Nov 1, 2018 | 0 comments

Your decisions about your money and lie are often driven more by your emotions and stress
than through logical thought or plans, so your decision making process often lets you down.
Understanding how your brain works can help you control and manage your
financial decision making process, giving you greater control of your money and your life.

We recommend you start by reading our introductory post on the Living Money blog.
Then watch our introductory video below (click on the bar under the video to read the full text).
Finally spend some time on self reflection, setting g out an action plan and suggested further reading.

.Understanding your brain
HELLO, I’m Jeremy Deedes, life and financial coach and founder of living money. This month I am going  to start exploring your brain with you. Our understanding of our brains has grown exponentially in the last 50 years or so, and neuroscience is now a hot topic, rightly so. Your brain, after all, is ultimately responsible for your successes and failures and understanding how your brain works can enable you to make it work more in your favour.
This is particularly so given that scientists have discovered that your brain can change and be rewired. This is the concept of neuroplasticity, and I’ll be talking more about this later.
I have EXPLAINED some of the fundamentals in a post on the Living Money blog and I do recommend reading this before you watch this presentation, which is divided into four parts.
FIRST, an introduction to the subject, its relevance to our lives and money and how my interest developed
PART TWO is about neuroscience, the science of the brain, and what it can do for us. I’ll also explain neuroplasticity in more detail here
IN PART THREE I will look at the everyday application of neuroscience to our lives and money, including beliefs, decision making and flow. I’ll touch on habits and demonstrate how neuroscience is helping us understand and better utilise brain processes in each case.
I don’t pretend to be a neuroscientist. However, as a coach I understand the importance of this subject in helping clients to grow and develop, so I started some years ago to study the subject. I EXPLORED the subject in greater depth as part of my coaching diploma course and I want to acknowledge and thank my trainer Amy Brann for her enthusiasm and guidance on this subject.
My interest in the brain was born when I read Ian McGilchrist’s book The Master and his Emissary in which he explains in great detail the difference between the left and right hemisphere of your brain. He believes the left hemisphere (the emissary) is detail oriented, prefers mechanisms to living things and is inclined to self-interest. The right hemisphere (the master) has greater breadth, flexibility and generosity.
McGilchrist argues that the master and emissary roles are reversing, with potentially difficult consequences for humanity. In very, very abridged terms, the ascension of the left brain is replacing the right brain oriented world of spirit, beauty, intuition, compassion with a self-interested human race dominated by technology, mechanics, processes and messages.
For me, that came as a profound insight. Having for some time recognised this polarity in the world and come down in favour of the world of spirit, beauty, intuition, compassion, it was a revelation to discover that the trend towards technology, mechanics, processes and messages had neurological causes. If that was the case then surely we could do something about it.
Of course not everyone agrees with this thesis and many neuroscientists do not recognise the different natures of the left and right hemispheres, although they do recognise and enthuse about neuroplasticity. Whatever, I began to see the important of neuroscience in our search for meaning, fulfilment, happiness. It was only a small step to then see its importance in our financial decisions that underpin and support our lives.
Here are SOME EXAMPLES of our brain processes working against us rather than for us:
•I had a client who INSISTED on always having a significant sum in his current / savings accounts, ‘just in case’, even though  he forfeited substantial returns by investing it elsewhere
•A MODERATELY wealthy client insisted on buying an old, second-hand car, only to have to spend almost the same again on recovery, repairs and spare parts. He would have been better of buying a newer model. You pay peanuts, you get monkeys
•A RELATION who found the sales pitch and offers of very high, tax free returns promised by BCCI to be irresistible, invested £30k and lost the lot a few years later when BCCI collapsed
•My own SELF-SABOTAGE when I first stated charging fees as a financial planner all those years ago, and set a rate far below my actual worth
•A COMMON story, people who work hard to earn good money whilst living an unfulfilled life
•A client who REACTED to stress and disappointment by going on spending sprees, which just added to the stress and anxiety when the next credit card statement came around
Your brain is you. It perpetuates your habit of making a pot of tea every morning, then only drinking half a cup. It was responsible for your terrible decision to invest your money in a ‘too good to be true’ scheme. Or, it makes you keep your money in ’safe’ cash to slowly loose its value in real terms.
Elsewhere, a part of your brain generates enthusiasm for saving money for a big treat. Unfortunately, another part indulges in regular self-sabotage by dipping into these savings for impromptu after-work get togethers. Or else one part of your brain shouts ‘My job sucks’ whilst another refuses you permission to quit.
It is a place of inner conflicts, especially over money and life. Work or play, salary or family, spend or save, guilty or gratefulness, make a fortune or make a difference? It is also the repository of your consciousness. It enables you to be aware of yourself and others and to build relationships with them.
