Can you change how you behave with money?

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0:34After your trial, you'll save an extra£5 a quarter on the subscription, which is exclusive to Making Money listeners. And that's moneyweek.com forward slash money. But there's a link in the description if you just want to click that. I know it's March now, but this is our final special episode that we recorded at the start of the year to help you get off to the best start and perhaps offer a fresh perspective on your finances. We really hope you enjoy it. What if you became the scientist of your own life and you apply this to finances, relationships? work. Anne-Laure LeCamp is a neuroscientist and the author of Tiny Experiments.

1:06She says we need to change the way we look at success. Because how often do you actually question your financial goals? You'll notice there are so many areas where it's just a script. It's not based on any reality, any actual data. And it's maybe worth experimenting with that. What do you think are some good tips for people to make some changes in the new year? Can I say something a little bit controversial? Absolutely. That's why you're here. Okay. So let go of goals. Let go of New Year resolutions. That's what everybody does, right? You decide on something you want to do, and then you work really hard to get it.

1:45And I would really encourage people this year to try and experiment a little bit more. Be a bit more curious. Let go of trying to copy-paste whatever success looks like for other people. And maybe ask yourself, what is something I can try when it comes to money, finances, etc.? What is something I want to explore? And I'm not sure it's going to work. I'm not sure it's for me, but I'm going to give it a little try. And there are lots of areas in life, obviously, where it's easier if you stick to a plan. But sometimes delaying those decisions a little bit and making it a little bit more space for having more options can lead to better outcomes and more fun in the process.

2:22I agree with the more fun, but I'm not sure if it's always better outcomes. I do everything last minute and I just kind of go with the flow. We went on holiday and Damien's like, book your plane tickets. and I was like, I'll book it. And I booked it like a few days before. So it was cheaper. It was more expensive, but you know, I had less stress and I had a great time. Is it practical always in life for people to leave things like last minute? Normally if you leave things late, it costs more or like, you know, you can't plan. So are there downsides to this? Before you answer, the other side to that as well was me and my friends checking the flight every day to make sure there's still flights left.

2:53And we tell them there's one seat, book it. So actually like his laissez-faire attitude is our stress. Do you know what I mean? We were managing that situation. And he's like, oh, yeah, I always book last minute. It's fine. I think the key word here is intentionality. So instead of just doing it at random and just because you're busy or too stressed to even think about it, just being a little bit intentional. And that's part of what's interesting in terms of learning about yourself, what works and what doesn't also. It's just doing things differently from the way you normally do them. So if you're the kind of early planner, normally, I would experiment with what it looks like to wait a little bit and see what maybe last minute deals come up this time if for once you don't plan in advance.

3:44And obviously only do this if you can afford it, if you can afford for the experiment to not be conclusive. If in the end it's like, actually that did cost more money and that wasn't worth it. Now you know actually, like scientists, right? So you just test it and then you decide if it works for you. If you're the kind of person who's more last minute, maybe you can experiment with saying, even though you're like, I always do it last minute and it's always fine, saying, what about if this time I listen to my friends and I actually plan in advance? What does that feel like? And comparing it. And maybe the answer is that actually that didn't do anything for me.

4:17Like I don't care about saving the little bit of money I saved and it made me more stressed to have to plan in advance. Or you'll discover that maybe actually I'd like to be more of a planner. That works better for me. So as you can see, this is not like a rigid, linear goal. The definition of success is not, I'm going to get there. The definition of success is, I'm going to learn something new. As long as you learn something new, the experiment was successful. And I discovered this method when I did my studies in neuroscience. That's what they teach you. That's how you do experiments. And at the time, I figured, what would that look like if you took this and you applied that to your life?

4:56What if you became the scientist of your own life and you apply this to finances, relationships, work, anything that you do, you can look at it, ask a question, design an experiment, collect that data, and then see what the result is like. Are there anything particularly in life or any goals that people chase that you think they should perform experiments around rather than blindly chasing? soon? Any goal that was inspired by other people around you, I think, is worth at least questioning. And it doesn't necessarily mean that they're bad. Again, it's the intentionality. If you experiment and you figure out, actually, that thing my mom has been telling me to do for 20 years that I've been doing, I'm going to try to do it differently.

5:42And I find out that, oh, she was so right, actually. I'm just going to stick to the way she said to do it. This is new knowledge that is really useful because now you have the conviction that you're doing things in a way that actually makes sense for you and not because someone told you to do it this way. So anytime you notice that you've been doing something because you've been copying and pasting it, in psychology we call that cognitive scripts and those are scripts that we follow that have been embedded in our minds based on just observing what other people are doing. An example that you see in research papers is that if you go to the dentist, for example, you're not going to start opening your mouth in the waiting room and ask them to check your teeth, right?

