The Intersection of Engineering Psychology and Wealth Building
Engineering Psychology and Financial Behavior
What the heck is Engineering Psychology? Engineering Psychology, a subset of Human Factors, focuses on optimizing human interactions and performance with machines and various design systems. While often associated with safety and efficiency in workplaces or technology, its principles directly impacts our financial behaviors and decision-making. This field plays a crucial role in financial technology (FinTech) by, influencing how people save, invest, and conduct transactions. Consider tools such as AI-powered robo-advisors to biometric security in banking, Engineering Psychology ensures that financial tools are both efficient and user-friendly.
How Engineering Psychology Shapes Financial Behavior
You can look at an Engineer as a creator, because they assist in the creation processes of whatever project or task that is presented, engineering psychology is relatively the same. It assists in creating systems that make financial decisions easier, or more challenging.
Engineers use psychological principles to build financial platforms that encourage good habits, this includes application designs like automatic savings round-ups in apps like Acorns. Other platforms such as Robinhood use simple game-like interfaces that appease to our investing goals. This triggers behaviors such as excitement or concern that encourages us to buy or hold. Within such apps you can also utilize the AI decision making functions. Consider algorithm driven investment platforms like Wealthfront and Betterment that uses AI to help users invest. Although this is beneficial the biases in algorithmic design can lead to systemic risks and unequal financial outcomes.
The Future: Engineering Better Financial Habits
Why This Matters for the Future
Engineering psychologists can study how financial systems can be improved to foster better decision-making. Areas of research include reducing online fraud vulnerabilities, designing accessible banking for neurodivergent individuals, and improving AI financial literacy tools.
We can leverage these same principles to make saving and investing as seamless as spending.
Modify Defaults: Set auto-investments so money flows into assets before discretionary spending.
Create Friction in Spending: Use cash instead of cards for certain expenses to feel the impact of purchases.
Use Design to Reinforce Good Habits: Choose finance apps that focus on education and gradual wealth-building over impulsive trades.
Next time you use an online banking platform, take a moment to evaluate the financial tools it offers. Assess the application, review the wealth building tools and the cashback offers if any. Ask yourself, does this system make managing money easier or harder, or is it simply keeping me engaged? Comment below to share your thoughts on how tech influences your financial choices.
Personal Note:
The idea that engineering can make or break our financial future is something I think about often. The systems we engage with daily are shaping our financial habits, sometimes without us even realizing it. For instance, I once jumped on an investment because a trading app made it feel effortless, only to regret it later. It was a lesson in the power of the interface design. Now, I focus on platforms that prioritize education over flashy graphics.
