CFI Blog

Monkey Brain Keeps Searching for the Right Answer

“I have a theory that the Internet makes people stupider.”
–Bill Maher

Have you ever taken a pregnancy test (or been around someone who has)? For those of you who are not familiar with how they work, it generally involves putting a urine sample on a strip of paper and waiting for the paper to turn a different color.

If you’ve been trying to get pregnant, then you’re likely hoping that the strip turns a different color, and if you’re trying to avoid getting pregnant, then you’re probably anxiously counting down the minutes for confirmation.

According to research by Kent State University’s Peter Ditto and David Lopez, how long you’re willing to wait for the test result and whether or not you’re ready to go buy another test and try again depends on what you wanted in the first place. According to their theory of motivated cognition, Monkey Brain discounts information which doesn’t conform to his view of how the world should work (sorry ladies, but, really, Monkey Brain is a male, isn’t he?) and rapidly uses anything he finds which affirms what he thinks the world should look like.

So, if you’re trying to get pregnant, and the test says to wait for 5 – 15 minutes for a result, if there’s no color change, you’ll probably sit around for an extra few minutes, shaking the strip, blowing on it, whatever you can to will that strip to turn colors. On the other hand, if you’re not trying to get pregnant, as soon as 5 minutes is up and the strip hasn’t turned colors, you are tempted to throw it away; waiting the remaining 10 minutes is a long, long, long time.

Furthermore, if results don’t go the way you expect them to, then you’re tempted to blame the test itself rather than accept the outcome (See also: “Monkey Brain Gets Hit by a Plague of Locus(ts)”). Strip turns red when you don’t want it to, and you want go to go the store to buy a different brand and see if their test works.

It’s the same when you go to the doctor and hear something that you don’t want to hear. Your immediate reaction is to think “I should get a second opinion.” But, if the roles could be reversed, you never consider that the doctor could be wrong. We never remotely considered getting a second opinion when my wife’s neurologist told her that she didn’t have multiple sclerosis.

Monkey Brain Doesn’t Like to Be Wrong, and It Could Cost You Money!

Monkey Brain Doesn’t Like to Be Wrong, and It Could Cost You Money!

Let’s face it, when it comes to finance, there are few actual facts. We know what tax rates are and that credit card companies can charge us an arm and a leg when we miss payments, but beyond that, interpreting the facts and forming a plan for how to win with money and make it behave (and keep it out of Monkey Brain’s grubby little paws) comes down to sets of opinions.

As a result, you could find information which supports nearly every potential counterargument to what my opinion would be about personal finance. Oftentimes, my opinion is going to counteract Monkey Brain’s desires.

Let’s look at a few.

Credit card debt

If you’re carrying a credit card balance and paying interest to the bank, then you are putting your hand in your pocket, taking out a wad of dead presidents, and handing it over to the bank. I used to work at Capital One. We’d have beer outings. The company would pay for it. People who paid interest on their credit cards were paying for our beer outings.

However, Monkey Brain doesn’t like being told “no” when he wants something. Say “no” enough and you get tired of it, and eventually, you say “yes.” Boom. More credit card debt, but that doesn’t matter to Monkey Brain, because the credit card bill will come in the future.

He’ll also use his friend Mr. Google to tell him that credit card debt is OK. In fact, it’s not too hard to find someone telling you seven reasons why credit card debt is acceptable (go ahead and check – it’s there). Monkey Brain will conveniently ignore the fact that the source of this information is a website whose source of revenue is getting you to sign up for credit cards.

Don’t have to save more for retirement

Don’t have to save more for retirement

You may have seen my article discussing the safe minimum saving rate research from Dr. Wade Pfau, CFA. Dr. Pfau’s research revealed the percentage of your income that you should save for 30 years in order to be able to retire for 30 years and not run out of money. Want to know what that number is?

You’ll have to click on the link above!

If you’re not already saving that much, or more, for your retirement, then there’s about to be a serious cat fight between you and Monkey Brain. You’re going to have to make some prioritization decisions about what you’re currently spending money on so you can get your savings up to that number (or more) to give yourself a decent chance of not running out of money in retirement.