So many of our financial and life decisions are made in fear or greed, or under stress and anxiety. Understanding how your brain works can help you control and manage your financial decision making process, giving you greater control of your money and your life. This is where neuroscience comes in.
The SCIENCE of the brain
For many years scientists studied human behaviour to learn about what goes on inside our heads, particularly anomalies in human behaviour, often as a result of brain-related disease or injury. Then MAGNETIC resonance imaging gave scientists the means to ‘see’ your live brain and measure its activity and processes.
NEUROSCIENCE provides four insights into our brain which can be exploited in our quest to master our lives and our money.
We now have a far greater understanding of the PROCESSES in our brains. Knowing how the brain works means you can take steps to adapt your behaviour and counter unhelpful behaviours in the light of this understanding.
For instance, when we pick up a possible DANGER signal the information is passed onto the THALMUS. The thalamus assumes there is danger and triggers the AMYGDALA which in turn triggers the HYPOTHALMUS to initiate the fight / flight / freeze response. This leads to INCREASED heart and breathing rates and gives precedence to instinctual survival responses over more considered cognitive responses.
The implication is that, in day-to-day terms, we should recognise that we shouldn’t be making big decisions when we are anxious. Taking this a bit further we should be considering whether an environment of constant pressure, stress, anxiety and possibly fear is the best way of working.
We now know the brain is not STATIC and unchanging. Quite the opposite, in fact.
Brain change is a normal and common process. Our thoughts, our environment and our behaviour patterns can all cause our brain to change, as can disease or accident.
At the CELLULAR level this means that the way our synapses and neurons operate, connect, grow and diminish can and does change. This is the concept of neuroplasticity.
Specifically, the more frequently this happens and a particular pathway is activated, the stronger becomes the neural pathway.
This is known as HEBBS LAW and is commonly paraphrased as ‘Neurons that fire together, wire together’. An understanding of this can be of great help in our quest for personal growth and development and a better life. In simple terms,  Hebb’s Law tells us that once is not enough; repetition is all-important.
As an example, a recent famous study showed that the hippocampus of LONDON cab drivers, who spent their days repetitively navigating London’s roads, was larger than those of normal drivers or non-drivers. The breaking of bad habits and the formation of good habits also relies on this and we will consider this as a topic in its own right later
Neuroscience is able to debunk FALSE BELIEFS, practices, solutions, etc by providing firm evidence that alternatives are better. We have already shown that danger and stress are brilliant at turning the body into an efficient machine for fighting or fleeing, but not much good for more cerebral activities such as planning, designing, or problem solving. By extension we can argue that the belief that ‘working under pressure’ improves productivity is false; in fact, its more likely to result in mistakes and bad decisions. A bit of peace and quiet might help some people to get more done.
Our brains spend their time ABSORBING INFORMATION, processing it and acting on it. Understanding how information flows around the brain, how different parts of the brain work together to produce the optimum result can help us not only to survive but to thrive.
Your personal development and growth will benefit from all of these. However, neuroplasticity is arguably the most important of the four. Having said that, neuroscience is not a panacea. For instance, understanding how your brain functions is not a substitute for taking a course to improve your skills. However, neuroscience can tell you how to maximise your learning and make the most of the course. It can, of course, also tell the trainer how best to present the course.
I will now explore with you four areas of everyday life, work and money where an understanding of neuroscience can help:
Every minute of the day we make choices, often unconsciously. The process can involve gathering information (and making an assumption about its reliability), delving into our memories for an earlier, similar situation and referring to our values and objectives.
Technology has now advanced to the point where it is possible to study, at single neuron level, the processes involved in how we value options and make choices, as well as studying how the decision making process adapts to the environment.
Research by Antonio Damasio suggests that emotion, rather than rationality, is the foundation of decision making. The area of the brain known as the VENTROMEDIAL pre-frontal cortex (colour red in this diagram) deals with our emotions and is active during decision making, as is the amygdala, which is involved in regulating emotions.
This cuts to the quick of spending money because a decision to purchase something is as much a selling process as a buying process and a good sales or marketing team knows that WE BUY IN EMOTION, then rationalise in thought. Even where we consciously buy an item because we need it, we are subject to emotion led sales pressure of one form or another.
