Equally smart people can disagree on how you should invest your money, what you should prioritise, how much risk you should take and so on. Photo: Getty Images
Equally smart people can disagree on how you should invest your money, what you should prioritise, how much risk you should take and so on. Photo: Getty Images
Equally smart people can disagree on how you should invest your money, what you should prioritise, how much risk you should take and so on. Photo: Getty Images
Equally smart people can disagree on how you should invest your money, what you should prioritise, how much risk you should take and so on. Photo: Getty Images

Why money is an emotion and one of the most powerful forces in our lives


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Let me tell you about a problem. Afterwards, you’ll hopefully feel better about your money and less judgemental about what others do with theirs.

A colossal gap exists between the rate of return investments produce and the return most investors get. This compounds over time to either fuel or decimate your wealth.

The problem? Behaviour.

Harvard research shows more than 95 per cent of our financial decisions are subconscious or emotional.

This explains the story of a “wildly successful” executive, who founded and sold multiple businesses, and felt compelled to buy the best of everything and speculate his wealth away on physical gold, cryptocurrencies, properties and the “next best thing” (and not surprisingly, eventually ended up broke).

In contrast, American Ronald Read, who fixed cars and swept floors at a supermarket, left a whopping $8 million estate behind when he died at 92 in 2014.

You see, doing well with money isn’t necessarily about what you know. It’s about how you behave. And behaviour is hard to teach, even to really smart people.

As Richard Thaler, the American economist and 2017 Nobel prize winner, said: “People aren’t dumb. The world is hard.”

In the real world, people don’t make financial decisions on a calculator. They make them at the mall, on a golf course or in a meeting room, where personal history, friendship, their own unique view of the world, ego, pride, marketing and odd incentives are scrambled together.

People do dumb things with money. But this doesn’t make them crazy – just human.

But here’s the thing: People from different generations, raised by different parents who earned different incomes and held different values, in different parts of the world, born into different economies, experiencing different job markets with different incentives and different degrees of luck, learn very different lessons.

The person who grew up in a war-ravaged region thinks about risk and reward in ways the son of a successful businessman cannot fathom if he tried

Everyone has their own unique experience on how the world works.

All of us – you, me, everyone – go through life anchored to a set of views (largely formed in childhood and early adulthood) about how money works.

The person who grew up in a war-ravaged region thinks about risk and reward in ways the son of a successful  businessman cannot fathom if he tried.

You know stuff about money that I don’t and vice versa. You go through life with different beliefs, goals and forecasts to mine.

Your personal experiences make up maybe 0.0000000001 per cent of what’s happened in the world, but maybe 80 per cent of how you believe the world works.

So, equally smart people can disagree on how you should invest your money, what you should prioritise, how much risk you should take and so on.

We all think we know how the world works but we’ve only experienced a tiny sliver of it.

The real problem is we have Paleolithic emotions, medieval institutions and the latest technology in the palm of our hands.

Our three-pound brain hasn’t changed for 130,000 years, so it’s primed for survival; fight, flight or freeze with mental shortcuts that ease the cognitive loads of a decision.

Examples of these are “educated guesses” and “rules of thumb”.

Humans manifest these potential biases – whether through excessive stress and misreading data, personal prejudice or an ill-considered philosophy that includes the fear of missing out and herding.

This isn’t wrong. It’s just human.

In his book Stumbling on Happiness, author Daniel Gilbert says: "Human beings are works in progress that mistakenly think they're finished."

Money is a tough topic. There’s no right or wrong way to learn, talk or feel about money.

For my first column in The National today, I want to express that money is essentially an emotion and one of the most powerful forces in the lives of individuals and societies.

Inspired by the world’s leading authors, educators, neuropsychologists and coaches, my future columns won’t focus on the technical side of money (taxes, investments, cashflow, risk and estate planning) but the personal side (relationships, emotions, hopes and dreams, self-esteem and a sense of well-being).

I plan to ask you questions to increase your awareness about your own money story. What were the consequences of your upbringing and what is your “money mind”?

Are you a careful saver or a carefree spender? Do you take big risks or play it safe? Do you have your goals meticulously mapped out or will you see how it goes? Why do you have the goals that you do? Do you always seem to want more or do you feel content?

What are the consequences of all these on your attitudes and behaviour?

Ultimately, financial wellness means navigating your money life with clarity, confidence and control. It’s security, now and in the future.

Money is largely a mindset. One that involves work, accountability and making sound decisions. One that centres on calibrating purpose with planning and meaning.

The good news? A positive mindset can be achieved without focusing on the number in your bank account.

Sam Instone is co-chief executive of wealth management company AES

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What drives subscription retailing?

Once the domain of newspaper home deliveries, subscription model retailing has combined with e-commerce to permeate myriad products and services.

The concept has grown tremendously around the world and is forecast to thrive further, according to UnivDatos Market Insights’ report on recent and predicted trends in the sector.

The global subscription e-commerce market was valued at $13.2 billion (Dh48.5bn) in 2018. It is forecast to touch $478.2bn in 2025, and include the entertainment, fitness, food, cosmetics, baby care and fashion sectors.

The report says subscription-based services currently constitute “a small trend within e-commerce”. The US hosts almost 70 per cent of recurring plan firms, including leaders Dollar Shave Club, Hello Fresh and Netflix. Walmart and Sephora are among longer established retailers entering the space.

UnivDatos cites younger and affluent urbanites as prime subscription targets, with women currently the largest share of end-users.

That’s expected to remain unchanged until 2025, when women will represent a $246.6bn market share, owing to increasing numbers of start-ups targeting women.

Personal care and beauty occupy the largest chunk of the worldwide subscription e-commerce market, with changing lifestyles, work schedules, customisation and convenience among the chief future drivers.

Labour dispute

The insured employee may still file an ILOE claim even if a labour dispute is ongoing post termination, but the insurer may suspend or reject payment, until the courts resolve the dispute, especially if the reason for termination is contested. The outcome of the labour court proceedings can directly affect eligibility.


- Abdullah Ishnaneh, Partner, BSA Law