lifetime practice. And that's what this podcast is here to explore. My name is Paula Pant. I'm the host of the Afford Anything podcast. And for this special February 1st Friday bonus episode, we're going to cover some of the key takeaways that we learned in the past year. Who did we talk to last year? What have they taught us?

Let's dive right in. We'll start with behavioral researcher Vanessa Van Edwards, who runs the research lab science of people. She broke down the psychological secrets behind feeling and looking. more confident, competent, and charismatic. And she explained to us how to apply these techniques to critical conversations around money, whether you're negotiating your salary, buying a home or a car, or having a debate with your spouse about household spending. It begins, she says, with the first impression. I'm a recovering awkward person. And so when I'm going to think about all these people skills, it's funny because I want to make sure I'm doing it right. And we found that this

Hello is like the most critical part of your first depression. How you answer your phone, the first word of your voicemail, the first word of your video call is actually the most important for someone's deciding if you're warm or competent. How do you screw that up? What's an example of a bad hello? Here's the biggest mistake we make on hello. So what we did in our lab is we had people analyze just a quick recording of one of their important phone calls, sales phone call, negotiation call, a call with a partner. We recorded the calls and we looked at their voice vocal data. And we found often the highest word in terms of pitch on the entire call for both men and women was, hello, although I'm here.

So what happens is we get nervous as we're waiting for someone to answer. We're waiting for the phone to ring. And so we're taking a deep breath and we're speaking at the very top of our voice, which makes me sound a little bit tense, a little bit anxious and a little bit tight. And so we say, hello, how are you? So we say this hello with all of this vocal tightness. What happens is universally what researchers have found is that we decide how confident someone is, specifically confident, within the first 200 milliseconds of hearing them speak. 200 milliseconds.

What's happening is as humans, we're very attuned to people's cues. The reason for this is because if someone's in anxiety or low confidence, we don't want to catch it. So when we hear someone with a high pitch up here where their vocal cords are tight, and this is for both men and women that when we're anxious, we go higher. Our vocal cords tighten. And sometimes we can also get vocal fry. So we lose that vocal power. So vocal fry sounds like this where we lose a little bit of our vocal power.

And it sounds like sizzling bacon in a pan. Right. We can hear that anxiety. So the biggest thing you can do on a call is not say hello on the in-breath, but say hello on the out-breath. So here's the difference. Ready? Okay. Hello.

You don't want to do that one. Verses, hello. Speak on the out breath. It forces our vocal cords to relax, which then makes the other person feel relaxed, which then creates this beautiful, confident loop. So only hello on the out breath. All right, so we create a great first impression,

but then what? If we're going in for a job interview, if we're meeting a potential new client. Once we get past the hello, what next? A lot of people think that when we talk about communication or people's skills, they're kind of a nice to have, that it would be to be able to make small talk. It would be nice to be able to have a little bit of chit-chat. What people don't realize is that people skills are actually fundamental for our financial success, for our career success, that they've even found that specific cues that we use, like one that just blew my mind was that MIT researchers looked at salary negotiations. Now, if most people are preparing for a salary negotiation, what are they prepping? They're verbal. They're thinking about evidence for why they deserve it. They're doing research on companies to see competitive salaries. They bring in a portfolio.

They're thinking of all the evidence. What they found was that when they looked at actual salary negotiation interviews, these weren't in the lab. These were real salary negotiations from mid-level executives transferring to a new company. They found that when the negotiator, so when the person wanting the raise, the promotion, mirrored just subtly the non-verbal cues of their interviewer, So when they laughed, they laughed. When someone nodded, they nodded. When they leaned, they leaned just subtly mirrored. That person earned 20 to 30 percent more in their final salary. That is a huge number. And so what we don't realize is all these cues are setting us up for financial success and career success. Right. And it stands to reason that if a salary negotiation goes that well, then your performance at your job.

your ability to receive promotions or to get the types of assignments that you want so that you either make more or enjoy your job more or both, that would largely be impacted by the subtle ways that you don't even realize that you're communicating. What's really hard, and this is the mistake that smart people make, and this is really difficult, is that very, very smart people, they focus on their smarts. They have great ideas. They've done years of training in school. they have great technical skills.

But the problem is what the research shows is that high competence without warmth, trust, like ability rapport, leaves people feeling suspicious. This comes directly from Dr. Susan Fiske's research at Princeton University, where she looked at highly charismatic people. And she found that there are people who are off the charts in competence. They're very smart, reliable, dependable. But what happens is they cannot get buy-in. They cannot build trust in their sales.

They can't build trust in their negotiations. And so people think, wow, he or she is smart, but I just don't trust them. And so what she found, we have competence without warmth cues. People feel suspicious of our competence. And so what we have to realize is to balance out our smarts with our warmth is the single most important thing we can do to increase people believing us. Ultimately, she says, people want to know that they can trust you and rely on you. And that comes from sending cues about both your warmth and your competence. What's the most important thing is actually sending cues of warmth.

And this comes from the research. What's interesting is you just said exactly what my instinct was for a long time, which is I want to be seen as smart. I want to be seen capable. So I want to show competence and confidence. And competence and confidence are great. But actually as humans, when we're first interacting, there are two basic questions we have to ask about a fellow human.

This comes from the research. The first question, and they are chronological, is, can I trust you? So who we even think, are you smart? Can I rely on you is, are you going to be on my side? Are you going to be an ally? Are you a threat? So the very first thing we're looking for are warmth cues. Then immediately second is, can I rely on you?

So what's happening in our video calls, our phone calls, even when someone looks at our LinkedIn profile or our website or our email or our marketing material is we are first looking for warmth cues and second, we're looking for competence cues. So easiest way to think about this is actually verbal to nonverbal. The reason why I say this, because the verbal ones are really obvious. So in the book, I talk about the four channels of cues, verbal, the words we use. That's what we talk about the most. Nonverbal, our body language base, gestures, vocal, how we say our words, our volume, our pitch, our cadence. And lastly, the one we often forget imagery, our fonts we use, the colors we wear, the props in our background. So warmth, verbal

cues are really important in the start of an interaction. This is why we start most interactions by saying, oh, so happy to see you. What a pleasure is talking to you. It's so good to see you. Those are all warmth verbal cues. So what I always say is in the first few seconds of an interaction, I want you to say one warm word and use one warm nonverbal. So it could be so happy to see everyone. Happy Monday team. Oh, it's great to see you. So that's a warm. verbal cue, warm verbal cues, or anything that makes someone feel the warm and fuzzies, and then some kind of warm nonverbal. Here are your choices. You only have to pick one. Obviously, a smile. We love a smile. They're contagious. The reason why I say you don't have to

is because nothing's worse than a fake smile. Or is someone coming on a video call and doing this. Hi, it's so happy to see you. So if you're not truly happy to see someone, I would actually rather you skip it. Another option for you, a smile doesn't feel natural to you, is any kind of a visible palm. So like a wave, a greeting hello, and then that can go into a handshake, a high five, a cheat kiss. So some kind of a touch if you're in person. So wave, a high five, handshake touch. You can also just make eye contact. Remember eye contact produces oxytocin.