Even something as outwardly simple as buying SIX EGGS brings up sales pressures. One brand wants you to buy free-range or organic, whilst another wants you to buy factory farmed eggs at a lower price. Another comes in bright and informative packaging whilst yet another comes in a minimalist recycled paper carton. If we understand that our brain makes decisions based on emotion rather than thought we can be more aware of when we are reacting to sales pressure that might result in a purchase we don’t necessarily need, so retaining money which could be better spent elsewhere.
IN PRACTICE, reflect on recent decisions, see how they were made and look for patterns in decision making. Importantly, explore the extent to which emotions played a part in the decision and how emotions affected the outcome.
I’ll turn now to the neuroscience of FLOW
You have probably recognised those times when you are flying, whether at work, on the sports field or just getting household chores done. You have challenges, but they are achievable. You are continually assessing your environment and situation, adjusting decisions and actions based on those changes. You are intensely focused, not aware of your self, feel independent, rewarded and just can’t understand ‘where the time has gone?’
The neuroscience of flow is still in its infancy. However, it appears that DOPAMINE plays an important role. The chemical is released when rapid cognitive shifting occurs. This helps to focus our attention and pre-rewards us for doing well. It also helps the cognitive switching process.
When we are focussed we enjoy our activities more and perform better. Here we can see links between mindfulness and flow.
IN PRACTICE, become familiar with the concept of flow. Then, keep a diary and note occasions when you are in flow, and the circumstances at the time. It may be important to look again at your beliefs about your ability to achieve, and also to plan how best you can get into flow as regularly as possible.
Finally in this section I’ll turn to the NEUROSCIENCE OF BELIEFS
Beliefs are central to your life, especially those around money. So much of our behaviour around money is driven by innocent beliefs acquired during childhood, when our brain is still forming and experiences and maxims tend to stick with us. So often these colour our financial behaviour patterns for years to come.
I used to collect stamps when I was young and remember going to our local post office to collect the latest first day cover without any money. Our wonderful post lady just told me to pay later, which I forgot to do, causing significant shame and unpleasantness when my parents found out. This instilled in me a belief that you must pay when you buy, no bad thing, but always makes it difficult for me to accept those buy now, pay later, interest free sort of deals which are actually quite attractive.
And do you recall having various monetary maxims being drilled into you.”look after the pennies and the pounds will look after themselves’ seems to be good advice except that, if taken too far, it stops you living life to the full on a day to day basis.
These beliefs are often plain false, or at least have another side to them that needs to be considered.
The thing about beliefs is that we accept them even without proof. Or worse, we accept them in the face of incontrovertible evidence to the contrary. Beliefs are powerful. Indeed the worlds great religions are built on faith or belief in something that, by definition, cannot be proven.
So how does our brain deal with beliefs, especially proven false or innocent beliefs that may be positively detrimental to our lives.
NEUROSCIENCE has a bit of a problem with beliefs, with some neuroscientists believing that beliefs don’t actually exist in the brain at all. OTHERS, such as Daniel Dennet of Bacteria to Bach and Back fame see beliefs as simply a mechanism for predicting an outcome. For example, you decide to bake a cake. Having no baking skills you slavishly follow a recipe in a famous cookbook you have successfully used before. You have no idea how the gooey mess in the mixing bowl is going to transform into a light and fluffy sponge cake in the oven. However, because you believe it will, you predict that following this recipe will result in the cake you seek.
Kathleen TAYLOR sees beliefs as memories. In neurological terms, she sees beliefs in terms of neurological pathways, and how repeated experiences strengthen and deepen the neural pathway (Hebb’s Law again). Repetition and the emotional pull of ideas and new beliefs are important factors. Studies using MRI scanners shows that beliefs activate the ventromedial prefrontal cortex, the area of the brain we came across in decision making that’s linked to emotion, reward and goal driven behaviour.
Put this into practice by reading up about the neuroscience of beliefs. Daniel Dennet is a good place to start. Then, review your own beliefs and pick out ones that have been strengthened by repetition and emotional pressure. Question your beliefs and identify any that, on reflection, are possibly false or at the least cannot be verified. Replace with new beliefs and repeat to strengthen.
So there is real value in understanding how your brain works.  If you understand the processes going on inside your head you can work out how to change them. With that you can improve your creativity, decision making, communication and all those functions so necessary for a fulfilled life.
There is plenty of literature on this topic, some of it written for the lay person. I’ve included references on this page for you, along with other resources. However, neuroscience is an ongoing project. Consequently, not every scientist agrees with the next, so beware of overly rigid positions and oversimplification.
A good place to start is the ‘3D-Brain’ app, developed by Cold Spring Harbour Laboratories. The basic version is free. The premium version costs only a few dollars. For this you get good descriptions of each part of the brain and links to associated research papers. It is a great place to start exploring what goes on behind your eyes.

