3 TED Talks You Should Watch To Step Up Your Personal Finance Game + Key Takeaways

TED is a non-profit devoted to spreading ideas, usually in the form of short, powerful talks. Over decades, TED Talks have greatly inspired, captivated and given its audience access to the world’s most remarkable and intelligent minds. I have been one die-hard audience of TED Talks since my university days–some of the talks have blown my mind with eye-opening, unique and inspiring ideas.

There are many favorites of mine but in this post, I will be sharing 3 personal finance-related TED Talks and what you can learn from each talk.

1. Saving for tomorrow, tomorrow | Shlomo Benartzi

It’s easy to imagine saving money next week, but how about right now? Generally, we want to spend it. Economist Shlomo Benartzi says this is one of the biggest obstacles to saving enough for retirement, and asks: How do we turn this behavioral challenge into a behavioral solution?

Key Takeaways:

  • Behavioural finance is the combination of psychology and economics. People make money mistakes such as buying a bigger house than they can afford, doing badly when managing risks, buying insurance for their iPhone instead of their lives, and spend more than $1,000 a year on lotteries. All of these money mistakes have to do with our psychology.
  • People are not saving enough money. Benartzi explained that only one-third of Americans are saving for retirement, and merely 0.5% percent of Americans think they are saving too much. (Side note: survey in 2017 revealed that 30-40% of Malaysians do not have sufficient savings for emergency situations and retirement­–which is worrying!)
  • There are 3 main issues when it comes to savings. 1) Immediate gratification–we know that we should be saving, but we are not doing it now, we think we will do it in the future. Then, we end up spending the money we have now instead of saving it. 2) Lack of action–we procrastinate and do nothing when we feel overwhelmed or when something requires effort. 3) Loss aversion–we mentally, emotionally and intuitively frame savings as a loss because it forces us to cut our spending. We feel painful when we lose stuff.
  • The solution for these behavioral challenges is Save More Tomorrow. Benartzi and Richard Thaler came up with Save More Tomorrow to invites employees to save more in the future, not today. Benartzi gave an example of putting away money for savings automatically every January before we see the money, and when we make more money or get a pay raise, we save more without cutting our spending. It solves the issue of immediate gratification­­–it’s in the future, lack of action–it’s on autopilot; and loss aversion–earn more so there’s no cut back.
  • Behavioural finance still has a long way. Benartzi went on and brought up that there is still a lot more to do and to solve especially when it comes to post-retirement. He pointed out that most of the people do not have a solid plan for the future when we reach retirement.

2. How to speak up for yourself | Adam Galinsky

Speaking up is hard to do, even when we know we should. Whether you’re looking to get a job promotion, negotiate a sale or ask for a pay raise, this talk is loaded with useful and valuable information presented by social psychologist Adam Galinsky.

Key Takeaways:

  • When it comes to speaking up, each of us has something called a range of acceptable behavior. When we stay within the range, we’re rewarded. When we step outside of the range, we’re punished. It applies to getting a job, promotion, raise, deal and so on. For example, when we negotiate our salary for a new job offer, if we push too hard, we might lose the job. If we don’t ask for it, our worth will go unnoticed. So, we need to know our own range–it’s not fixed, it expands and narrows based on the context. And the thing that determines that range is power. Either the company/client/seller have the power, or we do. The more power we have, the wider the range becomes.
  • Low-power double bind happens when we lack power. When we lack power, we have a narrow range and the double bind becomes very large–imagine a scale where the range is sandwiched between the double bind which is stretchable. These double bind (too weak or too strong) can be narrowed when we expand our range. To expand our range, we either have to 1) seem powerful in our own eyes; or 2) seem powerful in others’ eyes. When we feel powerful, we feel confident and less fearful, thus our range is expanded. When others see us as powerful, they grant us a wider range.
  • There are a few tools to help us widen our range. Galinsky talked about 1) The mama bear effect–we advocate for others, and it will help us to find our voice. 2) Perspective taking­–we take the other person’s perspective and know what they really want, then they will be more likely to give us what we want. 3) Signal flexibility–give people options, it lowers their defenses, and they will be more likely to accept our offer. 4) Ask for advice–we flatter the other person when we ask him/her for advice, which makes us likeable–and in return, helps expand our range. 5) Be passionate–we are more confident when we have the expertise and are passionate about what we do, which allows us to speak up courageously.

3. How to buy happiness | Michael Norton

My budget consists of a significant chunk for giving as I enjoy buying gifts for others and giving money to my parents. Giving is a wonderful thing we can do not only for others, but for ourselves as well. Social science researcher Michael Norton shares fascinating research on how money can indeed buy happiness­–when we don’t spend it on ourselves.

Key Takeaways:

  • Money can buy happiness. Norton pointed out that it’s about the way we spend our money that can make us happier. For instance, lottery winners who think that their life will be amazing turned out to be miserable when finding themselves spending all the money and going into debt. The reason money can’t make them happier is because they spent it on themselves, which made them selfish and antisocial. The way to go is to be more pro-social with our money.
  • Spending money on others contributes to our happiness. Norton ran different experiments to study the relationship between money and happiness. All results revealed that giving away money does make the participants happier than keeping it for themselves, whether it’s buying things for friends and family or donating the money to those who are in need.
  • Teams that spend the money on their teammates tend to have better achievements. Whether is a sales team or a dodgeball team, when given money, the teams that bonded together to buy something and do a group activity instead of spending it on each individual, generated better results–getting more sales or winning the games. Norton urged us to stop thinking what to buy for ourselves and try giving to someone else instead–which eventually bring us a bigger return.

Do you have a favorite TED Talk? If so, I will really appreciate it if you can share with me in the comment section below. Thank you for dropping by and ciao for now! 🙂

Image from TED and videos from YouTube