So walking, seeing someone across the room, making eye contact, those are all ways of saying, you can trust me. And it's like a checkbox in someone's mind. Right. Right. What about body language? So in terms of positioning, should a person be standing such that they are fully, I want to say full frontal, but that's not? You said it. You said it. Yeah. Fronting is the name of the cue. You got it. I want you to be full frontal. I mean by that. So this is a real cue. You're right in this. There's 96 cues in the book. And one of them, one of my favorites, is fronting. And this is angling our toes, our torso and our top. top, just an easy way to remember, our three Ts, towards the person we're speaking with. And the research

has found that when we are aligned with someone, like literally our toes are on the same page. Like right now, even though we're on video, I'm trying to square with you, right? I want my shoulders to be on the same line as you. I want my head to be the same one with you. I might look over to my notes for a second, but then I always turn right back to you. Right. That is a non-rubal sign of respect. And a big mistake that can happen is in board meetings or even with our partners, we will be angled away, our phone, right? Hey, how are you? And we like, look over our shoulder at them. We don't angle our body towards them. What that does is in our mind is it creates a disconnect. And so one of the best things you can do is when you see someone is literally full front with them. So same page

toes, torso and shoulder. It's a very subtle way of saying, I respect you so much that I literally want to get on the same parallel lines as you. And in a Zoom call, as you just said, in a Zoom or a video, Skype call, any type of call, you can still mimic that even remotely? Yes, 100% yes. And in fact, I think one of the reasons we get so drained on video is because we're using body language that would never work in person. So one of the most important things you can do to make your video calls better is do what you would do in person.

So in person, Paul, if you and I were sitting together, we would be angled towards other. We would be leaning in across the table or across a cup of coffee. Great. It's a mistake in someone. I've seen people have their cameras. off to the side of their body and they type and they occasionally glance over. If we did that in person, it would be incredibly rude and that can be more draining.

Another aspect of body language is called proxemics, which is the space between people. In person, we're very aware of this. Like in person, we would never close talk. I would never walk all the way up to your face and speak to you, you know, a foot away. Right. The same thing can happen or we mistakenly on video ruin space with we get too close to our camera. and that can literally come across as too invasive. And so what I want everyone to make sure of is when you're at your next year at your computer,

measure the distance between your nose and your camera and make sure it's at least 18 inches away. Wow. I know that sounds crazy, but 18 inches is a very important measurement in interpersonal behavior because 18 inches away is about the distance of your arm, which is how far we like to be when we can both handshake someone. And so if you are closer than 18 inches, you are accidentally being a digital close talker, signaling alarm bells. If you are way farther than 18 inches away, if you're like three to four feet away, people will have physically a hard time connecting with you because they're like, come closer.

And so that's a very small but very important measurement. Next, we turned to Dr. Michael Slepian. He is a professor of leadership and ethics at Columbia Business School, and prior to that, he was a visiting scholar at Stanford University. He spoke to us about the psychology of secrets. Global research shows that across cultures, people tend to keep the same types of secrets. There are 38 common varieties,

including secrets about money and finances, big surprise there, about ambitions and career, about beliefs, habits, unpopular opinions, mental health, trauma, addiction, and drug use. These 38 common types of secrets fall into three categories. There are moral secrets, which we fear will either cast judgment on us or will cause harm to another. There are relational secrets, which we fear will harm our relationships if they were

to be discovered. And there are goal and ambition secrets. These are the secrets related to career, business, and finances. But it isn't just the fact that people keep secrets about money that led us to bring Dr. Slepian onto the show. Secrets, as he explains, capture our limited resources. They capture the resources of our attention. Michael, this is a podcast about how to make smarter decisions about allocating limited resources, whether that limited resource is money, time, energy, attention.

In that context, how does. the topic of secrets or secrecy apply. I think it was the very last item in your list attention. We can only attend to one thing at a time. You know, sometimes that's the work you're trying to do, and then your mind wanders away and you have to pull it back. It turns out that the way our secrets hurt us is very much like this. And sort of the old story, the wrong story about secrecy

is that it hurts our health and well-being because it's difficult to hide things in conversation and that's stressful. But we now know that's actually not the full story or not even how it actually goes. In fact, the most common experience people have with a secret is simply having their mind return to that secret when there's no need to conceal it. And so often the time, what it means to have a secret is a secret is on your mind. And it turns out that that tends to be a problem when we're alone with something. And so our mind will often go to unhelpful places that are distracting.

Of course, we had to define what a secret is. He says it's the intention to withhold information. It's an intention rather than an action. What makes something a secret as opposed to other things about yourself that other people don't know is you specifically intend to hold the information back? And what's so interesting about money is it plays both games. Like there are things about finances and financial decisions that we intentionally withhold from other people that we don't want other people to learn about. And then there's a bunch of other stuff around money that it's not that we are trying to keep it a secret. It's just we don't talk about it.

People tend to not talk about what their paycheck looks like because it might not be polite or whatever it is. And so privacy is essentially a reflection of how much closeness you need with someone to reveal something like a detail about your finances. Whereas keeping a secret is you're specifically intending to hold information back from one or more people. and that's why it's a secret. So the distinction between secrecy and privacy is that privacy, you're just not volunteering it, whereas secrecy has intent. Exactly. In that vein, what is a secret? How would one define the word secret?

Yes. It's the information which you intentionally hold back. And it's an intention and not an action? Secrecy is an intention, not an action. And the reason for that, the reason we can't define a secret by the actions we take to keep a secret is some secrets we don't need to hold back in conversation, but that doesn't mean they're not secret. You know, imagine something from your childhood that is something you intentionally withhold from other people. That just never comes up in conversation. Even if you don't have to

conceal a secret or hide it in a conversation, it doesn't mean you don't have that secret. He also explains context around the 38 common varieties of secrets, which shed light on why, among other things, many people choose to keep information about their income, their spending, their net worth, information about their money. Many people choose to keep it a secret. But why? His research sheds some insights. We have this list of common secrets that people keep 38 items long, and that list really does a good job of comprehensively covering the kinds of things people tend to keep secret. We know this because when we show people this list, 97% of people say they have at least one secret from the list. The average person says they have 13 secrets from the list.

And when we ask open-ended, what is the secret you're keeping? 92% of the time, what the person says fits one of the items on the list list. So it really covers what people keep secret very well. What's nice about that is I can give people that list and per each secret that they have from the list and they'll have multiple, we can ask these follow-up questions. So we can look at sort of across a person's whole set of secrets. which ones are the ones that are harmful? And this is moving us far beyond the question of secrets, are they good or bad, is keeping

more secrets worse? Instead, we're asking, among the secrets you have, which ones are more harmful to your health and well-being and why? If you're interested in the content of the secret, knowing that there's 38 kinds of categories of secrets is a little too many. Then we can look at how they clumped together, essentially, and you can start to understand And which are the primary ways in which people are seeing secrets as being similar to each other or different from another? It turns out there's three.

