Hello and welcome to this wholesome conversation. Last week, we discussed compound interest. If you happened to skip the article, you are in good hands. Just click the blue button below and digest its content. Your interests may just compound.
Today, we converse, the endowment effect.
The endowment effect describes how individuals ascribe higher value to objects or items they possess compared to those they do not. It highlights the psychological attachment and perceived value we place on things simply because we own them. Understanding and harnessing the endowment effect can greatly enhance your financial intelligence in various aspects of personal skills, services, and even self-worth.
In terms of personal skills, the endowment effect leads you to first recognize and then appreciate your unique abilities and talents. By recognizing your own worth and skills, you can leverage them by engaging in fulfilling career paths and or entrepreneurial ventures. This self-awareness and confidence play a vital role in decision making and seeking opportunities that align with your strengths.
When it comes to services you currently offer or have the potential to offer, the endowment effect emphasizes the value you bring to the table. Recognizing and valuing your expertise, experience, and unique offering can empower you to charge fairly for your services. It enables you to negotiate confidently and communicate the worth of your offerings to current and potential clients or customers. Understanding the endowment effect can help you avoid undervaluing your skills and services, leading to better financial outcomes.
Les Brown is quoted to have said ‘‘The graveyard is the richest place on earth, because it is here that you will find all the hopes and dreams that were never fulfilled, the books that were never written, the songs that were never sung, the inventions that were never shared, the cures that were never discovered, all because someone was too afraid to take that first step, keep with the problem, or determined to carry out their dream’’.
By reading this newsletter, you are not in that category. You are indeed a masterpiece!
The endowment effect plays a crucial role in self-worth and self-evaluation. It encourages you to evaluate your relationship with material possessions and shift your focus towards experiences, relationships, and personal growth, which have a more lasting impact on your happiness and financial intelligence.
The question is, what is your endowment effect?
‘‘Moses told the Israelites, “See, God has selected Bezalel son of Uri, son of Hur, of the tribe of Judah. He’s filled him with the Spirit of God, with skill, ability, and know-how for making all sorts of things, to design and work in gold, silver, and bronze; to carve stones and set them; to carve wood, working in every kind of skilled craft. And he’s also made him a teacher, he and Oholiab son of Ahisamach, of the tribe of Dan. He’s gifted them with the know-how needed for carving, designing, weaving, and embroidering in blue, purple, and scarlet fabrics, and in fine linen. They can make anything and design anything.”
Exodus 35:32 MSG
Very apt and thought provoking as well. A journey of enhancing my self genius is imminent now