science

Psychology explained the three main behaviors to achieve financial well-being

2 years ago
Read Time: 3 minutes
by Aileen Morales
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Avoid compulsive buying

Stress and a bad mood are often behind impulsive purchases that often end in regret, he says. AxeBuhler. Emotional discomfort “turns off” the control area of the human brain. This is a problem because this area is responsible for managing long-term goals, delaying gratification, and resisting urges and temptations. Instead, the reward system takes over, demanding instant gratification to feel better. Likewise, time pressure and time are the main enemies of rational thought. “If you don’t have time to think about the behavior, the alternatives, and the potential consequences, the reward system takes over,” he says. AxeBuhler.

Both scenarios often end in impulsive buying and questionable financial decisions. Therefore, a critical first step towards more conscious spending behavior is the ability to identify our consumption patterns. From N26 they recommend identifying factors (starting sales, for example) and situations (going shopping after a bad day) that encourage compulsive spending to avoid.

Save without pressure

According to his analysis AxeBuehler, “The human mind is not made to save or make intelligent financial decisions.” On the contrary, human beings are “programmed for instant gratification and the brain refuses to wait or long-term rewards. Therefore, spending is much easier than saving or investing.”

To relieve the stress of the control system when making conscious saving decisions, N26 suggests setting long-term goals and using tools that allow process automation to avoid having to make active decisions. Digital tools are a good alternative, as they simplify and automate the saving process. For example, N26 allows you to set Automatic rules for your spaces (sub-accounts) Transfer a predetermined amount regularly. Another function that the user can choose to automate is “rounding”, which, as its name suggests, rounds purchases to the nearest euro and transfers the surplus to the savings space specified by the customer. It should be noted that in the first year after its release, this tool appeared pEnable N26 customers to save more than 12 million euros.

These are examples of how to create a habit-based saving behaviour, which is guided by a “reward system” and, due to automation, requires less effort and energy, freeing the user from the stress or rejection that often includes active saving decisions.

Set realistic goals

Responsible money management habits are not established overnight, and setting too many or unrealistic financial goals can backfire, because “trying to control too many impulses at once increases the risk of failure.”“, points AxeBuhler.

Instead, Internet banking recommends breaking savings goals into smaller stages and formulating them as specifically as possible. “Achieving goals brings an immediate sense of satisfaction, and because of the positive reinforcement process (neurobiologically reflected in a dopamine blast), the person is more likely to repeat the behavior that led to that success.” Well-being and improvement of the relationship with money, because joyful feelings of success and achievement will be associated with saving.

N26 is building the first online bank that everyone will fall in love with. St. Valentine’s day stalf s Maximilian Tainthal They founded N26 in 2013 and launched the initial product in 2015. Today, N26 has more than 7 million customers in 24 markets. The company has a team of 1,500 professionals of 80 nationalities and offices in 10 cities: Amsterdam, Berlin, Barcelona, Belgrade, Madrid, Milan, Paris, Vienna, New York and São Paulo. With a European banking license, the latest technology and no branch network, the N26 has re-engineered banking for the 21st century and is available on Android, iOS and the web. N26 has been valued at over $9 billion and has raised nearly $1.8 billion from the world’s most famous investors, including third Point projectsAnd coat Management LLC, Dragonair investment CollectionAnd insight adventurer partnersGIC, TencentAllianz X, Valar projects (run out thil), horizons projects (for me Ka Shing), Quick-witted venture capital, Greyhound capital and battery projectsas well as board members Zalando s Redalpine projects. N26 currently operates in Austria, Belgium, Denmark, Estonia, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Netherlands, Norway, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden and Switzerland.