And so three ways in which people can think about their secrets as compared to their other secrets or three ways by which people think about their secrets are whether the secret is immoral, whether they believe the secret is about something that's wrong or is causing harm. The second one is the extent to which a secret is relational, the extent to which a secret is related to our relationships and social connections. And the third one is the one that's is the dimension related to you, how much the secret involves our goals and aspirations, which often comes, means our professions as well. What would be an example of a secret related to goals, aspirations professions? Performing poorly at work, cheating at work or school, discontent with your profession. Finances shows up really high on this dimension. And some of these would also have a moral overlay as well, yes? Yes, and so the dimensions are independent, but you can be high or low on all of them. So, for example, cheating at work is a secret people would consider immoral and highly goal oriented.

Could there be moral secrets, highly moral or at least not immoral secrets related to goals, ambition workplace? Yeah, and a secret ambition is a good example. It turns out that it's very common to keep ambitions secret. Maybe people are a little embarrassed about their ambitions. Maybe they worry about telling people about ambitions that they'll never be able to realize. But for whatever reason, ambitions is the kind of thing that people tend to keep secret. And those are very much related to our goals and aspirations, but most people don't consider it immoral to have a secret ambition. When it comes to money, people often feel shame, and even if their financial decisions have hurt no one other than themselves, they often still feel as though that is a moral failing. So even if it is, I guess, not relational, it still feels moral. Do you have any insight as to why? Finance in particular seems to be the type of topic that people often moralize, even when that moralization is unwarrant. I think part of the problem here, because it's the kind of thing that we tend to not talk about or consider that it's not even polite to talk about, we're not really well practiced on having these conversations, which means we're not really well practiced in thinking about these situations. We just haven't had as many conversations that would sort of tamp down some of those negative reflexes.

Those insights come from Dr. Michael Slepian, who discussed the secret life of secrets. Last year, we also ran a series called Invest Anywhere, co-hosted with real estate investor Sonny Rao. Sunny and I talk about how plenty of successful real estate investors start out with empty coffers when it comes to some of the most critical resources. They're strapped for cash. They're pressed for time. They lack connections. And yet, time, money, and relationships are critical resources for any enterprise, including, of course, long-distance real estate investing.

So what do you do when you think you don't have enough money to buy real estate? Let's talk about how to evaluate your cash position. It's important to understand not only if you have enough cash to get into an investment, but also do you have enough adequate reserves? And depending on your goals, how quickly you can replenish your holdings to be able to rinse and repeat. In determining whether or not you have enough cash, like what are some of the questions that you would ask yourself? The first, I think, is pretty self-explanatory. How much money do you currently have in your discretionary?

savings highlight the term discretionary. Investing should be built on sound financial principles. It's not a get out of jail free card if you are struggling other areas of your finances. We firmly believe that you want to be coming from a very strong financial position if you want to start investing in real estate. Another question, how much of your income are you able to save on a monthly basis. That will help you determine your ability to stay in the game long term, reinvest, come up with cash if there is an extra CAPEX or large expenditure emergency. So it's important to know that just so you can have that in your mind going in. Another question, will your savings rate allow you to purchase a home in your desired area?

That lends to the question, should I invest where I live? Should I invest in another location? Because we have a lot of people who are priced out of the areas in which they live, the highly densely populated big cities. Plus a lot of homes in those cities just aren't good rentals in terms of their price to rent ratios. Absolutely. Another question, do you have good credit in a low amount of debt relative to your income? that allows you to be bankable, allows you to get better terms as you think about using leverage to purchase an income property.

And then what are your sources of cash? Where is the cash coming from? Is it just from a job? Is it from a self-directed IRA? Where is it coming from so that you know what you can draw on when you want to draw on it? And for those who have goals that require building a source. of residual income that goes beyond buying maybe one or two properties over the course of the decade. There's also a second order of questions involving cash. You really have to look at

how quickly cash reply can be replenished, which means you have to start thinking through returns, thinking through the returns of your investment, which again, that is what leads a lot of people to investing in real estate at a distance, because they see that if they buy, that duplex in Seattle, every dollar that they put in, it's harder to earn the same amount of dollars that you would if you were to buy a duplex in the Midwest. Yep. Exactly. And that goes to replenishing that cash supply. So that you can rinse and repeat and get more properties. And just to zoom back out for a second, the reason that we're talking about cash is because cash is a resource. and resources are, you know, the two classifications of your internal analysis are what are your personal resources is one question. And then what's your personal mindset is the second

question. So cash is one example of your personal resources. There's one other important question that people should probably think about if they want to build that portfolio. and that is, are there other ways to access cash that I'm not thinking about just yet? Cash that you could access, but that you don't currently have? Yes. That's really helpful in building the long-term strategy and the plan. And by that, I mean, if you make sound investment decisions on the front end, you buy with equity in the deal, you're able to force appreciation. You target the right area that is growing, that is improving, that is hopefully continuing to appreciate, although you don't buy just for market appreciation.

Reminder. As time goes on and equity builds up, there are ways to access some of that equity through lines of credit on investment properties, for example. that you can then utilize to purchase more. So it's not always just about specifically the cash that you have coming in. It's about strategically thinking about the resources you can use to gain cash. In addition to inventorying the logistics, you also need to understand your cognitive biases and your fears as they relate to all investing,

particularly real estate investing, because cognitive bias and fear are the mental and emotional legs of the stool, which are just as critical as the logistical leg. It's really important to understand your potential mental biases before getting started, especially, especially as they revolve around fear and personal. limitations. It's important to know what you're afraid of and the kind of questions that you ask, especially if they have implied meaning. The first question is, what are you most afraid of? It's a really big question. Sometimes it helps to reframe this as what are the potential issues you are having a hard time grappling with as you evaluate potentially investing in real estate,

investing in real estate long distance. Are there any specific exercises people can do? Like, can you bust out a piece of paper and a pen? And is there like a prompt that people can write? Typically, the questions and commentary that we hear a lot of start with the phrase, I am afraid of investing because dot, dot, dot. So that's the prompt. Yes. I don't want to lose all my money. What do I do if the tenant doesn't pay? What if there's another moratorium? There's a lot of questions that come up. And my question back is, is the real issue about a hypothetical situation that may or may not happen for a long time or may happen extremely infrequently? Or is it that you are afraid of not knowing how to handle these and other complex unknown?

when investing. Either way, the question is how do you get what you need in order to feel comfortable taking on these challenges? For some people, it can be building that network of relationships so that you can have feedback and contacts when XYZ happens. Okay, who do I call now? And they can say, call X person, ask for why. And then you have a path to a solution. that you can trust. For others, it might be a surplus of cash just so that they have the peace of mind knowing that they can ride out whatever short-term obstacles come up because they know that the long-term investment is worth it. We're going to take a quick break for a word from our sponsors. When we come back, we'll recap key takeaways from international bestselling author

Julie Winkle Giuliani, who reviews the eight dimensions of career development, Chris Hutchins, who spills his best secrets on optimizing his spending so that he can travel more cheaply. He is a life hacker extraordinaire. And Kirsten and Julian Saunders, who talk about their framework for becoming financially independent in 15 years. Stay tuned. Fifth Third Bank's commercial payments are fast and efficient, but they're not just fast and efficient. They're also powered by the latest in payments technology built to evolve with your business.

