Manage Your Finances Like a Monkey!

by Khaleef Crumbley on October 25, 2010

in Education,Housing,Investing,Personal Finance

Contrarian

So, Sandy @ First Gen American asked a bunch of finance writers to participate in a writing experiment. We have to write about a personal finance topic by using monkeys as the theme. I then began to think about one of my favorite facts about monkeys. The contrarian strategy which they employ to open a banana!

As you can see in the video below, monkeys open bananas from the opposite end than humans. Instead of fighting with the stem and having to involve a knife (or teeth), they just softly pinch the opposite end and then peel back.

Unfortunately, I couldn’t find a video of a monkey pinching a banana, so this human will have to do:

Someone taught me this a few years ago, and it has changed my life! Ok, that’s a bit of a stretch, but it has lowered my level of frustration when eating a banana. So, how does this relate to personal finance, you ask?

Using a Contrarian Strategy

In many walks of life (especially finance), going along with the popular way of doing things (or thinking) can be dangerous. In personal finance, it is always best to question every move to ensure that it makes sense for you.

Many financial decisions are made based on emotion and the herd mentality! We see many people performing a certain action, and we feel as though that is what everyone is supposed to do.

Just like the idea of peeling a banana from the stem, we end up wasting time and energy attacking a situation from the wrong end.

Be A Monkey When Finding A Place To Live

Take buying a house for example. Many people have become convinced that this is the right thing to do, simply because “everybody else does it”, or “it’s what you do when you become mature and stable”. People actually borrow money to gain shelter, borrow money to furnish it, then borrow more money to make expensive, unnecessary, cosmetic changes; and after all of this, they have the nerve to call it an “investment”!

However, we need to be like these monkeys and decide if that’s the best way to handle our need for shelter! Would it be better to be patient and take the path of least resistance? Rent a property until it makes financial sense to buy one!

Be A Monkey In School

Does it make sense to go into college directly after high school? For some, yes. However, this shouldn’t be an automatic decision that we make without proper analysis. Many high school graduates jump directly into college with no savings, no scholarship, and no support! But, since they have been told that this is the normal progression in life, they take on tens of thousands of dollars worth of student loans!

Much of the time, they have no idea what they want to study, or what they want to do with their lives. They just follow the herd and apply to college. Even the ones who have an idea about what they want to do, fail to count the costs of attending college with little to no savings! They just go and assume it will work itself out in the end.

However, we need to think back to the [mighty] monkey and attack this problem from a different angle. Before filling out those loan applications, do a little math to see how long you’ll be paying off those loans, and what benefit they will have.

You might find that it’s better to take a job directly out of high school (actually, while in high school), and save up for college – or even go to a 2-year school first – rather than being in bondage to student loan repayments for 10 or 20 years after graduation!

Use A Contrarian Strategy When Investing

Warren Buffett once stated that investors should “try to be fearful when others are greedy and greedy when others are fearful“. I’m definitely not suggesting that we go around following Buffett blindly, but he does make a good point. When people are chasing after a certain stock, commodity, or industry, that’s usually the time to run away (or short that investment)! Then once people are running away from those investments (after the irrational exuberance wears off), then that’s when you consider them as viable investments (paying attention to valuation, of course).

One contrarian strategy that has actually become quite popular as of late (possibly taking away part of its effectiveness) is to invest in gold coins and other precious metals. Gold is usually looked upon as a hedge against economic turmoil. For a long time, the most prominent method of investing in gold was through derivatives, therefore limiting the amount of people who were able to take meaningful positions. However, with the rise in gold mutual funds and ETFs, we are seeing more “everyday investors” getting in on the action.

Instead of just choosing what everyone else chooses (such as a 60/40 split, or saving 15% for retirement), look at your situation and make the choice that’s best for you! If you find it’s easier to peel the banana from the stub, while 95% of the investing world is still fighting with the stem, then ignore those who are “smarter” and move toward your goal!