Or you can let Monkey Brain come up with some other “reasonable” assumptions.

YOU: “We need to save more money. We’re definitely not saving enough. I’m worried that I’m going to have to work until I’m 173 years old.”


YOU: “Oh really? How?”


YOU: “Back up the truck!”

Paying someone to manage your money will make you better returns

Paying someone to manage your money will make you better returns

This happens when Monkey Brain teams up with a financial planner who views you as a walking piggy bank. It’s a similar twist on the previous theme, except this time, it’s someone telling you (or, more likely, telling Monkey Brain directly) that if you just trust him, give him 1% to 1.5% of your money every year, and sit back and watch the magic happen, he’ll make you outsized returns.

Except, there will always be this little small fine print caveat which we’re all required to make: we can’t guarantee your investment returns. Mean old SEC making us refrain from making promises that we can’t deliver on.

Yet, we’ll find the one fund manager or investment advisor who made outsized returns the past 5 years and think that he has magic in a bottle. I read one such advisor’s interview recently which said “I can’t tell you how we did it, but we beat the market” in telling you that you should invest with him. Inspires confidence, right?

The reality is that, while it’s possible to beat the market, it will take between 20 and 25 years to determine if beating the market is due to luck or due to skill. There are also people who could underperform the market, be more skillful, and simply be unlucky. How would you find them? That’d be like finding a doctor to disprove a medical diagnosis that there’s nothing wrong with you. You’d never look there in the first place.

Additionally, even if you do find said money manager, there’s no guarantee that you’re going to make more money with him. What if he gets hit by the beer truck the day after you invest? What happens if the Duchy of Grand Fenwick (bonus points if you can name the reference without using Google) launches nukes? I can go on and on.

However, Monkey Brain doesn’t like to think of those possibilities. He’ll simply find the person with outsized recent returns, figure that this person has caught lightning in a bottle, and convince you to give up a significant portion of your net worth to hop on the roulette wheel.

Your house is an investment because real estate always goes up!

Monkey Brain is going to use this argument to convince you to buy more house than you really should because, hey, after all, real estate goes up and up and up, right?

This would seem especially true if the market starts to turn up. Monkey Brain starts screaming in his cage that you’re going to miss out because home prices are about to boom, and he cites all two episodes of HGTV’s Flip This House that you’ve ever seen as proof that making money in real estate is as simple as getting out of bed in the morning.

The actual numbers don’t bear Monkey Brain’s assertions out. There is almost zero correlation between one year changes in real estate prices and ten year real estate prices, which means that what happened last year has effectively zero effect on what will happen ten years from now.

Here’s the killer statistic, though. For the past 100 years, real estate has shown a 0.2% average inflation adjusted return. That doesn’t account for closing costs and Realtors’ fees. Assuming that a Realtor’s commission is 6% and closing costs are 2% (1% each for the buy and the sell), on average, it’s going to take 42 years to get a positive real return on your “investment.”

Some investment.

Sure, you could wind up on the positive side of that average, assuming that you’re handy, have good taste, can put in the sweat equity, and have the knowledge and financial wherewithal to take advantage of local mispricing. But, just like investing in the stock market, it’s not a sure bet.

One of the keys to not letting Monkey Brain outsmart you when it comes to your money and your retirement is to understand how he whispers (or screams) in your ear when you’re searching for information. Know what your initial thoughts are and how you’ll look for information. Make sure, no matter if the information you find proves or disproves your beliefs, that you’re fully educating yourself on your choices before you make a final decision.

Around a year ago, I wrote about how overloading yourself with stock information can cause you to make poor investing decisions. If you haven’t read it, go check it out!

Author Profile

John Davis
John Davis is a nationally recognized expert on credit reporting, credit scoring, and identity theft. He has written four books about his expertise in the field and has been featured extensively in numerous media outlets such as The Wall Street Journal, The Washington Post, CNN, CBS News, CNBC, Fox Business, and many more. With over 20 years of experience helping consumers understand their credit and identity protection rights, John is passionate about empowering people to take control of their finances. He works with financial institutions to develop consumer-friendly policies that promote financial literacy and responsible borrowing habits.

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