Evan Lucas’ Mind Over Money probes the complex interdependence between human nature, psychology, and financial behaviour. The book discusses how our evolutionary tendencies and cognitive distortions influence our money-management habits, providing insight into how to make more sound financial decisions and achieve financial well-being.
The Evolutionary Brain and Decision-Making
Evan emphasizes that our brains are biologically identical to those of our ancestors from 3,500 years ago, yet we face modern complexities, such as making approximately 35,000 decisions daily. This gap between ancient drives and modern problems frequently results in unwise financial choices.
He compares the idea of Homo economicus—a rational, utility-maximizing agent conceived by John Stuart Mill in the 1830s—as well as Homo emotionalis—defined by political scientist Timm Beichelt. Homo emotionalis is an emotional, social, and biased disposition that makes humans not purely rational or purely irrational.
Behavioural and Cognitive Biases
Evan also points out how biases constrain our capacity to make sound financial decision judgments:
- Loss Aversion: A bias where losses weigh more heavily than equivalent gains, introduced by Daniel Kahneman and Amos Tversky in 1979.
- Self-Attribution Bias: Taking credit for success achievement while blaming external factors for failure causes.
- Heuristic Simplifications:
- Anchoring bias – anchoring to recent events
- Availability bias
- Attention bias (e.g., GameStop stock bubble of 2021),
- Confirmation bias
Evan also discusses “money biases”—both cognitive and affective—which limit desirable outcomes. Categorizes individuals into five money personalities:
- The Saver
- The Spender
- The Debtor
- The Investor
- The Ignorer
The identification of these archetypes can enable persons to understand their own tendencies and adjust their financial behaviour. For example, The Saver attaches more significance to safety, whereas The Spender attaches greater value to reward.
Evan suggests Harold Evensky’s Bucket Strategy (1985) for personal finance:
- Today Money: Covers immediate needs.
- Tomorrow Money: Focuses on near-future goals.
- Beyond Money: Reserved for long-term investments.
Behavioural Economics Concepts
Evan proposes ideas such as hyperbolic discounting, which generally means that short-term impatience dominates long-term tolerance.
The common principle of time in market, not timing of market, highlights the importance of constancy in investments instead of speculative timing. Likewise, compound interest is touted as a tool for effective wealth accumulation.
Cultural Influences and Portfolio Management
Evan applies Geert Hofstede’s six cultural dimensions as a framework and argues that they shape financial behaviour in response to cultural contexts.
- Power distance – High vs low
- indulgence us restraint
- long term vs short-term orientation
- Masculinity vs femininity.
- Uncertainty avoidance – High vs low
- Individualism vs collectivism
He mentions Harry Markowitz’s Modern Portfolio Theory (1952), which advocates diversification to reconcile risk and return.
Outlined are some of the resulting common investment-‐biases such as
- Ringfencing (selectively investing in a subset of assets)
- Familiarity bias (becoming more likely to put more weight on what are familiar options).
According to Evan, it is advisable to “control the controllables” and to try to avoid emotional decision-making.
Practical Insights and Philosophies
The book concludes with actionable advice:
- Spendvesting: Allocating funds between spending and investing.
- Dollar/Cost Averaging: Regular investments to reduce market volatility impacts.
- Recognizing psychological pitfalls such as
- The feeling of buyer’s remorse and
- The greater fool effect.
Evan encourages readers to align financial decisions with their values, leveraging emotional awareness to enhance financial literacy.
In Mind Over Money, Evan deftly integrates the disciplines of behavioural science and economics and the tools of the trade and offers a model for achieving financial stability. His writing provokes readers to consider money with attention, understanding, and anticipatory mental preparation.
Evan reminds his readers that “Money is a terrible master but an excellent servant”.