The News is Making You Poor

I’ve seen a lot of reactions to the news in the past week, both on the joyful and livid sides of the spectrum. The reasons for those reactions are not something that I have enough expertise or desire to dive into as someone who represents a financial company. However, I am of the opinion that constantly watching and looking at the news is a net negative for our health and makes us poorer, both financially and emotionally.

There is a media term “if it bleeds, it leads”. Our brains are drawn to stories that contain elements of fear and sensationalism, and since news outlets make money by keeping our attention, they are incentivized to promote stories that will elicit fear-based emotions. This didn’t seem to be as big of an issue when I was growing up, with the newspaper and half hour evening news programs being the main sources of news for my family. Then 24 hour cable news networks gained traction, followed by phones that could show you the news whenever your heart desired. Now, access to fear-mongering is one simple tap of the finger away. Until we have systems in place that make it more difficult for us to be constantly drawn to the sensationalism occurring in the news media, I don’t believe we will ever reach our fullest potential.

Emotional Reactions to the News

Can you remember a time where a headline news story consisted of the stock market having an amazing day? I certainly can’t, however I do remember many instances in which the market went down a few percentage points and the media reacted like all the money in the world up and vanished. We still to this day teach about Black Monday 1987 without mentioning the fact that people who did nothing with their money that day or since have multiplied their investments by over 15x. We know about the stock market crashes of 1929 and 2008, but do we know much about the stock market’s most successful periods?

This is just one illustration of how the news media shapes our thinking when it comes to our money and can lead us to making poor financial decisions if we are not mindful. Bad financial news can lead some people to panic-sell their investments, even though we know this is unwise in the long run. Negative news stories might lead us to overestimate the amount of disasters that adversely affect us, causing us to buy far more insurance than is statistically necessary. The news also acts as proxies for advertisers, scaring you into buying things you probably do not need.

Negative Worldview

What benefit does all of this news actually have for us? Sure it helps to know what is going on in your local area and in the larger national and international community, but I would argue what you really need to know could easily be summarized in a story that could be read in minutes. 

When we are constantly hit with the “bleeding and leading” stories it gives us a more negative view of the world. It makes us more wary of our friends and neighbors that they might be more similar to these terrible people covered in the news, even though the people covered are the vast minority of our society. It gives us the feeling of fear, and since there’s no direct actions we can take from many of these stories, a feeling of helplessness.

My solution? Filter your news intake. Know that much of what is put out there by the media is profit-motivated and not a microcosm of the world as a whole. Get off your phone and connect with people in your community where it is obvious that most people are level-headed individuals doing the best they can for themselves and their families, not mentally ill trolls trying to get attention on Twitter.

Drawbacks of Negative Thinking

Opposite to the Power of Positive Thinking is the stress and anxiety of negative thinking rife in the news these days. We stress how important a clear and positive mindset is when it comes to dealing with money. Many people are already stressed when it comes to the financial aspect of their lives, so compounding that aspect with ruminating on bad news around the world will further hinder a financial journey.

Negative thinking hurts income opportunities. This is true for both entrepreneurs looking to start their own business and job seekers looking for networking opportunities and positions of employment. Entrepreneurs have to take big risks where the odds are their business will not succeed in many industries. These entrepreneurs must think positively that they will succeed and not have fear overtake their desire to begin their venture. On the other hand, successful and positive people want to work with other successful and positive people. Consuming nothing but bad news all the time will create a poor disposition to which other people can easily catch on and will be a natural repellent that others will want to avoid.

Lastly, the most common instance of financial negative thinking relates to the stock market and related fear based investment decisions. The two most successful groups of investors are:

  • Investors that have died
  • Investors that have forgotten their investment portfolio access passwords or the very existence of their investment portfolios. 

Dead investors and “coincidental investors” as I’ll call them don’t make decisions based on an election result or Jim Cramer’s horns, bells and whistles, and are wealthier as a result. Turning off the news will lessen the temptation of messing with a good thing, and your portfolio will thank you.

Turn Off the News

Think about the last time you said “Thank goodness I look at the news every hour”. I can’t think of it either.

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