Financial Behaviour

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FInancial Behavioural Predictions

Financial Predictions for the New Financial Year

(Reading time: 3 - 6 minutes)

(and let’s face it, every year after)

Predicting the future can be difficult and mostly impossible. Especially if one’s trying to predict things which are completely out of their hands. Nevertheless, vast majority of predictions in the financial world are made about exactly those.
At a start of any new year, the mainstream media get saturated with headlines about market predictions, interest rate predictions and what their experts think will happen over the next 12 months or so.

It made me write my own list. With one point of difference is – my predictions are about the one thing we can all fully control (with a help of a third-party professional), if we choose to – our own behaviour.

I’m almost certain that my forecast won’t make the headlines because it doesn’t contain the kind of information people seek. It’s not the sensational news or some negative scary news or ‘the secret’ information that will bring them wealth. Well, actually it will, but not in the immediate form as they all expect.

So without further ado, here are my top 5 behavioural predictions for this year (and in fact every year thereafter, since human nature doesn't change):


We will keep looking for ‘the right’ product that will ‘save’ us

Most corporations spend ridiculous amounts of money to employ top marketing agencies to sell their products. These behaviour wizards understand too well how human brain works and create wonderful campaigns that simply fool us. They play to our basic emotions - fear and desire, but lately also pride, frustration and self-esteem. And vast majority of population will follow and buy whatever they’re selling, not realising, the new product won’t make any difference in their long term well-being - financial or emotional. They will happily keep chasing it, year and year again, with their super fund, insurance company, mortgage provider…


We will ignore the behavioural (read boring) issues that actually make the difference

After nearly two decades of my professional practice, I’m yet to see a prospective client who will come to me asking for assistance with their patience, disciplined spending or emotional decision making. Instead, they come asking to check if their super can be ‘’invested better’ (whatever that means) to deliver greater returns, for mortgage with a better rate or a cheaper insurance.

When I explain to them that it’s not the product that will deliver the outcomes but it’s actually themselves who can do that via better money habits and mindful consideration of how they go about things, they get disappointed. Many don’t believe me. And subsequently leave and they continue pursuing the ‘whatever other crazy issues they’re convinced are important’ as everyone else and which will eventually drive them to the ground.


We will continue focusing on (out)performance

The ‘timing and selection’ culture we live in is obsessed with being better than average. We were told by our parents we can be the best, so we expect nothing less from the results of financial products we buy. Not realising that the consistently best performance can’t be delivered year in, year out, we keep participating in the rat race we can never win.

Most of us will not want to see that it doesn’t have to be that way. That the constant best performance (or the outperformance) isn’t required to pay off our debts fast, educate our kids or retire early (whatever that means).

Most of us will not accept that the only real outperformance is the one we can deliver ourselves via long term and disciplined plan, with a help of third party coach, keeping an eye on our vulnerable money behaviour, inherited in our DNA.


We won’t listen to financial advice professionals

A decent number of books, movies and pieces of research has been done on how buying stuff does not make us happy (in the long term). Most of us just don’t even want to get the memo. It’s actually getting worse with big companies now skipping parents and market directly to our children. And oh boy, do we all know what our kids’ bad behaviour can do to a parent who is tired, lacking sleep and just wants to have a quiet moment or just wants to pop in the grocery store to only buy milk. So what do we do? We give in. To our kids, to fashion, to our marketing and social media driven culture.


Not managing your debts

Less than one in five working Australians has a dedicated financial planner who overlooks their family’s finances and their family’s long term financial interest. How do we expect to get ahead, to live lives on our own terms, to get financially independent, to retire early or whatever the headlines we buy into says, if we choose not to have hard conversations about the way we spend money?

It’s easier and so much more exciting, to look up stuff online or chat to our friends or read an article about the latest products and hottest suburbs to buy in right now.

Therefore, we will continue to choose not to engage a financial advice professional because we’ll continue to justify it to ourselves – don’t you read the paper and see the bad headlines?

It feels better to say that, because we that way, we don’t have to do a thing, to look for anyone.

So we just continue to Google…

Or maybe it’s time to stop and think about what’s really important to us in life and how we can direct our fortnightly pay to achieve it. What do you think?



What behavioural predictions are yours?

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Article by Sydney Financial Planning

This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.


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