The Washington Post has a neat little piece looking at people’s time horizons and their ability to manage money. Essentially the article is highlighting new research by famous psychologist Philip Zimbardo saying that people who are future oriented and mentally ready to improve their finances tend to have better outcomes.
In fact, the financial decisions many people make may have little to do with how good they are at math or how much they know about 401(k)s and more to do with their emotions. Specifically, financial decisions are strongly influenced by the way people view time, according to a new study by Philip Zimbardo, the psychologist who orchestrated the Stanford Prison experiment in the 1970s.
People’s financial health was correlated with whether they were more focused on the past, the present or the future, according to study Zimbardo did with MagnifyMoney.com, a Web site that helps consumers compare financial products. Perhaps even more troubling, people are unlikely to realize how their time perspectives are impacting their wallets”.
People who are too focused on the present, “the guys you like to have in the party,” who are primarily concerned with having a good time, are prone to living beyond their means and should avoid credit cards, Clements says. On the flipside, present-oriented people who stress their immediate needs– by focusing on decisions that need to be made today or bills that are due tomorrow– might never think about the long-term changes they can make to reduce their financial burdens, he says.
For more check out the story at the Washington Post here.