6:24You have a cognitive script that tells you, and you never think about it, right? That you go in the waiting room, they're going to call your name, and then you go in the doctor's office, and then you open your mouth, right? And it's the same in life, for example. We have this cognitive script that we need to go to university, finish our studies. and then get a first job. Once we're eligible, we can get a mortgage and we can buy a house. And once we do that, then an A and B and C, right? There's nothing inherently bad about this process and those steps, right? But experimenting is about asking yourself that question.

6:58Is that really what I want to do? Is there a different way to do things? And am I being intentional in those choices that I'm making? So I'm looking for a new car currently. Always. Because my car's always in the garage and, you know, my crypto is doing quite well. So I'm like, time to buy a car. Do you think, would my cognitive script be, instead of, I know which car I want, I think. Is it a good idea to test, like rent the car first instead of just going and buying the car? Is that kind of like how cognitive script works? That's such a great example. Yeah, so the cognitive script, sometimes what's interesting is that you don't notice that it's a script.

7:31You don't notice that it's because maybe a friend has been driving a similar car or you saw an ad several times. they're very good at implanting scripts in our minds. That's what they're designed for. And you can't experiment with everything and you can't run an unlimited number of experiments at the same time. When a scientist is in the lab, they're usually running maybe one or two experiments at the same time because you need to keep track of what's happening. You only have 24 hours in the day. You need to sleep. So it's very similar in your life and your finances too. You need to choose what you're going to experiment with.

8:06And as I mentioned earlier, you also need to be in a situation where it's okay if the experiment fails. Because with any kind of scientific experiment, again, the goal is not to succeed. The goal is not to get the answer you expected. It's to learn something new. So I really don't recommend experimenting with things where if the experiment doesn't go to plan, you're going to be in a very bad financial situation. Do you think people should totally abandoned goals and goal setting or in favor of experiments no they work in tandem so it's a little bit as the same with goals and habits the main issue i have with them is that we just go for them straight away we just assume that they're good so we say i'm going to build the habit of i don't know going to the gym once a day uh you know every week i'm going to build the habit of drinking water.

9:00I'm going to drink to do this habit. With goals it's the same. I'm going to have the goal of saving x amount of money so I can go on a holiday at the end of this year. I'm going to have the goal of buying a car in the next two years. Experiments should come before. So especially for big goals or habits that are significantly going to change your life. Instead of assuming that's what you want and that is good for you, first experiment. And if the answer is yes, that is something I actually want, despite the cognitive scripts and despite the fact the assumptions that I've made, et cetera, actually now I know this is what I want.

9:35Then you can turn it into a goal and you can break it down and say, okay, so I'm sure I want this car now. So that's how much I should save every month, for example, if I want to buy this car. So not getting rid of goals, but again, being a bit more intentional and experimenting a little bit more before you set those goals. Last time we recorded, Tomei, and you were having some real dramas with your accountant. So how's that been going, mate? They're sacked. So drama sorted. They're a big corporate firm. They didn't really reply to my emails very quickly, like took a week or two at times. And they charged me way too much.

10:11I mean, I've got pretty simple taxes. And yeah, they were charging me thousands. They saved me some money. But yeah, I had to move on. Slow and expensive. Pretty much, yeah. This is one of the reasons that we're really happy to be partnering with TaxApp. It's a tech platform that makes self-assessment simple. Whether you're self-employed like me, a freelancer, or a director like Damo, big dog. Instead of sending endless emails, bills, and spreadsheets to your accountant, you just connect your bank, answer a few questions that are only relevant to you, and your tax return can be ready in as little as 15 minutes.

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11:15I've done a few deals. A bill, a bill. What would your compliance team say about you? They will say that I am always nagging them and that essentially I just have beef with compliance. I love the team. Compliance slows down all my deals because every time I get to the finish line, they've got to check documents, KYC, GDPR, and it's just a nightmare. It slows the deal down by like two, three weeks. It's always on both sides as well, isn't it? Sometimes it can be blocked on the other side. Well, that's where today's sponsor can help. Indeed. Vanta helps companies of all sizes get secure and compliant fast and they stay that way.