Further Information and Resources

The Master and his Emissary

A heavy book in every sense of the word, but one that explores the brain an its impact on our lives, society and culture.

McGilchrist explains in great detail the difference between the left and right hemisphere of your brain. He believes the left hemisphere (the emissary) is detail oriented, prefers mechanisms to living things and is inclined to self-interest. The right hemisphere (the master) has greater breadth, flexibility and generosity.

McGilchrist argues that the master and emissary roles are reversing, with potentially difficult consequences for humanity. In very, very abridged terms, the ascension of the left brain is replacing the right brain oriented world of spirit, beauty, intuition, compassion with a self-interested human race dominated by technology, mechanics, processes and messages.

A deeply informative book, but not for the feint hearted.

Fundamentals of neuroscience

MCB80x is a new three-part introductory course in neuroscience delivered online and for free by Harvard University through the EdX platform.

Fundamentals of Neuroscience is a three-course series that explores the structure and function of the nervous system—from the inner workings of a single nerve cell to the staggering complexity of the brain and the social interactions they enable.

In this first course, you’ll learn how individual neurons use electricity to transmit information. You’ll build a neuron, piece by piece, using interactive simulations, then travel around Harvard’s campus, where you’ll see the inner workings of a lab and learn how to conduct DIY neuroscience experiments on your own.

Join us as we study the electrical properties in individual neurons, building a foundation for understanding the function of the entire nervous system.

What you’ll learn

  • Fundamentals of bioelectricity
  • The importance of resting potential
  • The properties of passive membranes
  • Action potentials, their currents, and their role in the nervous system
  • How you can do neuroscience in your home

The course

Learn how electricity makes the neurons in your brain tick.
Discover how neurons work together to create complex networks inside the brain.
Discover what makes your brain tick in this third course in our introductory series in neuroscience.

NB this course requires you to register with edX and enrolled on MCB80x.

Watch Ian McGilchrist talk about his theories and latest thought in The Divided Brain

Two excellent TED talks

Ariel Garten

Know thyself
with a brain scanner

Julian Baggini

Is there a real you?