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Many of us repeatedly make the same financial mistake: buying high out of greed and selling low out of fear, despite knowing intellectually that it's a terrible idea. This behavior is most evident in market cycles. When sectors are booming, people pour money into markets to chase performance. But when sentiment changes, and investments plummet, investors rush to escape. We've seen this during the dot-com bubble, leading up to the 2008 crash, and more recently with technology sectors. Consider this pattern: at market peaks, we can't buy fast enough. Three years later, at the bottom, we can't sell fast enough. And we repeat this cycle until we're financially drained. It's no wonder many are dissatisfied with their investing experiences. We do this over and over, with stories like this surfacing monthly. Imagine behaving this way in any other scenario. Walking into an Audi dealership and eagerly buying three cars at a 30% markup? Unthinkable. We're wired to seek security and pleasure while avoiding pain, a survival instinct. Mix this with our herd mentality and the belief that safety lies in numbers, and you have a potent combination. When everyone else is buying, it feels safer to follow suit, lest we become financial prey. However, this behavior is detrimental to investing. Feeling fear and greed is normal, especially in turbulent markets. But acting on these emotions can harm us financially. It's crucial to resist these impulses. This might involve staying out of the market, creating a plan, or seeking professional advice. Understanding this can help us make better financial decisions. I hope it does the same for you.

Humans don't fit into an algorithm. This is particularly true when we’re talking about humans and their money. Because “Humans + Money” is a messy little cocktail that economists refer to as a complex adaptive system. “Humans + Money” is complex because cause and effect can only honestly be identified with the benefit of hindsight, and it’s adaptive because our interaction with the system changes it. Try cramming that into an algorithm. As much as we would all love a simple formula to tell us what to do with our money—and believe me, there are simple answers, and maybe they’re a good starting place—the more we try to fit the big money questions into a neat little box, the more we find ourselves saying “it depends.” So what works better instead? The only way to navigate in a complex adaptive system is through constant course corrections. From my experience, the steps look like this: Assess. Guess. Act. Repeat. Now, keep in mind that the cycle rate for these steps is going to be driven by the volatility of your situation. If the situation is relatively stable, you may only cycle through every six months or once per year. But when things blow up, you may be cycling through your financial decisions every day. The important thing is to remain flexible. Humans don’t fit into an algorithm, so don’t try. Rather than looking for a simple calculator, just acknowledge the reality that life, markets, and money are messy, and make yourself as adaptable as you can.

One of the most challenging personal finance issues we all face is an ever-expanding definition of “need.” Things we once thought of as clear luxuries somehow become necessities, often without any consideration of how the change in status happened.

I absolutely LOVE Tate's Chocolate Chip Cookies. Sometimes, though, I'll absentmindedly eat way too many of them. After all, they're pretty thin!

Security is a feeling… not a number Here’s a paradox: 1 - I know people who have more money than they will ever need, but are totally insecure. 2 - I know people who have almost nothing, but are totally secure. The conclusion this forces me to draw is that if security exists at all, it is a feeling… not a number. The good news is, that means we can have some control over it. The bad news is, that means it’s up to us to learn how.

Here’s a tough question: Is it hard for you to talk about money with your spouse or partner? It’s challenging for us to talk about money. One of the keys to talking about money: knowing that it’s going to be hard.