Fifth Third Bank has the big bank muscle to handle payments for businesses of any size. But they also have the fintech hustle that got them named one of America's most innovative companies by Fortune magazine. That's what being a fifth third better is all about. It's about not being just one thing, but many things for our customers. Big Bank muscle, fintech hustle. That's your commercial payments, a fifth-third better. The holidays are right around the corner, and if you're hosting, you're going to need to get prepared. Maybe you need bedding, sheets, linens.

Maybe you need servware and cookware. And of course, holiday decor, all the stuff to make your home a great place to host during the holidays. You can get up to 70% off during Wayfair's Black Friday sale. Wayfair has Can't Miss Black Friday deals all month long. I use Wayfair to get lots of storage type of items for my home, so I got tons of shelving that's in the entryway, in the bathroom, very space saving. I have a daybed from them that's multi-purpose. You can use it as a couch, but you can sleep on it as a bed. It's got shelving.

It's got drawers underneath for storage. But you can get whatever it is you want, no matter your style, no matter your budget. Wayfair has something for everyone. Plus they have a loyalty program, 5% back on every item across Wayfair's family of brands. Free shipping, members-only sales. and more terms apply. Don't miss out on early Black Friday deals. Head to Wayfair.com now to shop Wayfair's Black Friday deals for up to 70% off.

That's W-A-Y-F-A-I-R.com. Sale ends December 7th. Welcome back. Last year we heard from international best-selling author and leadership speaker Julie Winkle-Juliani, who talked through the eight dimensions of career development, which she defines as contribution, competence, connection, confidence, challenge, contentment, choice, and climb. And those dimensions can apply to different parts of your job or to progressing to the next job.

That latter point, progressing to the next job, is something that has been on a lot of people's minds lately, as the Great Resignation, which started during the pandemic, reshifted a lot of thinking around work. The last couple of years it's certainly changed all of us forever. We've had to really dig deep, go off in some cases by ourselves to think more critically about the work that we're doing, the life that we're living. In many cases, when we were sent to all corners of the world away from the workplace, some of those trappings of work, like the great food and the ping pong table, or even just catching up with people in the hallway,

that was all stripped away, and all we have left is the work itself to look at. And then there's just the reprioritizing, the rebalancing of life that many of us engaged in during that period of time. So folks are looking for their jobs to do different jobs as we come back into whatever the next new abnormal is. So remote work produced fewer fringe benefits at the office,

which then caused people to, re-evaluate the work itself? Yeah, the work was kind of laid bare there, wasn't it? That was all we had for a period of time. So it gave us a chance to maybe look at that work in a more clear-eyed way and make decisions about the level of satisfaction that that gives without some of the extras that might have distracted us from that. You know, the other thing that comes out loud and clear is folks are leaving.

employers for opportunities where they see greater growth potential, whether it's learning or development or career advancement, we crave the ability to keep growing and learning. And for too many people, where they are, doesn't feel like a place where that can happen. Julie talks about how feeling as though you are making a contribution is one of the most critical components to enjoying the work that you do and to knowing what work you ought to do. Contribution was one of the most interesting ways that we can find growth and development in our work. My global research found it was actually number one in terms of how we want to learn and grow. And so contributions about tapping that deep human need to make a difference, to step up, to be of service, to live on.

purpose. And so there are countless ways we can find expression for contribution in the workplace. I mean, we're contributing every day, right? The growth piece of it, that's what takes deliberate attention. So what happens so frequently, I'm sure it's your experience too, Paula, when you look back on some of your most profound learning, it was those times you were contributing more than was required where you stepped up and beyond your expectations. And so frequently we only see that in the rearview mirror. So we're talking about here is how can we be intentional, look through the windshield and plan out. Okay, I'm going to step up and I'm going to take on that project or step in for someone who's on leave or take on a void, you know, this persistent issue that's been niggling around the organization.

I'm going to step into those situations. I'm going to give a lot in the process. but what am I going to get back? And so it's about contracting with, you know, having really over conversations with one's own manager or supervisor about, you know, when I step up and do this, I look forward to learning these skills. I want to develop this competency and walk away really good at this. I want to have expanded my network to include these stakeholders or these executives

or whomever so that contribution becomes a two-way street, as I'm giving, I'm getting something back in terms of my growth and my development. So this sounds to me, because I'm imagining for a lot of people who are listening to this, this sounds like more work. If every day at your job, you're doing data entry into an Excel spreadsheet, and now there's the onus is on you to take on somebody else's project or to initiate some new project, that becomes additive to your existing workload rather than substitutive. So wouldn't that just mean longer hours?

Well, I suppose it depends upon the nature of the work and the agreements that you have with your supervisor. You know, when you take on a new or bigger or broader project, it may mean that something has to fall off your plate. I mean, that just may be the nature of the beast. In other cases, you know, we as individuals realize it's valuable enough. What I have to gain is valuable enough to where I want to give a little bit more of, you know, my discretionary time. It's three minutes a day that I have left that I'm not already giving. And so it's certainly a choice to be made. Now, in addition, the most competent, most contribution-oriented person in the world won't necessarily get their ideas heard if they don't exude a reasonable degree of confidence.

But that also means finding a workplace in which your confidence is encouraged or at a minimum is not actively undermined. Confidence certainly contributes to feeling good about the work that you do, but it's also a huge development dimension as well, a way that we can grow really powerfully. So confidence is really about, you know, enhancing your trust in your ability to show up predictably, to, deliver consistent outcomes. And there are times in almost everyone's career where that confidence dips and it can, you know, hurt our job satisfaction and engagement. And it can hurt your career prospects as well. And so there are times when the most important way to focus your attention and your growth is through confidence. I think the statistic is 70% of us will experience the imposter syndrome at some point in our careers and some of us more than others. And so recognizing that

to begin with. And in our society, there's a little bit of, I don't know, shame associated with confidence. You're expected to be able to show up and do whatever you're tasked with. And I think a lot of us feel like we spend a lot of time, you know, faking it until we make it or something like that. So being able to confront the embarrassment or the shame or whatever. So I'm not feeling 100% here. And what do I need to do in terms of either really honing my craft or testing where the limits are, where I could go off the rails, helps to create that level of confidence that supports the performance and the growth?

