For many millions of Britons, 2023 was a financial wake-up call. A combination of inflation, higher interest rates and concerns about the economy all contributed to a sense of unease about household finances.
According to a recent survey, 57% of British adults say the cost-of-living crisis is a major financial concern. Running out of money was a major concern for 38% of respondents. Not saving enough for retirement was the third-biggest worry, affecting 26% of people, with anxiety peaking among those aged between 41 and 55.
Such fears are entirely understandable. The question is, what can you do to allay them? Inflation and the state of the economy are out of our control. So too are the financial markets. And no one is immune to life events like marital breakdown, or losing your job or business, that can seriously harm your financial wellbeing.
But there’s one thing we can control that has a huge bearing on our financial future, and that’s our own financial behaviour. By having a plan, controlling our expenditure, investing enough money and maintaining a long-term focus, we maximise our chances of achieving our goals.
But there’s one thing we can control that has a huge bearing on our financial future, and that’s our own financial behaviour. By having a plan, controlling our expenditure, investing enough money and maintaining a long-term focus, we maximise our chances of achieving our goals.
It sounds so easy, doesn’t it? In practice, though, it can be anything but. Why? Because, when it comes to money, we’re all prone to self-sabotage. In the words of Benjamin Graham, the investor and academic who was a mentor to Warren Buffett, “the investor’s chief problem, and even his worst enemy, is likely to be himself.”
This is a strange phenomenon. After all, football players don’t deliberately score own goals, and batsmen don’t hit their own wicket on purpose. So why are the financial crises people face so often self-inflicted? A book by psychologist Steve Peters called The Chimp Paradox provides the answer.
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