Sleight Of Mind, Seeing Through The Illusion
Nobody Cares More About Your Money Than You Do
This article is the 12th of a 14-part series that explores the core tenets of Get Rich Slowly.
I’ve read a lot of stuff lately about how scammers take advantage of other people. (Example, here is a brief summary of seven psychological tricks con artist use.)
(Excerpt from Lloyd Morgan)
Seven Psychological Principles Con Artists Exploit
Inherent human vulnerabilities need to be taken into account when designing security systems/processes, suggests a study that looks at a dozen confidence tricks from the UK TV show “The Real Hustle” to determine recurring behavioral patterns con artists use to exploit victims.
This study was a carefully constructed collaboration between Frank Stajano of the University of Cambridge Computer Laboratory and Paul Wilson, writer and producer of the aforementioned TV show (Wilson was an IT consultant for twelve years before moving into entertainment).
The seven principles of human behavior that con artists exploit, according to the article:
The distraction principle: While you are distracted by what retains your interest, hustlers can do anything to you and you won’t notice.
The social compliance principle: Society trains people not to question authority. Hustlers exploit this “suspension of suspiciousness” to make you do what they want.
The herd principle: Even suspicious marks will let their guard down when everyone next to them appears to share the same risks. Safety in numbers? Not if they’re all conspiring against you.
The dishonesty principle: Anything illegal you do will be used against you by the fraudster, making it harder for you to seek help once you realize you’ve been had.
The deception principle: Things and people are not what they seem. Hustlers know how to manipulate you to make you believe that they are what they want you to perceive.
The need and greed principle: Your needs and desires make you vulnerable. Once hustlers know what you really want, they can easily manipulate you.
The Time principle: When you are under time pressure to make an important choice, you use a different decision strategy. Hustlers steer you towards a strategy involving less reasoning.
NOW BACK TO THE ORIGINAL ARTICLE
It’s easy to think that those who lose their money are just unfortunate suckers. That’s not always true. The most intelligent people are more likely to fall victim, the less intelligent individuals are least likely to become a victim of manipulation because they use more common sense than logic.
On some level, the same thing happens all the time with bankers, brokers, and real-estate agents. Even with friends and family these folks may not be con artists, we’ve all at some point allowed these other people to tell us what we should do with our money. We let ourselves believe that they’re able to make better decisions about our financial situation than we are.
Sometimes they can, but more often than not, they can’t or won’t because the truth is, your money just isn’t as important to anyone else as it is to yourself.
One of the most powerful lessons you can learn is that nobody cares more about your money than you do. When you realize this, when you take responsibility for making your own financial decisions (instead of letting others make them for you), it can bring a tremendous sense of power and control to your life.
Trust no one
If your real-estate agent says you can afford a particular house, don’t just take her word for it. Run the numbers yourself. Set your own budget for a mortgage; don’t just trust the mortgage broker or the bank. Of course they think you can afford more they have commissions riding on it!
If your insurance salesman tells you that whole life is better than term, don’t just take his word for it. Do your own research. Find out what’s right for your situation. (Hint: It’s probably term.) Of course he wants you to buy whole life he’ll make five to ten times more than he would if you bought term.
If your lawyer tells you to create a living trust in addition to a simple will, don’t just take her word for it. Dig a little deeper. Learn what a living trust is. Find out why people use them. Ask yourself if this makes sense in your circumstances. You may very well decide to have your lawyer create a living trust or you may decide that $800 is better spent elsewhere.
If the salesman at the Mega Mart argues that you should take out an extended warranty on your new 180″ deluxe di-lithium-drive television, don’t just take his word for it. He has zero motivation to give you advice that’s in your best interest. His advice is based on what’s in his best interest, which means more money in his pocket.
If your favorite personal-finance blogger urges you to invest in index funds, don’t just take her word for it. Read up on the subject yourself. Though it’s unlikely that a blogger is going to profit from your investment choices, it’s very possible that her investment goals and your investment goals are different. Maybe she’s well off and merely wants to match market returns. Maybe you’re young and would like a little more risk. Make time too use the blogger’s advice as a starting point, but do your own reading, your own planning, and make your own investment decisions.
When you see an ad on television, on a blog or in a magazine, don’t just believe what the marketing copy tells you. Of course the latest Trends are the best! That’s what all ads say, right? Big corporations don’t have your best interest at heart. All they care about is the bottom line. To get the facts on quality and performance, check out impartial reviews through Amazon, Consumer Reports and your friends.
The truth is out there
Don’t get me wrong. I’m not saying that it’s bad to talk to a financial planner or to use a real-estate agent to buy a house. You should absolutely have a team of financial advisers. Heed the advice of experts. Listen to what they have to say. But don’t follow their recommendations blindly.
The advice that others give you is almost always in their best interest, which may or may not be the same as your best interest. Never forget this. Don’t do what other people tell you just because they have authority or because they have a silver tongue.
Read. Research options. Understand the pros and cons of every choice. (Because every choice will have its pros and cons.) Don’t become obsessed with perfect, and be willing to make mistakes. Realize that what’s right for one person may not be right for you.
And, especially, never make a financial decision under time pressure. If somebody tells you this is a limited-time offer and you need to act fast or you’ll miss out, then miss out. It’s almost always the best choice. (Creating time pressure is one of the oldest tricks in the book, and an easy way to get people to go against their own best interest.)
Know what’s important to you and why. Use this knowledge to set goals. And use these goals to direct your choices. When you have a why, it’s easier to trust your own judgment.
Do these things, and you’ll appreciate that nobody cares more about your money than you do.
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