What should a person do if they have a manager, a supervisor, a colleague who is consistently undermining their confidence. Maybe this person is talking down to them or delivering negative feedback publicly or in some way exhibiting some type of communication behavior that just undermines your confidence in the workplace. How should a person handle that? Oh, so much of it depends upon the nature. It's so context driven, isn't it? I guess like the, the, the global global advice would be to address it. How do you address it? You address it. Have a conversation with that person. I always try to assume positive intent, assume that the person isn't trying to do any harm to me, and offer them some information that may help them to interact better with others. So, you know,

saying, Paula, I don't know if you're aware of it, but when you spoke to me like that in front of the client, it kind of created some raised eyebrows. And I have to say, I felt embarrassed and less than when that was going on. And so that kind of feedback can be really helpful. And then making an overt request, something to the effect of I would really appreciate it. If in the future, when you see something like that, you would hold off until after the meeting was finished, the client was gone, and then shared your perspective. Those are three takeaways related to finding happiness at work with Julie Giuliani. Next, we turned our attention to travel hacking. We talked to Chris Hutchins. He is an avid life hacker, financial optimizer. He hosts the podcast, All the Hacks, where he talks about

mileage hacking, travel hacking, life hacking, and he's collected millions of points and miles. My first question to him was, geez, that sounds complicated. How do you 80-20 it? How do you accumulate points in miles without this whole endeavor turning into a second job? The simple version of just,

I'm going to open up one credit card right now that aligns with how I spend money. You spend your money on travel and dining, get a card that focuses on that. You spend your money on groceries, maybe focus on a card there. You don't really spend anywhere specific. Get a card that just earns two points per dollar on everything. That kind of simple path of, I'm going to open up a card, I'm going to get the sign-up bonus, and then I'm just going to spend, depending on how much money you spend. Maybe you end up racking up a few hundred thousand points every few years and taking a vacation for your family

every couple years. You want to get extreme and open up five cards a year, 10 cards a year, have the spreadsheets go buy everything you want through gift cards that you bought at the grocery store through your grocery store card or at the office supply store with your office supply store card. You can do that. I don't think it's an all or nothing game where you have to go that far down the rabbit hole to start to get value. If you're spending money on a debit card, you're just giving money away because assuming you can responsibly pay off your credit card, you otherwise would just be getting at a minimum 2% cash back, if not points that could be worth more than that every time you buy something with your credit card.

For the average person who's listening to this, what is that optimal 80-20? Is it just opening one card? Is it something a little bit more sophisticated than that? If you spend a lot of money in the types of categories that often credit cards give really big bonuses for, that's like travel and dining and that kind of stuff, you know, the 80-20 is to probably get, you know, like a Chase Sapphire preferred or reserve, which is, you know, two or three X on travel and dining and pair it with like a Chase Freedom on. Unlimited, which is one and a half X on everything else, right?

Like, that's like two cards in one platform, like financial institution. You're not trying to keep track of lots of things. One of them has no annual fee. There's that version. And then if you're not someone who spends a lot of money in the categories that often have bigger bonuses, could just be get one card like the Capital One Venture or Venture X where you get two points per dollar on everything and you're not really worried. Like, I think that's the easiest entry is one or two cards that align with your

spending or align with all spending and focus them on one program. Chris also elaborates on the distinction between miles and points and explains how to prioritize between the two. I think in general, the words miles and points to me are virtually interchangeable. Some airlines actually accrue points. So I think rapid rewards for Southwest is just rapid reward points. That's right. And Capital One calls their points Capital One miles.

So they're somewhat interchangeable. the way I would think about it at the highest level is if you always fly one airline or if you always stay in one hotel chain, you might do better just going deep on them for your kind of primary earning. But if you spend a lot of money on dining or broad travel or even groceries, you know, there are credit cards that will really maximize that. So I generally think transferable points is the way to go. Maybe if you're all in on Delta, pick Amex because you can transfer your Amex points to Delta. or if you're Chase, you can transfer your chase points to United. Sorry, if you're United, you can transfer your chase points. If you're American, you can get built rewards and transfer your points to American. So you can kind of play both and kind of hedge and say, I'm really loyal to this airline or this hotel chain. But for all my spend that's not on those brands, I'm going to get a card that at least partners so that I have one place that I can pull up a large number of points. All right.

So what do you do? If you want deals, but you don't want. want to work with miles or points. You're just, you're not into it. But you still want to find deals. You want free perks. You want savings hacks. Here's what Chris recommends.

My favorite travel hack has nothing to do with points and miles. And it's probably like the single biggest thing I've got emails about because so many of the listeners of my show have gotten great success. And it's super simple. You're going to stay at a hotel. you book the hotel directly with the hotel on the hotel's website, and after you book it, you email the hotel. If you don't have the hotel's email address, call the front desk, ask for an email address. You say, hey, I'm coming to your hotel. I'm really excited to be staying with you. If you're celebrating anything, let them know. You can tell them why you're coming.

You're trying to build a relationship. As much as we think hotels are just transactional, they're really in the hospitality business. And all the other channels you book through, they often don't even get your name until days before the booking. So book direct ask that and then maybe follow up a week before, a couple days before say, hey, just want to follow up. I'm really excited to see you guys this week. See you then. That's all I would do. I think I've probably gotten at least 100 emails from listeners who've been upgraded, gotten a bottle of champagne or the most unique one was had their initials monogrammed on their pillows for their bed, which I thought I would much rather have a bottle of champagne for free than have my initials monogrammed on a pillow. So that's one that works for anyone. You're

booking a hotel. Always book direct and email the hotel. The flip to that is if you are splurging and you're booking a super expensive high-end hotel, you know, let's call it in the five-star category, probably hundreds of dollars a night or, you know, maybe even over a thousand, most hotels offer really great perks to people who book through a travel channel that is a travel agency or in some cases, you know, like a program like Amex's fine hotels and resorts, booking through one of those channels usually gets you a property credit, free breakfast, upgrade, early check-in, maybe late checkout, free Wi-Fi, all those things. And hotels really value people who book through travel advisors and they know that travel advisors

help build the relationship with the hotel and so they offer those perks. So that's one. You can do it through those programs. I'll do a shameless plug that we We partnered with the travel agency to be able to give all the hacks listeners that whole thing. So if you just go to all the hacks.com slash upgrade, you can read about it. So those are two. On flights, I don't think there's a better tool to save money on flights than Google flights. Almost every flight search begins there because there are very few places online where you can say, I want to go from San Francisco.

And then you can say things like on a flight that's less than 10 hours and has less than one stop for a week in July and move the map and just see where in Europe you could go, see where in Asia you could go. You know, you can put multiple from airports, from San Francisco or Oakland or San Jose, from Newark and LaGuardia and JFK. I think clicking through dates, looking at their calendar is one of the best ways to find cheap, international, domestic, anything flights. You can even set alerts.

So that's one of the best products that has kind of come to the market in the last 10 years to save money on flights. Those are a few of my favorites. The last I'd say is if you're a member of Costco, you know, Costco for rental cars has travel discounts for a lot of rental car companies. So do a lot of credit card companies. I actually just wrote this newsletter all about credit card benefits that people don't really realize they have.

