Are You Listening?

Are you listening?

Our sense of hearing is a remarkable system. There is so much noise going on around each of us that it is impossible to listen to everything. We hear it all, but listening is different.

Listening means you are present for that moment in time. Energy in the form of thinking exists which is an activity practiced less and less. Thinking is a requisite to problem solving.

Many people make decisions based upon who speaks the loudest or who speaks closest to what they want (regardless of truth). I learned of a woman who sought counsel in her marriage. She visited her minister, her friend’s minister, a neighboring minister, a marriage counselor, and a number of friends before she ultimately found someone that agreed with her point of view.

What did all of them but the last have in common? Each of them counseled her that her source of happiness was found in the mirror. The last source gave her permission to blame her husband. She listened to what she wanted to hear.

During the first week of swine flu vaccines in New York, more than half the parents kept their kids out of the program. Interviewed parents said things like, “I’m not sure it’s safe,” and “I wanted to see if it affected other kids…”

No mention of any studies or long-term side effects. No science at all, just rumors and hunches and gut instincts. The gut-instinct approach served people well for hundreds of thousands of years, but it’s becoming more and more clear that it doesn’t work in a complex world.

Audiophiles spend thousands of dollars rewiring the electrical lines in their house with .99999% pure copper, ignoring the fact that the power from the street is in the same old cables. Adding decimal points to our irrationality doesn’t change much.

The problem with being an amateur financial planner is precisely the reason that marketers relish the opportunity to sell to us: we make stupid decisions, easily manipulated by those who are incentized to use numbers to transfer funds from our pockets to their bank accounts.

It’s not that people are irrational by nature, it’s that too much credence is given to expert advice based upon historical numbers that do not tell the entire story.

Consider breast cancer screening. It appears to give information, really good information, but in practice, it doesn’t. Since the information is historic and scientific, we give it too much credence.

When it comes to finances, we listen to the marketing noise that’s exciting, sexy, and irrational. Success in finances is a sequential process. 1. Master your spending. 2. Master your saving. 3. And the most important of all, Master your ability to communicate about money.

People who listen to this council can avoid the mistakes and pitfalls associated with following the crowds of risk. Going with the flow is just a euphemism for failure.

Remember the story of the tortoise and the hare? Well, who won?