How to become more rational?

What is financial rationality ? Have you ever heard phrases like “you behave irrational” or “be rational”? Even when we talk about financial literacy, we often throw the phrase “ financial literacy is about how to manage your money rationally.” Let’s take a quick look.

Financial rationality

The philosopher can say that rationality can be called a criterion by which the wisdom of choice is evaluated, and this choice is based on the amount of benefit derived from the consequences of every possible choice. Not quite clear. Imagine that we have a goal (most likely it already exists and not one), it can be expressed in money and there are several ways to achieve this goal. So, financial rationality – is to maximize the achievement of our goals with minimal effort. Do we often want more for less?

So rationality is needed to achieve more in life, minimizing effort and expense. And this is not only a question of money.

How to become rational

How do we make financial decisions? Sometimes we listen to the advice of friends or advertising, often use the financial services of the first financial institution that comes to hand. Do you remember the criteria for a financially literate person ? According to one of the criteria, a financially literate person makes decisions based on choice. We can always compare the conditions that financial institutions offer us and choose the most profitable options. Do not be afraid to count the benefits, it is not difficult. But do not allow those consultants whose goal is to sell their services profitably, even if it is not profitable for the buyer, to splurge you.

So:

  • Make decisions based on choices.
  • Calculate the options and their benefits.
  • Consider buying items / services in stock (housing, taxis, etc.).
  • Pay attention to the value of the product and service.
  • Do not always believe advertising.
  • Refuse unnecessary additional services and estimate the cost of servicing a new purchase.
  • Before making an expensive purchase, consider whether it is really necessary.

This is not all options, but much comes with experience.

Author: Evan

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