Alexis Wise: A Penny for Your Thoughts: A Psychological Approach to Personal Finance | Summary and Q&A

April 5, 2019
Stanford Graduate School of Business
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Alexis Wise: A Penny for Your Thoughts: A Psychological Approach to Personal Finance


Learn how understanding personal financial psychology can help individuals make rational decisions and change the way society approaches money.

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Key Insights

  • ❓ Personal finance frustration is common, even among highly educated individuals.
  • 🖐️ Psychology plays a significant role in financial decision-making.
  • 🔨 Implementing systems and using innovative tools can help counteract negative financial tendencies.
  • 🤑 Open discussions about money can remove shame and provide support for better financial management.
  • 🤑 Understanding personal financial psychology can empower individuals and lead to positive changes in society's approach to money.
  • ✳️ Financial mindsets, such as risk aversion and scarcity mindset, influence decision-making.
  • 🏛️ Positive associations and rewards can help individuals build financial habits.


[MUSIC] When I was nine years old, I asked my parents for an allowance. Since I've been diligently feeding the cats, they agreed, and we settled on $3 a week payable on Fridays. The first Friday rolls around and I am so excited. We're sitting at the dinner table, and my dad slowly pulls out a crisp, $2 bill, and then a stack of four quarters. Then ... Read More

Questions & Answers

Q: Why is understanding personal financial psychology important?

Understanding personal financial psychology is crucial because it helps individuals recognize their biases and tendencies when making financial decisions. By acknowledging these factors, individuals can develop strategies to counteract them and make more rational choices.

Q: What are some common financial mindsets?

Some common financial mindsets include risk aversion, which may cause individuals to avoid investing in the stock market. Another mindset is a scarcity mindset, often prevalent in individuals from poorer households, which can lead to overspending instead of saving.

Q: How can tools like robo-advisors and savings apps help improve financial habits?

Tools like robo-advisors can assist individuals who are risk-averse by taking over investment decisions and providing a sense of security. Savings apps, on the other hand, can help individuals with a scarcity mindset by automating savings and creating positive associations with financial chores.

Q: Why is open discussion about money important?

Open discussions about money eliminate the stigma and shame associated with financial struggles. By sharing our experiences, knowledge, and strategies, we can help others overcome financial hurdles, hold each other accountable, and create a supportive environment for managing finances.

Summary & Key Takeaways

  • The speaker shares a childhood experience of learning about finances through a family tax and charity cups, highlighting the frustrations many face with personal finance.

  • She emphasizes the importance of psychology in personal finance and discusses different financial mindsets, such as risk aversion and scarcity mindset.

  • The speaker suggests implementing a system to counteract financial tendencies and shares examples of tools that can help, such as robo-advisors and savings apps. She also encourages open discussions about money to create a supportive environment.

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