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12:26There's a link in the description though, so you can just click that. Can we design a little experiment now or something that people could use maybe around their finances or something, just so people can know what that looks like? Because, you know, go and experiment with your money and you start like spanking money on stuff and your partner's like, what are you doing? I'm experimenting. Yeah, I'm experimenting. I got a new chain. He's like, what? That is not experimenting. Exactly. So I was about to say, what would the goal be? But that's wrong, isn't it? No goal. Yeah. But I like the fact that you mentioned partners because I also think it can be really fun to experiment with your partner instead of just doing it on your own and having them be like, what are you doing?

13:07Can do it together. So, okay, let's do a tiny experiment, something very small that everybody can do. I'm going to, again, you have to take something that you do naturally, question it, and do something different. Okay. So, okay, everybody eats, right? So, if with your partner, you tend to go out a lot and spend quite a bit of money every week just going out and going to your restaurants, a tiny experiment could say once a week we both stay home and we go to the supermarket together we buy food we cook it and we save money and also we see how that feels so external signals is probably saving a bit of money on the bank account but also how does that feel do we like it and you kind of reflect on this and you can say let's do that for a month and at the end of the month, we look back and we decide if we want to keep going.

14:03If on the other hand, you're a very frugal couple, you always eat at home. It would probably for most people be okay to say that over the next month, once a week, you're actually going to go out. And that doesn't mean you go to a Michelin restaurant, right? So you can have a nice pizza down the road, right? And just say, once a week, we go on a date night together. And we know it's going to cost a little bit more money than usual, but same. At the end of the month, let's look back. External signals, yeah, probably going to cost a bit more money than eating something from Tesco. But internal signals, what does that feel like?

14:39What is the impact on our relationship? Are we having better conversations when we're sitting across the table with our phones because we feel like we paid for this meal and so we need to talk to each other? Or actually, were we okay eating from our kitchen at home with the Tesco meal, which might be the case. So that can be a very small, fun experiment to do together. And when you can apply all of the principles we discussed, where you collect that data, and then you analyze it together. And depending on the result, you decide whether you want to keep going, or you can maybe tweak it, or you can stop.

15:12Yeah, so I mean, I wasn't in an intentional experiment. But I noticed with our food shopping, let's say we spend 100 plus a week on food, and we were ending up eating out maybe or getting takeaway twice a week. And it's like, you know, that ends up being 40 quid every time. So I was like, we're spending 80 quid here on takeaways because we're lazy. So I found a meal delivery service that's actually Planthood, not sponsored, but, you know, they deliver like vegan meal prep things and my partner's vegan. 70 quid for two of us to eat for five days. So we started ordering those. We don't order takeaways anymore and we actually reduced our food shop.

15:48So I was always like, oh no, those meal things are too expensive we tried it for a few weeks we've been using it now for like seven months so i guess in a way it's like challenge the norm of in my head i was like we buy all our own food because it's cheaper but then when i looked at it actually what we were doing was spending 80 quid a week on takeaways as well on all the nights where i was like i can't be bothered to cook and that thinking that it was too expensive again might have been a script from hearing some friends saying this or just assuming it and so that's um that's actually a really good example of saying let's just try it and if you can afford it if it's not a very risky experiment to do just try it and then you can decide yeah i mean in the same way with the with the youtube channel i had this kind of script of only i can edit my videos the way i can i put in a video i did a trial with a video editor i realized he was better and you know now we've got the podcast all this because i freed up time by hiring an editor so it's like these little tiny things of yeah Yeah, that's amazing.

16:44And that's, you've basically described the entire process where you take an assumption, something you think you deeply believe is true. When you start examining your work, your life, your projects, your finances, everything, and you look at the things that you just think are true. And for you to, yeah, like those milk kits are too expensive. Or, you know, I'm saving time by editing my videos myself, et cetera. You'll notice there are so many areas where it's just a script there's it's not based on any reality any actual data and it's maybe worth experimenting with that so cognitive scripts i know it's not the same but is it a little bit of cognitive bias in that like you have preconceived ideas of something so you can use it for is there anything you can't use it for you can use it for like bad habits finances yeah they're related in the sense that the cognitive biases that you have are likely to make you more prone to fall prey to specific scripts.

