Rocío Ledesma del Fresno —— Financial Awareness: use your brain to make good decisions

“People don’t buy what you do but why you do it.”

Simon Sinek

Paul McLean’s triune brain suggests that our brain has three major information-processing zones, each representing a part of who we are: from our most primitive side that relates us to reptiles, through the center of emotion-processing, to the zone of higher functions, that rational side that distinguishes us as a species. These three differentiated areas are key when it comes to making decisions and how we use and organize them will mark both our present and surely our future.

If, before making a decision, we stopped and thought, we would start from the why: what is the reason behind what you are going to do. The important thing is not so much what you do as why you do it: the essential thing is to know why you do what you do. These two questions are completed with the how referred to by Nietzsche: “Whoever has a why, will almost always find the how”.

On the contrary, acting in survival mode would first activate the reptilian brain (what?), then the limbic (how?) and finally the neocortical (why?). We would reason after acting, when we can no longer do anything.

The reptilian brain makes decisions automatically with the basic objective of survival: it is instinctive. It is estimated that it is responsible for up to 35% of the purchasing decisions we make. If that ancient brain is the one that finally determines the most elemental decisions of your life, do you want to feel that you can get the reptilian brain?

In addition to impulses, there are other aspects to consider. Why do you buy expensive brands? What makes you want that pair of shoes you saw so badly? Why is it that when you’ve argued with someone and do the shopping, you take food that you’re not going to eat without feeling guilty? The answer is in your emotions. The emotional brain is responsible for 50% of the decisions we make: shopping preferences take place in this part of our brain. Believe it or not, emotions always come into play and we later rationalize them to justify them.

It would then remain that the rational brain, the neocortex, is responsible for the remaining 15% in making purchasing decisions. Since it is not a determining factor, this structure is the one that is least tried to be stimulated in matters of marketing, advertising and sales. Think of the ads for new smartphones, cars or perfumes: do you remember megabytes, engine power or ingredients in their composition? Salespeople try to touch the heartstrings to sell a sensation associated with the product, rather than the product itself.

Desires, which by their very nature are physical and emotional impulses, do not arise out of thin air; they can be both conscious and unconscious. Therefore, if we get into the habit of stopping and thinking before we spend, we will be aware of the reasons and will be able to decide rationally. If you are very impulsive and the reptilian brain decides for you, you have to stop before you act. If you are very emotional and spend on things that are not useful or you have used to compensate other needs, you have to stop before acting.

The outside is a reflection of the inside. This statement is great news: if the material has its origin in the immaterial, when you control your emotions and thoughts you will get control over the results. Knowing how to explain why we do what we do is the only way to accept the consequences and live in coherence and peace. When the result is not the expected one, you will understand why it happened and you will be able to act to change it or simply accept it. The people who can explain why have a better chance of success.

You always have a good reason to do what you do. By identifying why you do something you don’t like, such as buying or saving too much, you will see what need you satisfy and you will be able to find a more suitable way to do it. Otherwise, it will be very difficult to achieve lasting change. The emotions that you cure with money are so strong and primary and so necessary their satisfaction, that it is worth thinking how you can take care of yourself being aware of how you do it so far and if you are happy with the results obtained

You have to analyze your instincts and emotions to make the right decision. You have to use the “why” to appeal to the emotion. Thinking, feeling and acting is the sequence that leads to success. If we decide to take command and be more astute than our mind, we can make it our best ally. But if we leave it to its own devices, it can become our most fearsome internal enemy. Let your actions be the result of your thoughts.

Next week: The triune brain in personal finance.


Rocío Ledesma del Fresno

She graduated Summa Cum Laude in Business Administration with a Minor in Economics from The American University of Paris, in addition to a Master in Finance from ICADE. She recently completed a Master in Emotional Intelligence at the Hune Institute.

For 25 years she was Director of the Innovation and Products Departments at Banif and Andbank. Currently she is Manager at Dextra Corporate Advisors, an independent M&A and corporate boutique, and advisor at Navis Capital Desarrollo, SGEIC, an alternative investment fund manager registered with the CNMV. She is also part of the WA4STEAM association, an international community of women business angels who seek to expand the female presence in the STEAM fields, providing not only capital but also becoming a strategic partner for future leaders.

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Rocío Ledesma del Fresno

 

She graduated Summa Cum Laude in Business Administration with a Minor in Economics from The American University of Paris, in addition to a Master in Finance from ICADE. She recently completed a Master in Emotional Intelligence at the Hune Institute.

For 25 years she was Director of the Innovation and Products Departments at Banif and Andbank. Currently she is Manager at Dextra Corporate Advisors, an independent M&A and corporate boutique, and advisor at Navis Capital Desarrollo, SGEIC, an alternative investment fund manager registered with the CNMV. She is also part of the WA4STEAM association, an international community of women business angels who seek to expand the female presence in the STEAM fields, providing not only capital but also becoming a strategic partner for future leaders.

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