Dr. Sarah Newcomb is a behavioral economist at the investment research firm Morningstar. Sarah’s personal and professional passion and professional goal is to bring independent financial advice to populations that are currently under-served by the financial services industry, namely: women, low/moderate income households, and younger investors.
Sarah discusses the psychology of money and explores why smart people can make poor financial decisions. She outlines techniques to change one’s thinking, such as distinguishing between a “need” and a “strategy” to meet that need. A person may not need a car. What that person needs is transportation. A car is one of several strategies to meet that need – all of which come along with a different price tag. Zarak doesn’t necessarily need to go to Starbucks every day. What he needs is to get out of the office for 15 minutes every afternoon, and Starbucks is just one strategy to meet that need. Sarah invokes Maslow’s hierarchy of needs to help us reevaluate what our true needs are, and why that can help us financially.
"Every decision that people are making is based on a story they’re telling themselves, and they’re trying to meet a need. So what are your customers needing? Put it on Maslow’s hierarchy! How are you helping your customers to self-actualize? And what are the stories? What are the stories you’re helping people tell themselves? Is it healthy, or not? Once you learn to see these deep needs in yourself, then you learn to see it and hear it everywhere else.”
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