And there are a lot of credit cards that have rental car discounts that offer car rental insurance so you can decline the rental coverage that offer tons of travel insurance. This is not on this topic of travel. but I've probably cracked a phone screen four times in my life, and two or three of them were paid for by the free insurance I got by paying for that phone on a credit card. Most credit cards have purchase protection that if you break something within the first three or four months,

they'll replace it, whether it's damage, stolen, broken, or anything. I don't know, those are a few of my kind of fun savings hacks. So those are some tips around travel hacking with LifeHacker Extraordinaire, Chris Hutchins. After that, we spoke with Kirsten and Julian Saunders. When they began dating in 2012, they fell in love quickly, and their relationship felt strong until they started talking about money. They broke up as a result of their first money conversation. Now, luckily, the story has a happy ending.

They got back together. Today they're married with kids. But that necessitated the two of them learning how to have important. money conversations with one another? I think one of the earliest ones was just around the money, the cash flow that we did receive, the income that we did have and what the purpose of that money was for. So for me, I always viewed money as a tool, but I viewed it as a tool for social connection, meaning it was for brunches with friends, trips with booze, new clothes that would impress

managers at work. I just viewed it as this thing, this means to an end to help me connect and build social capital versus Julian had a more traditional financial background where he was like, no, money is meant to buy assets, things that appreciate and value things that are that lead to financial capital. And so getting very clear on that before we even tackled the budget conversation, deciding which categories get what, it was very insightful for us to make sure that we were coming at it from the same place. In my mind, social capital still led to a fulfilling life. And in his mind, traditional assets and financial capital led to a fulfilling life. So we both had the same goal in mind. But then it was a matter of balancing the budget to make sure that both of our journeys were accounted for. Yeah, to that point, one of the things that was certainly revealed through that breakup and through that conversation was that I was carrying a lot of baggage with respect to my background. And so I came from tough times, as they say. I grew up poor in the 1980s in Brooklyn, New York, to a single mother. And so for me, even as I got a job while I was excited about the fact that I was earning more income, I always knew in the back of my mind that one of my motivations, even

as I thought about my real estate journey. Like, it wasn't just so that I can, like, get this asset because I knew it was a great way to build wealth. It was also a backup plan. It was, hey, like, in case my mom loses her home, this is something that I can do to help solve the problem either temporarily or even indefinitely. And so for me, there was a bit of a rub there because Kirsten's background, quite honestly, we jokingly said that she comes from, like, you know, a more Cosby show background, whereas mine was more like, like good times, you know? And so it was just different. Both, I guess you could say, are entertaining depending on the day. But, you know, the struggle was real. And even though I was at a point where I was far more comfortable than I'd ever been making more money than I ever thought, I knew I couldn't really enjoy it for long. Even going back to the vacation, it was like, wow, the money we just spent on dinner would buy groceries for my mom for an entire month. And it was difficult for me to truly even be present on vacation because it was always in the backup. mind that, hey, on any given moment, something could happen. And I, as her only son, would have to spring into action to be able to sort of fill the gaps. And so it was a bit of baggage that led me

to feeling the way that I did and lashing out as much as I did, because I was like, there's no way we're going to get along anyway, because you're not used to the way that I think or some of the responsibilities that I have to deal with. And so it was a lot of baggage there that crept into the way that I managed and thought about money. Now, once they learned how to have these important conversations, once they came into financial alignment, they then developed a framework called a 15-year career. A 15-year career starts with the end in mind, in which you imagine that you'll only work for 15 years and you break that down into five-year stints. The 15-year career framework is really just meant to encourage you to begin, with the end in mind. So if this is your day one, whether it's year six in the framework or whatever,

begin with the end in mind. And the end in this case is really just to feel like you have options and to actually have options. There are so many of us that aim for these 40 and 50 year long careers, but at year 15, we feel stuck. We don't feel like we can leave to try something new. We don't feel like we can start over. We barely feel like we can apply for another job at a different company. We just feel very stuck. And what the framework is meant to do is help you to have more options. It's broken down into three five-year sprints. And the reason for that is because there's very little downside to focusing on something for five years. That's kind of across the board. The first five years is about building financial foundations, like a very solid financial

foundation where you're paying down debt. You have a reliable budget. you understand the volatility of the things that you participate in. So five years is a good stretch to know, like, in that five years, I'm probably going to need two sets of tires, something's going to break at the house, I'm going to need an emergency funeral. So you've got kind of a good working model for what kind of flex your budget needs. The second five years, year six through 10, is about finding your superpower at work. And we define a superpower as something that can be monetize outside of the nine to five window that you currently use it in and investing along the way. This is where you're really amping up trying to max out those taxable accounts, starting a brokerage,

whatever you're invested in. If you're a real estate person starting to build out your real estate portfolio, you're really focused on what your investing strategy is for that second five years. And then the last five years is about building an exit plan. That's when you're starting to look at the landscape. You're starting to assess. whether your skills are still relevant, which is a thing now because of how fast the world is changing, and whether or not you're underpaid, applying for jobs, seeing what the market rate for your skills are, deciding what you want to do after this next five-year sprint. And what we find in that last five years is that a lot of people don't need the full five

years to get the clarity that they're looking for. A lot of people opt out around year 11 or 12 or start to feel like they can afford to take on bigger risks and apply for different jobs. Some of that imposter syndrome starts to fade away because you've now got 10 years of investments and a solid net worth, hopefully by that point. And you feel more comfortable taking different paths. And so that's basically it in a nutshell. And at the end of the 15 years, you may even want to try your hand at being a small business owner or taking a year off for sabbatical or traveling the world or volunteering.

There's just so many things that people don't consider because they don't feel like options. They stay at work because that's the thing that they know. That's the thing that they've built their identity around. And the 15-year career is meant to disrupt that. Anytime that anyone sets a long-term goal, like a goal that has a 15-year or more time span, maintaining momentum over the long haul is tough. But they emphasize that, hey, struggling on the way is okay. It's normal. And while you're on the journey, there's a lot that you can learn. I think you should welcome those years. Avoiding that

conflict or that resistance is where a lot of people go wrong. And what the 15-year career, the foundation and the steps within it allows you to do is to do that with somewhat of a safety net, to do that knowing that you understand how to generate income for yourself outside of a nine to five, that you have some sort of portfolio, or at least a manageable amount of debt, so that you're not required to ignore your inner desires to do something different. Yeah, I also think that, you obviously depends on what part of the 15 year career you're at. But one of the benefits of that failure is it's good to get it out of the way. You kind of feel like, wow, I'm really glad that I figured out that this is not what I'm good at or that I'm really glad that this is something I realize I don't want to do before I picked up and moved my family across the country or decided to go out and get another degree or do any of those things. A lot of this, again, sort of focusing on the fundamentals of debt freedom is getting to a point where you welcome those risks, taking those chances earlier on in your life and in your career so that you don't look back after 15 or 20 is, I mean, not tried anything, and now you're miserable, and then you're feeling like, oh, my gosh,

I don't really know where I should go next, right? A lot of this is really just about, to your point, building a strong core so that you can get to a point where you feel much more confident, trying things. And I think you'll realize that, you know, through that process, not only will you, like, have a positive impact on, like, your net worth, but you'll build so much more courage along the way. And you'll realize you'll have great stories to tell. of things that you've tried that didn't work out and you'll start to apply those lessons to some of the new things. So those are some of the lessons that we learned from Julie Giuliani, Chris Hutchins,

and Kirsten and Julian Saunders. We're going to take one final break for a word from our sponsors. When we come back, we'll hear from Stanford Professor Jeremy Utley, who breaks down the art of creativity and producing new ideas and shares actionable tips on how we can be more creative and have better ideas. We'll also hear from psychologist Dr. Daniel Crosby, who talks about how we're not wired to be good investors.

