An Eye to the Past Can Help Guide the Future

072114bucks-carl-sketch-master675Over time, we’ve come to accept the concept that knowledge is power. In theory, when we have more knowledge, we can make better decisions. But for many of us, there can be a disconnect between knowing something and acting wisely on that knowledge. As you probably know from experience, it happens often with money.

Last week, a Stanford professor emeritus of psychology, Philip Zimbardo, along with Nick Clements and Brian Karimzad of MagnifyMoney, released the results of a joint study that showed greater financial knowledge does not in fact make us more likely to behave wisely. It seems counterintuitive, but they found that “just because you have the ability to do the math, does not mean you are more likely to be financially healthy.” They also saw poor financial health among people who described themselves as financially literate.

It turns out that simply knowing a lot about money and personal finance doesn’t guarantee a better financial outcome. But if our financial health isn’t solely about knowledge, then what does make a difference? It comes back to an issue many of us struggle with: time.

Read the rest of the article at The New York Times.

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