One of the interesting learnings of first week of this tern at school: memories of past crises matter more than we think.
They tend to shape our future actions and we often tend to over correct for them. E.g. if you believe saving six months equivalent of income is a fair risk insurance if you lost your job, and then suppose you lose it and things turn really bad and it takes 9 months for you to find a job again. Note your risk perception changes and you save for say 18 months equivalent in the future, perhaps overdoing it.
Yet it is also true that with time we forget the crisis, we forget what we learnt and we forget what we corrected for. Years later, if your career has been going smoothly for long, you may wonder why you keep so much money locked up as savings. You may forget what unemployment felt like, and you may then start keeping only 2 months equivalent as savings, because the crisis it's well forgotten by now.
Think of this not in terms of individuals but in terms of nations and how societies remember their history, and the world starts making a tiny bit more sense.
Where we will go does depend considerably on where we are coming from.
They tend to shape our future actions and we often tend to over correct for them. E.g. if you believe saving six months equivalent of income is a fair risk insurance if you lost your job, and then suppose you lose it and things turn really bad and it takes 9 months for you to find a job again. Note your risk perception changes and you save for say 18 months equivalent in the future, perhaps overdoing it.
Yet it is also true that with time we forget the crisis, we forget what we learnt and we forget what we corrected for. Years later, if your career has been going smoothly for long, you may wonder why you keep so much money locked up as savings. You may forget what unemployment felt like, and you may then start keeping only 2 months equivalent as savings, because the crisis it's well forgotten by now.
Think of this not in terms of individuals but in terms of nations and how societies remember their history, and the world starts making a tiny bit more sense.
Where we will go does depend considerably on where we are coming from.
1 comment:
I realised I have not saved any month's salary in case I lost my job.
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