And so we need to overcome our cognitive wiring in order to be better at managing our portfolios. That's coming up right after this. This Giving Tuesday, Cam H is counting on your support. Together, we can forge a better path for mental health by creating a future where Canadians can get the help they need when they need it, no matter who or where they are. From November 25th to December 2nd, your donation will be doubled.

That means every dollar goes twice as far to help build a future where no one's seeking help is left behind. Donate today at camh.ca.ca.g.2.000. We know you love the thought of a vacation to Europe, but this time, why not look a little further? to Dubai, a city that everyone talks about and has absolutely everything you could want from a vacation destination. From world-class hotels, record-breaking skyscrapers,

and epic desert adventures, to museums that showcase the future, not just the past. Choose from 14 flights per week between Canada and Dubai. Book on emirates.ca. Today, Black Friday is here at IKEA, and the clock is taking on savings

you won't want to miss. Join IKEA family for free today and unlock deals on everything from holiday must-haves to cozy at-home essentials, all the little and big things you need to make this season shine. But don't wait. Like leftovers at midnight, our Black Friday offers won't last. Shop now at IKEA.ca.ca.com. Bring home to life. Welcome back. Have you ever grappled with this problem? You face challenges. You face plenty of problems at work, at home. in your investments, in your money, you're facing all these challenges, but you can't think of enough good solutions, or you glob on to the first solution that you think of. Stanford Professor Jeremy Utley can help. He says that solving complex problems requires

creativity, and that creativity isn't just something that we're born with. It's not an innate talent. It's a skill. It comes with practice, and it's useful in anything that you're doing, whether you're trying to manage your own household or retire early, renovate a kitchen, write a novel for anything that you're doing, you can develop the skill of innovation. So we start our conversation with the definition of creativity. My favorite definition, because we're throwing that word around like we all know what it means, we've got a network of teachers at the D-school that we've worked with in our K-12 lab, and Laura McBain, my colleague, who's the head of the K-12 lab,

she said that one of her colleagues in Ohio had posted on the whiteboard, what is creativity? And one of her seventh grade students put on a post-it note, creativity is doing more than the first thing you think of. And I think that's actually a fantastic definition because it gets at the heart of one of the greatest challenges we face. But it's so simple. And so for our purposes, for the purposes of this discussion,

simply thinking of creativity, not as artistic expression, but doing more than the first thing that comes to mind is a really practical definition of creativity. Dr. Utley also shares with us the Lego analogy, which illustrates how ideas are created from component parts. This neuroscientist said, the brain doesn't create anything from scratch. So when you think of an idea,

an idea isn't created from nothing, ex nihilo. an idea is created from component parts, things you already know. A very simple definition of the word idea is it's a connection. It's a connection between two things that I already know. Synthesis. So here's a simple example. What I want to do is tell you about how you can, for lack of a better word, you can gather Legos, right?

You think about two things that you know kind of clicking together. So for example, a friend's trying to start a stroller company and he wants to enter the San Francisco market. But you know what stinks about San Francisco? Big hills? Yeah. I can push a stroller up hills, right? And he's really struggling with how is he going to break into the market. And then he remembered that when he was in high school, his dad got him a self-propelled lawnmower to help make lawnmowing easier.

You and I and every listener on this call just had this collective hallucination called an idea. We just put these two Lego pieces together. One piece is the hills of San Francisco and a stroller. The other piece is this notion of a self-propelled lawnmower. I didn't have to tell you, try to solve the problem. Although, by the way, if you do, you're much more likely to solve it. I just gave you those two Lego pieces. And for most of us, they're almost like magnetic.

They just click together, right? And that's what I mean when I say that the brain doesn't create anything from scratch. It's taking pieces and it's connecting them. When you realize that, then a lot of the creative life becomes effectively about gathering Legos. Because if you know that ideas are made of component parts, then the bigger your bag of Legos, the more combinations you can make. His core idea is that you need many core ideas.

His idea is that the quantity of your ideas is more important than the quality of your ideas. If you can produce sufficient quantity, then quality will be in there. The greatest indicator or lever to get to good ideas, is lots of ideas. If you want good, don't go for good. Go for lots. The variable that has the most impact on the quality of your ideas is the quantity of your ideas. There's a researcher named Dean Keith Simonton, Dr. Dean Keith Simonton, who recently won a Lifetime Achievement Award from the MENSA Foundation. Okay, this guy's smart as it gets. One of his significant contributions to the field is he did a longitudinal study across domains to the arts and sciences and invention and discovery.

And what he found was the single greatest predictor of the success of any actor or thinker or artist or scientist was the volume of their work. And if you want to define the periods where they did their best work, look at the periods where they did their most work. But here's the thing. The periods where they did their most work in terms of volume of outputs is, also the period where they did their worst work, too. So we make the mistake. Like, everywhere I go in the world, people say, what do you do for a living? I say, I help people come up with ideas. I get the same response. You know what it is? What's that? How do you come up with good ideas? And I say, who said anything about good? I didn't say good. But that quality orientation is so, we can't think of

ideas without thinking good ideas. What's the value of a bad idea? It turns out they're profoundly valuable. The goal is not to eliminate bad. The goal is to increase the variation of your ideas such that you make good a possibility, too. How does this apply to money? If you've been listening to this podcast for a while, you've heard in some of the episodes in which former financial advisor, Joe Sal Sihae and I answer questions, sometimes people will call in with a proposed answer. They want to know whether or not this particular answer is the right one. And they don't necessarily realize that they've jumped to the answer rather than taking a step back,

pulling out, going to the 30,000 foot view, and saying, hey, what is the question? What problem, what underlying problem am I actually trying to solve? And when you stop conflating the answer with the question, when you ask yourself, what is it that I'm actually trying to accomplish here? That's when you can generate that massive quantity of ideas that can, that can take you into dozens, hundreds of potential new directions. So those are some of the insights that come from Stanford professor, Jeremy Utley. After that, we spoke with psychologist and behavioral finance expert, Dr. Daniel Crosby.