 

photo by wwarby

Final Thoughts

Personal Finance is named that for a reason. In many cases, one-size-fits-all solutions do not exist. In those instances, it’s best to be a good monkey and look at the full picture. You may find that the answer lies at the other end of the peel!


© 2010 – 2011, KNS Financial, LLC. All rights reserved.

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{ 19 comments… read them below or add one }

1 Evan @ My Journey to Millions

I always try to think of myself above the herd mentality, but it is so hard sometimes.

P.S. I have never heard about this opposite end of bannana thing! I am going to have to find a video

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2 Paul Williams

It’s funny – I knew about the banana trick, but still open it from the stem end. I guess it’s from habit? It’s sad how we can know a better way to do things but refuse to use it regularly just because we’re not used to it. Causes a lot of unnecessary grief!

And thanks for linking to my article on how much to save for retirement!

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3 Khaleef Crumbley

Yeah, when I was challenged to write about monkeys and finance, my mind came directly to this.

I kept picturing people chasing assets with debt just because they were popular. They weren’t giving any thought to their decisions – just looking for the crowd to validate them!

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4 Steven and Debra

Thanks for sharing the video and article. We peeled the bananna from what we previously believed to be the “wrong” end this morning and it worked like a charm.

Your article is thought provoking. Thinking outside the box is not just for monkeys.

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5 Khaleef Crumbley

I was pretty excited when I learned this.

It definitely pays to think differently – even if you end up going the “common” route.

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6 Techbud

This is what’s great about PF blogs. There is a lot of info and other experiences that you can learn from, but at the end of the day you need to decided what works best for you. Sometimes going against the grain, just might be the answer.

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7 Khaleef Crumbley

Very true. We all bring a different perspective into our writing, and I think that is what makes this so enjoyable.

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8 Lisa @ Cents To Save

When I was younger, I would follow the crowd with my purchases…. new car… new house… new furniture… all on credit. But with age comes wisdom, and now I can see that what is right for everyone else is not necessarily right for me.

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9 Khaleef Crumbley

That is so true. Just like opening a banana the hard way, we usually do what everyone else does without examining if it’s really the right call.

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10 Molly On Money

Great post! I have to say this was a challenging assignment!

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11 Khaleef Crumbley

Thanks! Yeah, this definitely was a challenge!

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12 Everyday Tips

Oh my gosh, thinking about opening the banana from the other end literally makes my brain hurt. I am going to have to try that tomorrow morning with breakfast!

Great points Khaleef. I am so glad I didn’t follow the herd a couple years ago and sell all my stock because the sky was going to fall. You are so right, do what seems right for you.

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13 Khaleef Crumbley

Let me know how it goes!

It can be hard to make the logical choice when everyone around you is doing the exact opposite (and seemingly having great success)!

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14 Invest It Wisely

This was a nice monkey post, Khaleef. The banana thing is interesting, too.

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15 Khaleef Crumbley

Thanks! I like that all of our posts were so different!

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16 Money Reasons

Nicely done!

Who would have guessed that we could learn something from a monkey :)

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17 Khaleef Crumbley

Hahaha – My coworker told me that it hurts her fingers to open bananas this way, so she still struggles with the stem!

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18 First Gen American

Yet another truly unique perspective on monkeying with personal finances. I didn’t know the banana fact. I definitely learned something there.

I whole heartedly agree with all your monkey observations with the exception of schooling. I think it’s hard to walk away from making money to go to college. Most of the people I knew who waited spent 10 years or more pursuing a degree part time because they just couldn’t walk away from the cash they were making with they’re day job.

But I’m definitely a monkey with housing. Borrowing to buy furniture is for chumps.

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19 Khaleef Crumbley

I definitely know what you mean about school. I basically dropped out after 1.5 semesters and it took years for me to go back. However, I think that if someone plans to work for 2 or 3 years while living at home in order to save up for tuition, it won’t be as hard to leave.

It was great to see how many different types of articles came out of this experiment! I’ll definitely do it again!

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