17:40So if you grew up in a family, for example, where maybe your parents really didn't have a lot of money and you were always being very careful about how much you were spending, you're maybe more likely to fall prey to those scripts about it's not worth looking at those meal kits because they're too expensive. So they are kind of interconnected. And so I'm glad you ask this because then you can basically also looking at your biases probably start noticing more scripts through this yeah so that's actually helpful to also think about those biases i just said it because i remember him he used to be like my precious my precious editing no one can touch it it's my baby i love it so much and then once he did he's like oh i've got loads of free time now so it's like you might have these deep preconceived notions and you're like i can't no one else can do this and then you're oh i just saved like 10 hours in my week or something so yeah yeah or things like i should buy a house yeah that's i think that's a very big cognitive script like you said go to uni get a job buy a house and then like times change and it's not quite the same as it used to be 20 years ago exactly i just don't know how easy it is for someone to say like this is something that i i'm lying to myself about or that i'm like i accept is true yeah do you mean it's hard it's really hard that's why i wrote an entire book about it right it's not something you can just do very easily.

18:58But once you understand how it works, it's something you can inject in your life a little bit off. It doesn't have to be changing everything. Again, you don't have to, and you really shouldn't experiment with absolutely everything. But it's just a way to start looking at your life in a slightly different way and to be more connected to your decisions and understand why you behave this way, why you make those choices. This keyword, again, of intentionality and what's great about it is that if you start doing this when you look back and maybe things have become a little bit difficult or you're not quite sure where you're going you can look back and remember oh but actually I made that choice at the time because those were the things that actually mattered to me not because other people told me to do it but because that mattered to me and that's why I bought the house or that's why I decided not to buy the house that's why I got this car or I didn't.

19:51And it's very helpful to have this confidence in your decisions rather than making them automatically. Yeah, especially like for example, politics would be a good example. You might be, oh, I believe this set of ideals or ideologies, go and read a newspaper from the other side every week or something and see if they have... That'd be a really good experiment. Yeah, see if it convinces you of the argument or makes you see it in a different way. exactly and again if it actually reinforces whatever you think yeah at least you've tried to have a look at a different way of thinking about things you've opened your mind to those different perspectives and so now you know why you think what you think do you think people have time for this in their lives they have very little time for it and this is also why i wouldn't try to do everything and it's really just about carving out a little bit of time that's why i love plus minus next so much because it really shouldn't take more than three to five minutes every week that that's it we've been talking a lot about experiments but how do you know how they're doing how do you know what's working and what's not working and that's what plus minus next is i'm scared you're going to hit that button because i'm going to use a word that's a little bit i'm ready and itching to hit it um so metacognition

21:08metacognition means thinking about thinking and very often mental cognition meta meta like facebook yes yeah yeah meta cognition so it means thinking about thinking and uh very often we're so busy with our lives that we don't even have time to think about anything right we're just let's do do do execute execute execute so when we don't have time to think we also very have little time to think about the way we're thinking about things. And that's what metacognition is, is really turning your attention inwards and asking yourself, why am I making those decisions? How do I feel about this decision?

21:50And what's very useful here is that when we do experiments or we pursue our goals or we try to build habits, very often we focus only on the external signs of success. So let's say that you decide, I want to, actually, this is an example that I went through that experiment. I tried to create a YouTube channel. And so I did, I said, I'm going to do this experiment for six months. I'm going to publish one video every week. External signs of success were pretty good. Got to 10 ,000 subscribers and people liked my videos, but internal signals. Every time I had to sit in front of the camera, I was dreading it.

22:28It's not easy, is it? I hated it. It's so hard. And I feel like this kind of conversation where I can get feedback, I have two human beings in front of me is fine. But this cold, dark eye of the camera looking at me, not knowing how people would react, I was so stressed about it. And that's what metacognition is about. It's not just looking at the money on your bank account or the number of subscribers on YouTube. It's looking at how does it feel? What does this success feel like or this failure feel like? because sometimes maybe the external signals are not so good, but you love doing it. You love the side project.

23:03You love working on the home renovations, even though it does cost a little bit of money, right? So plus minus next is a tool for metacognition. Now I go back to the very simple stuff because it's such a simple tool. It's three columns. You can do it in a notebook. It's bullet points. You're not writing a novel. It's not journaling. It's really just writing a few bullet points, what went well, what didn't, what I want to focus on next. And so that's why I'm not advocating for journaling for two hours every morning or anything like that, right? It's really just about this minimum amount of metacognition that you inject in your life.

