Learn how to think - not just what to think - about money - content creator Pete Matthew
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Pete Matthew is basically the original personal finance content creator, he's like our origin story.
He's a chartered financial planner and the Founder and host of Meaningful Money.
Pete didn't have any money lessons growing up. In his Christian household, money was a forbidden subject, which is probably why he was a financial train wreck when he left uni…
But, as he says, humans aren't wired to make good financial decisions. Humans are fight-or-flight creatures designed to make short-term, knee-jerk reactions – and those tend to be bad financial decisions, i.e. ones that make you worse off either now or down the line.
But getting rich is actually something that takes decades and decades, which is kind of unnatural thinking for humans who, for most of history, didn't live beyond 35 years.
Thinking about your sixties, seventies, even about living to 100, is alien to us as a species. So you need to actively train yourself to make long-term decisions.
Most of us aren't going to end up as Premier League footballers (we tried that) or get rich quick. But the roots of good finances are really simple – anyone can do the basics. Check out our "Here's how anyone can get rich" episode for more on that front.
We can all learn to think more intentionally, and learn good financial habits. Goals help with that (and we have a great episode on how to hit your life and career goals.
There are three things you should do to build wealth: keep it simple, invest wisely, and make sure you're insured against the worst happening. For more on that, check out our "Do you actually need life insurance?" episode.
If you do those three things, and if you work on your finances for long enough and consistently enough, you'll probably be OK, whatever happens in the world.
But when it comes to big events, like a financial crash, a Budget or an election outcome, just remember that you've (hopefully) got decades left to live, so if you keep calm - you can ride it out.
Don't make decisions based on what's just happened – it won't help you build wealth over decades – and above all, don't make any financial moves when you're half a bottle of wine in…
How to weather the ups and downs
Historically speaking, the stock market has gone down one year in every three (roughly). But that's the average – sometimes the market has been down for consecutive years.
Even experienced people can freak out when the market plummets and the value of their investments goes down, especially retired people who can't earn more money.
But, if all you're doing is reacting to those troughs, you'll make bad knee-jerk decisions.
Learn to take a breath, and put some space between the event and your reaction. Even half an hour can be enough.
Remember that markets can fall by 10%, 20%, 30% in a year - but you still own the same number of shares (or units of a fund). It's like owning a property which falls in value. You still own the same amount of home.
Even after the financial crash of 2009, a once-in-a-century event, the people who held their nerve and didn't bail out did very well in the long-term.
You can use these downturns as learning opportunities – for more on that, listen to our interview with British-American broadcaster Linda Yueh on how to spot the next financial crash. Experience is what stops you making rushed decisions.
You can also learn from bad decisions, by actively thinking about what happened, what led to it, and what system you can put in place to avoid making the same mistake again.
For example, you can decide to only make financial decisions on a Sunday, when you've had time to relax. And you can decide not to make them when you're knackered and have had a crap week.
There's just as much danger in making knee-jerk decisions when things are going great, too.
You also need to bear in mind that a lot of the information you're getting about these crashes could be biased or even incorrect.
There's never been more information, and a lot of it is bad: we're bombarded with messaging 24/7.
A crucial part of working on yourself is to learn how to sift the wheat from the chaff, and maybe use other people as filters – like us, obvs, and thanks.