He researches the intersection of mind and markets, looking at how sociology, psychology, and neurology impact our investment choices. and he tells us that our cognitive wiring is built for survival, not for successful investing. And as a result, we need to implement certain guardrails in order to overcome this. Neurologically, we're just wired about opposite as we ought to be wired if we were to be great investors. You know, we really are wired for survival. And as part of that, we're wired for immediacy, action. were wired to be on high alarm.

You know, when you think back historically, the cost of getting a danger signal and missing it could be your life, but the cost of getting a danger signal and sort of overreacting is maybe you look silly for a minute, but it's not going to cost you your life. Whereas adapting in financial markets takes patience in inaction and long-termism, evolutionarily, we're wired for the here and now, we're wired for action, we're wired for alarm.

And so getting past these things and understanding how bad our wiring is, I think is the first step to putting appropriate guardrails around yourself in the form of automation, in the form of a coach or an advisor, and in the form of sort of trying to tailor your environment to maximize your probability of success. So in just about every way possible, we're wired. the wrong way to be good long-term investors. The fact that we are wired for survival, that indicates why we have such negativity bias, why we have such loss aversion. There are quite obvious parallels there. You also have talked

about how we're wired for short-term impulses and also we're wired to be lazy. Can you elaborate on both of those? We're wired to be lazy both physically and cognitively. We'll start to seep into some of the other domains here, but if you'll forgive me. So if you think about your brain, your brain accounts for two to three percent of your body weight, but it accounts for 20 to 25 percent of your caloric expenditure each day. And so you are always looking for ways to think less. You know, you were always looking for ways to do less, to think less, and to conserve that energy, whether it be physical or cognitive. And so all of these heuristics, all of these biases that we, we've mentioned today, these are just cognitive shortcuts to be less taxing on our brain.

And, you know, to sort of start to bleed over into the social element and see how they're combined, one of the primary means by which we save this cognitive and physical energy is we just do what other people do, right? We say, okay, nine out of ten dentists choose crest, sure, fine. Tom Brady wears this kind of jeans. Cool, me too. We do this with financial news media too. I found when putting together the behavioral investor,

a study that looked at the brain activity of people who are watching cable financial news and the parts of their brain associated with critical thinking and decision making actually go to sleep. You know, we are wired to defer to other people and to be lazy. Now, the flip side of that is actually, can we use this to our benefit? We can. We know that if we set a process in place whereby we auto-withdraw and auto-escalate our savings and invest it in a prudent manner, because we're lazy, we tend not to mess with that either. So it's hard to get started because we're lazy, but if we set something good in place, we're unlikely to stop it because we're also lazy.

So a lot of the power of behavioral finance is understanding ways to make these quirks work in our favor. Among the many challenges that we face is that we risk diverting our attention to the wrong places. We're at risk of confusing what is loud with what is likely. There's a difference between a prediction that gets repeated versus a prediction that's likely to unfold. what's salient isn't accurate and vice versa. But it's easy to mistake the two. It's easy to mistake loud and likely. The easy way to put this bias is that we confuse things that are loud with things that are likely.

And so if you think about something like people's fear of being attacked by a shark versus people's fear of getting diabetes, you know, it's like not even close. People are way more scared of sharks than something like diabetes. but one in 300 million people get attacked by a shark every year and one in three Americans are pre-diabetic. But, you know, there's a shark week on Discovery Channel. There's no diabetes week on Discovery Channel. And so, you know, we do this with popular media. Things are misrepresented in the popular media. So it makes them feel scarier than they are. And then you pair this just with the way that our mind works. we know that bad information is about two and a half times as sticky as good information.

You know, even if we're getting a balanced media diet that's equal parts good and bad news, which would be candidly very hard to do, it's still going to feel a lot scarier than it is. A lot of the chapter around attention is just getting people to think in terms of probability and not in terms of their gut. And so he describes the importance of managing your emotions in order to become a better investor. We are simply not wired to make good investment choices, but there are ways that we can channel both cognition and emotion

to help us overcome ourselves. Emotion is one of these things that's so much a part of how we make decisions. I think there are some people who think that emotion can be a form of signal, right? Like emotion can be used to trade more effectively or to make better decisions. This is almost universally not the case. When we look at emotion, we know that people make really poor decisions in times of heightened emotion, whether it be positive or negative. And we know that people tend to engage in something called answering an easier question

that has somewhat to do with the affect heuristic that you talked about earlier. If you think about something like, is boating dangerous, right? If you ask people, is boating dangerous, you know, hey, do you want to go on a boat ride with me? Everyone goes, yeah, like, I'll go on a boat ride. And, you know, I'll go, I'll go on a boat ride. I'll go to the lake. Well, boating is super dangerous, but people don't perceive it as dangerous because it's fun, right? The emotion of fun overrides the objective assessment of the dangers of boating.

Now, you ask the average person is investing dangerous. And they go, oh, yeah, investing is dangerous. Wall Street's a casino or all these things that we hear. Over the long term, investing is not dangerous at all. If you're doing it at all correctly, investing for the long term is quite safe. and yet people have a different emotional experience of it than say boating. There's all these studies I found where sort of limiting emotion, trying to mechanize your process, to automate your process,

led people to make really good decisions. The small departure from that, I would say, is that positive emotion can push you to save more and to take risk. There was a great study I cited in one of my books that talked about, Two groups of people, one was a control group, so no intervention. The other group was shown a picture of their children and their family for five seconds before they could transact any business in their checking account. And the people who saw a picture of their kids for five seconds every time they were logged in

saved more than twice as much as the control group. Now, that's emotional, right? They were being sort of re-centered on the thing that mattered most of them. And so that was leading them to make different decisions and emotional decisions, but they were positive decisions. Just make sure that the emotion you're feeling is sort of channeling that behavior in a good way. We know that people continued to save in college savings plans all through the great financial

crisis, even as they were pulling money out of every other equity vehicle because they love their kids and they see their kids every day and they go, oh, God, I got to send little, you Bobby to college, it allowed that positive emotion allowed them to overcome that fear. Use emotion to help you overcome your fears, but don't succumb to the emotion that tells you to be fearful. Those are some highlights and key takeaways from guests who have come on this show in the past year. Which one resonated with you most? Which were some of your favorites? I would love to know and the community would love to know. Had to afford to afford a afford anything.com slash community. Share what you loved. Share what resonated with like-minded people

inside of this community. Affordanything.com slash community. It's completely free. You can chat with people who are into the same things you are. Side hustles, investing, early retirement, changing your career. You can find your village there. Afford Anything.com slash community. Thank you so much for tuning in. This is the February 1st Friday bonus episode of the Afford Anything podcast, February 2020, 23. My name is Paula Pant. If you enjoyed today's episode, please leave us a review, subscribe to the show notes.

That's affordanything.com slash show notes. And share this episode with a friend, a family member, a colleague, a neighbor, someone at church, someone at school, share this with the people around you. Thanks so much for tuning in. My name is Paula Pamp. This is the Afford Anything podcast, and I will catch you in the next episode.