The Human Brain’s quirkiness

Affirmative action, compounding, Financial Independence, Human Brain

Dr. Peter Diamandis and Steven Kotler recently released their new book The Future is Faster Than you Think. Being a voracious reader I have been devouring this book as well. We will keep the details of the book out of this post.

This book is part of a trilogy. Their earlier books Abundance and BOLD were amazing and really make you think that we are living in a world which is much better and safer than what our forefathers ever got. If you have not read these books, I would highly recommend you reading them first before you read this one, because it will give you a context to this book. I read their books also when I am feeling low. These books show you that the world is moving in the right direction and human beings have an ability to bounce back and always pivot to a higher level in life.

What I wanted to share from this new book, The Future is Faster Than you Think, was content of two paras which the authors used and which has stuck to me.

They talk about the medial prefrontal cortex which is the part of the brain which gets activated when we think of ourselves. As per them it gets deactivated when we think of others. Surprisingly whenever we think of our future selves it gets deactivated. And the further you project into the future, the more it switches off. Which is why people are not able to save for their retirement because for your brain (medial prefrontal cortex) the person who will benefit from the tough choices you make today is different from you. Now you see the quirkiness even within our own brain. What is supposed to actually get functional when you have to think about yourself, switches off, when you project yourself into the future

The other issue is that our brain does not have the capability to think in exponential and global terms. Due to this anything which is depicted by an exponential equation is difficult for the brain to comprehend.

Which brings me to my fascination with compounding. Compounding in its very nature is exponential in nature. And therefore even though I keep talking about compounding in almost every post, I still find most people read what I write but don’t take action.

Coupled with what I have written earlier about habits, I think that is one of the key reasons why more people are not financially free. They sell time for money and because their brains don’t comprehend compounding they don’t let money work for them.

I once read money is a good “servant” and a bad “master”. So if you can make money work for you by using the laws of compounding, you can aspire for a Future which is much bigger and better than your past.

Till next time then

Carpe Diem!!!

Decide – You want to have financial independence

Affirmative action, compounding, Financial Independence

The word decide has origins from the Latin word caedere, which in English has the last four words “cide”. It means to cut off or to kill or equivalent. So all the words with the word “cide” in them have some relation to the word to die or to cut off. As an example sui-cide, homi-cide, are also words which mean to cut off or kill or die.

So why start this blog post with such dreary thoughts about cutting off. Its because when you DECIDE some thing, you cut off other things as possible action items. So I have seven items on my plate which I need to finish before the end of the day. But I DECIDE that I will write this blog post first. The moment I decide to write this blog post, I am therefore cutting of other things to be done at this time. I went to the Webster dictionary’s site and then I did a search on google to ensure that I was getting my facts right about the history of the word. But I kept doing things to help me write this blog post and not anything else at this time. I had cut off the other 6 things. After I finish writing this post, I will then have ti Decide which of the remaining 6 things I choose to do next.

So what has this got to do with attaining financial independence.

Well the day you Decide you want to have financial independence ( again I am not talking about being wealthy) you will take steps to invest money. Like the first step I took in 2013 of starting to invest in SIPs of Mutual Funds. There were a lot of other things I could have used that money, but I took that decision and have stuck to the decision ever since.

Similarly, I can keep talking about how compounding can help you grow, how Asset allocation needs to be done or how you should ensure your student loan gets cleared out at the earliest. But till the day you decide to do something about it, it’s all talk no action. You need to take action and decide to walk the talk.

The decision is the first step you take to move forward. Not deciding on something is also deciding to let others or circumstances to take the decision on your behalf. Life suddenly passes by and you think back and see so many forks in the road, where if you had taken the decisions life would have gone in a totally different orbit.

While I speak, I have had my own share of being indecisive and I have shared a lot of those instances with you in the blog. But as I have learnt more and more from my experiences, I have stopped talking about the experiences but more about the learning I picked up. In these blog posts I try to share those learnings with you so that you can have a bigger future compared to mine.

There’s no doubt a lot of decisions that you take (or let others take for you) do go wrong. But from each of those which went wrong you could learn something. Once you learn something, it stays with you and you make better decisions in the future.

So decide today that you want to be financially free. And then take actions with small steps by starting some regular systematic investment and in a few years the exponential nature of compounding will help you become financially free.

To your future.

Carpe Diem!!!