Stop trusting your gut

Stop trusting your gut. This book completely changed my life in ways I could not have imagined. It's probably the most important book I've ever read. It's called Thinking Fast and Slow. It's by the author, Daniel Kahneman. He was a psychologist who spent his entire career studying why people make good and bad decisions. And he won a Nobel Peace Prize for it. I've read it five times. Let me break down the three most important concepts for you so you don't have to read it. Stick around till the end because the third concept is the one that I use every single day. I guarantee the lessons from this book will help you make more money, build a more fulfilling life and make better life decisions. The first idea he talks about is the concept of system 1 versus system 2. So your brain actually runs on two modes. The first mode is called System 1 and it's emotional, it's instinctive, it's fast. Roughly 96% of your thinking every single day occurs in System 1. It happens automatically and unconsciously. Now, system 2 is slow, it is deliberate, it's logical, and it's analytical. The problem is that system 2 is really lazy, and it lets system 1 run by default. And system 1 makes all the mistakes without you even realizing it. All the irrational thoughts and beliefs and bad decisions you ever make, that's system 1. System 2 is the smarter part of your brain. The second most important concept is the idea of the anchoring effect. It is your tendency to be influenced by the first number you encounter. And this is important for negotiations, for your salary, for your job, for fundraising, and everything else. Let's say you're negotiating a job salary. The first number thrown on the table will influence everything else. It anchors your entire negotiation. Any other number you think of after is just you adjusting to the initial number that was put on the table. And the third concept is the idea of loss aversion. Basically, what it says is that losing $100 feels much worse than winning $100. That kind of asymmetry is wired into your brain. Which means that every single day when you make decisions for your relationships, for your jobs, for your personal finance, you are making decisions based on reducing the amount of loss versus maximizing your gain. You are likely driven by fear versus logic. First is logic, which explains why most people never quit their jobs to start their own businesses. The best tip I have for you is that before every major decision you make, ask yourself if you are making this decision based on emotion or based on logic? If this was interesting, hit follow and I'll break down more concepts in the next video.