In a research study conducted by Ellen Langer, a professor of psychology at Harvard University, the word “because” plays an important role in the differentiation of the result in a sequence of different experiments that she conducted.
In the study, the word “because” did not need to be particularly meaningful, but just by including the word after a sentence being formed improves the intended result of the experiment.
For instance, if you see a man on the street tapping you on the shoulder and say:
“Can I borrow your phone for a while?”
Your first reaction would be somewhat apprehensive at a glance because you don’t know what this person is up to or why you should be lending your phone to a stranger on the street that you are not acquainted with.
But what if the man added in something like this.
“Can I borrow your phone for a while, because my phone’s battery is flat?”
Well, the situation gets a lot clearer now on why the man is looking out for someone who can borrow the phone to him in this situation.
If the man further adds by saying:
” Can I borrow your phone for a while, because my phone’s battery is flat, and I have an urgent need to call my parents/son/daughter to tell them/him/her that I’m here waiting by on the phone booth?”
Now, this definitely sounds a lot clearer and explain the entire situation very well on the objective of borrowing the phone.
The probability of borrowing for the phone is definitely enhanced and likely to succeed more than the former.
In Personal Finance (since this blog is catered towards ultimately achieving financial independence), it is the same thing.
Many folks started with the objective of trying to save 20% or 30% of their monthly take-home pay into their savings account. Once, they have accounted for enough emergency funds in their savings account, they would start to put some money into an equity fund for investing.
Many do not know why they are doing this or at the very least they do not think clearly why they should be doing this. A lot of things that most people are doing are simply because the majority of their friends or peers are doing.
They are herd saving, even with the same range amount as what their peers are doing, and herd investing, even with the same strategy and counters that their friends and peers are buying.
The objective is just not clear enough to justify the reason or action that they are undertaking.
For instance, if you are buying a company such as SEA Ltd at today’s price, you should be able to justify it with a “because” so the objective and thesis are clearer.
“I am buying SEA Ltd at this valuation because their valuation still have room to run given the management revised guidance in Q4 FY2020″. or
“I am buying SEA Ltd because consumers are still in the early phase of adopting e-commerce behaviour especially in the South East Asia region where market share is still up for grabs.”
You don’t have to know the full know-how-why but just by doing this, it tells you a lot of information on whether you actually know what you are doing, and this can be very impactful to the testament of your action.
It also gives us the ownership of managing our own money in a responsible manner because we are not swayed by emotions or something shallow that might put our position at permanent risk.
I’m going to consciously do this to change the way I do my things and see if it results in a better outcome after a few tries.
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