23:39And that will help you be more intentional with the direction of your life in general, because those little iterations and those moments of self-reflection, they do add up every week and you end up choosing things and going in directions that actually make sense for you do you think it still allows people to be spontaneous this way of living absolutely i think there's a massive gap in between injecting five minutes of intentionality in your week and being on autopilot like a robot for the entire rest of the week we're still human beings we are going to be spontaneous and uh and actually that might be the problem is that a lot of the decisions we're making are impulsive or based on those cognitive scripts that we decided we discussed so i'm really not worried that by being a little bit more intentional we start not having any spontaneity anymore do you talk in the book about community and how that is like a crucial element of this what why do you think community is so important we all whether you want it or not we're all part of communities and that can be as small as your roommate or a colleague or a fellow student or your manager or your partner there is also quite a lot of research that shows that we tend to make better decisions and we tend to think more creatively if we do it together you can take that and inject that in your daily life and in your decisions and even your financial decisions by bringing other people as part of the decision making process what about in areas so like so for example finance can have quite negative communities quite bad like echo chambers people get you to buy all sorts don't they expect that crypto like to main likes um or yeah just finding good quality communities is not necessarily that easy online and i think you know people can go seek them out and end up in bad places do you have any advice there at all ideally this is the way it's been done and with the internet it's a bit harder but if you look at the way it's been done for hundreds and thousands of years is that we tend to join communities based on the recommendation of someone we trust that's the way we've been doing it for the longest time you have someone you trust who tells you i'm part of this community i'm very happy with it you should join too with the internet we tend to read some random copy on the landing page and we're like i trust this person he's on my computer it must be telling the truth exactly take my credit card which doesn't really make sense so i would that's the first piece of advice i would give is if possible try to join communities where you know at least one person in real life who can be accountable sort of for the quality of the experience that you're going to have like a mate of yours who you can be like that committee is so bad why did you invite me to this.

26:33So that would be the first thing. And the second one is going back to the internal signals that I mentioned earlier. We tend to ignore these quite often. And I think we should trust those instincts a little bit more. Very often when I see friends who put themselves in bad situations, joining some communities that are toxic, not helpful, actually they had mentioned some red flags at the time and they chose to ignore them. So I think if you feel, especially when it comes to money if you join a program or a community at any point in the process of joining there's something that doesn't feel quite right it's better to make the mistake of not joining that community even though it would have been a lot of fun and amazing than the other mistake of joining and then you put yourself in a bad or risky situation as a neuroscientist why do Do we ignore red flags?

27:28Because I ignore them all. I'm colourblind. I'm a red flag. I'm colourblind to red flags. I literally don't see them. I mean, I see them, because you're just saying community. I just thought, one of the communities I'm in has got some red flags because it's on Telegram and it's a finance. Red flag. Yeah. It's a finance one, but they keep getting all these bots coming in and trying to say, oh, follow my page. If you're looking for a companion, I'm looking for some love or something. And it's like, how did this person get into this community? and they're all like fake accounts. So that's, but why do we ignore red flags generally?

27:59It's a very modern problem that we have. The issue is that most of the signals that tell you that something is a red flag comes from the, they come from the body. I'm going to use another, it's the last neuroscientific word I use, promise, but it's called interreception. So you know how I say metacognition is thinking about thinking. inter-reception is your ability with your brain to understand the signals coming from your body. So as I said earlier, a knot in your stomach, your heart that starts beating faster, sweat in your hand, little things like this. And sometimes it can be a tingle in your skin, those kind of things.

28:40Those are also signals that usually tell you danger. Something is wrong here. and in today's society we're so focused on using our brains and our cognitive abilities that we have become a bit disconnected from listening to those signals and this is a big part of the problem is that even though your bodily signals interoception is telling you danger danger danger something is wrong run your brain is going to be able to interpret that in a way that makes sense but we're smart we know we know right we've been online forever i'm an internet kid i would know if someone was trying to scam me right we're all right and we just ignore these things so that's the main reason why we're we've become quite bad at listening to those bodily signals and if someone's feeling uncertain about like direction goals life you know for someone living in london say who's waking up to the realization that they might not be able to own a home here but they want one moving up north is like a massive kind of thing or moving somewhere else in the world do you have any scientific ways of approaching uncertainty and the concern there yeah it's uh there's um a measure in psychology that is the your tolerance to uncertainty and it's been shown that people who have more tolerance to uncertainty end up being more successful in life because they try more things they're a bit more okay with a little bit of risk The thing with uncertainty is that whether you want it or not, it's going to be here.

30:13So you can either resist it, try to control it, try to reduce the uncertainty, which is not going to be successful. You can't really do this. Or you can accept it and embrace it. And so I would consider where you're at in your life and what kind of wiggle room you have for experimentation. Obviously, it's not going to look the same for someone who's fresh out of university, maybe doesn't have kids yet, doesn't have a partner yet, and someone who already has two kids and a partner who has a job in London. You have completely different parameters. So I would first look at your parameters at the moment.