money health weekly


Money, Greed, and Fear

elephant rider conscious thought automatic behavior

❝Gratitude will act as an elixir that will gradually dissolve the hard shell of your ego.❞ -Sam Keen

I'm standing at the front of the room as a class full of children finds their seats. It's 2016, and my colleague, Rose, and I are giving an introductory presentation on investing.

I try to convey the difference between making financial decisions logically and emotionally. I tell them that many financial decisions made emotionally are done out of fear or greed. People who are too conservative and don't take enough risk do so because they are afraid of losing money. People who are overconfident and take too much risk are driven by greed. That seems to make sense to the audience, so I sit down with a feeling of pride.

Next, Rose describes the fear of missing out, commonly called FOMO. She makes the case that what I referred to as greed can be thought of as FOMO. After all, nobody wants to sit by with an average return when their friends make tons of money.

Suddenly it hit me that it wasn't just the audience getting a lesson today. I am getting schooled as well. I've not thought about greed in terms of fear before.

It turns out I’m always learning.

fear and greed


Fear drives a lot of human behavior. Fear is an emotion that heightens our awareness of potential threats. Fear is directly related to our need for safety and security, one of our core needs.

Fear shows up in personal finance anytime the stock market starts to drop. People are afraid of losing money because their money represents their safety net. Fear also shows up when people overshop and don't want to return their purchases out of fear of being embarrassed. People are afraid of asking for raises, looking at their bills or statements, and changing the status quo. We feel fear even if we logically know that we are overreacting.

Knowing something logically can be helpful, but we need to put this in context. Most of our behaviors happen underneath conscious awareness. That is, they are automatic. You can imagine this like an elephant. An elephant wants to survive, and it will do what it wants to do. The part of our brain that consciously thinks about things is like a rider on top of that elephant. In normal times, both the elephant and the rider can work together. If the elephant is afraid of something, though, the rider is just along for the ride.

Your elephant calls the shots, and your elephant is effectively the result of all the genes that have been passed down by all of your ancestors. Your ancestors were really good at surviving, and therefore the elephant wants to survive at all costs. The concept of thriving or flourishing is of little value to the elephant.

thriving vs. surviving


Humans are status-seeking creatures. Without defining our financial purpose, we set out on an endless pursuit of more. If we don't know how much is enough, then nothing will ever be enough. As soon as we get more, we get used to that, and then we will set out to find more.

We are sensitive to changes in our situation. In other words, when we do get more, there is an increase in our status, and that feels good. Then we get used to it. This is a process called hedonic adaptation. Once the high wears off, we do what we think will bring us more of those good feelings, which means going after more.

This is what many people think of when they think about greed. Greed is often thought of as pursuing more than you need or putting money, power, and status above relationships.

However, another way to think about greed is to think about it as a subset of fear. Greed can be thought of as the fear of missing out.



We are hardwired to compare ourselves to those around us. This made sense when we lived in small groups. Our brain has not kept up with technology, though. Now we compare ourselves to the whole world via social media and other technologies. We have access to what everybody else is doing at all times.

Part of comparing ourselves to others is signaling where we belong in the group. This is why social media is so destructive because we're not comparing ourselves to the totality of other people's lives. We're comparing ourselves to the highlight reel of their lives. People go out of their way to signal that they are better off than they are. As you look around social media, you'll notice groups of friends or colleagues participating in events you may not have been invited to. You may see others showing off their latest products that are better than the one you have. This creates an uncomfortable feeling for us. It puts us lower in the social hierarchy (at least in our minds). There's a tendency for us to fear being left out. This fear of being left out, or FOMO, is quite powerful.