It’s 11-19-24 and time for our weekly Financial Freedom Affirmations and Visualization! Today I’m also going to show you a mind money trick that will blow your mind!
Mind Money Trick – Anchoring
I’m going to give you a math problem that I couldn’t solve, even when the answer was given to me and explained. It took me another few minutes to finally figure it out.
So, see how you do!
Try this math problem:
There are 2 items that when added together equal $1.10.
One of the items in $1 more than the other item.
How much is the cheaper item?
If you said $0.10 then you say what most people say, however, that is NOT the answer!
Think about it, $0.10 + $1.10 = $1.20! Remember the 2nd item is $1 more than the other.
Try again!
If you are still stumped then here is the answer.
The cheaper item is $0.05.
The 2nd item is $1 more than the 1st item.
$0.05 + $1.05 = $1.10.
Why is this problem so hard for us to solve?!?
The reason is a brain phenomenon called anchoring. We tend to fixate on what we’ve already heard or experienced. It’s like we throw an anchor down.
So since we heard $1 and $0.10 we assume the answer will have both those parts. However, the answer is $0.05 which is a completely new number.
Even though this is easy math it is very difficult for our brain because we are blinded by anchoring.
Think about what this could do when you are handling money.
Why is it so much easier for us to pay $1.99 than $2? It’s because of anchoring onto the $1 we think it’s much cheaper.
Why is it someone can tell us a new car costs $31,000, and then tell us we can break it down into payments of $500/month for 5 years and we’re ok with that? Anchoring allows us to believe that it costs less since the payments are so much less, even though over time we are paying more than the price listed.
Conclusion
The good news is there’s a biological and psychological reason that people are not that great with math and money. So, you are not alone.
In addition you now have knowledge to become more aware of your money and spending decisions!
Honestly I realize that I need to get a 2nd opinion on large spending decisions and also that I need to really be careful in making money decisions. It’s not surprising if I make mistakes and need to check my math!!!