Combatting Survival Instincts

Jonathan Clements wrote in the Getting Going column on today’s WSJ (link) about a theory dubbed “Lizard Brain” that traces the bad money management behaviors to our hunting and gathering ancestors. The theory goes that, deep down, the survival instincts inherited from experiences thousands of years ago tell us to:

  • consume more than we need
  • favor consumption today over saving for tomorrow
  • avoid losses at the cost of potential gains
  • rely on patterns discovered in the past

I’m not sure how one can pinpoint the blame but I do agree with what Jonathan said

In many cases, the trick is to arrange our finances so our ancient instincts don’t get a chance to foul things up.

So use automatic payroll deduction for saving for the future, and invest in broadly diversified index funds and avoid trying to pick individual stocks or one segment of the market versus another.

Refinance Your Mortgage

Mortgage rates hit new lows. I saw rates as low as 3.25% for 30-year fixed, 2.625% for 15-year fixed, with no points and low closing cost. Check mortgage rates in your state.

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