How Your Attachment to Possessions Hurts Your Finances

<blockquote> “It is preoccupation with possessions, more than anything else, that prevents us from living freely and nobly.” -Bertrand Russell </blockquote> Welcome to another installment in my ongoing series called “Money On My Mind,” where I publish articles to help you deal with the psychological aspects of managing money. <a href="https://benlefort.substack.com/s/money-on-my-mind" rel="noopener ugc nofollow" target="_blank">Check out past editions of the series here.</a> We continue our exploration of cognitive biases by unpacking the endowment effect. Continue reading to learn: <ul> <li>Why we have emotional attachments to the things, we own.</li> <li>How those attachments can hurt our finances.</li> <li>How culture and gender impact the endowment effect</li> <li>The impact the endowment effect can have on your career</li> <li>Three tips to avoid the endowment effect</li> </ul> <h1>What is the Endowment effect?</h1> Richard Thaler defined the endowment effect as the “underweighting of opportunity costs.” One of the most important lessons in economics is that every decision has an opportunity cost; what we don’t get by choosing one action over another. Let’s say you are thinking of selling your house. Similar homes in your neighborhood are selling for an average of $500,000. But you decide to list your house for $600,000. You tell yourself it’s because of the new renovations or that you have a slightly bigger backyard than your neighbors. In reality, <a href="https://themakingofamillionaire.com/how-your-attachment-to-possessions-hurts-your-finances-9f7246f8c014">Learn More</a>