Book: The Psychology of Money

Part: I Traps We Fall Into

CEFR: B1

Episode: Leo’s Impulse Buy

 The Saturday market in Cali was always a rush of energy for Leo, the loud calls of the sellers trying to sell their goods, the delicious smells of food, cooking on the street, and the bright colors of fruits, vegetables, and handmade crafts, made it a feast for the senses.

Leo, a young man in his early twenties, worked part-time at a local bookstore and was also studying English. For him, the market was a place where he could find interesting things, but it was also a place where he had to be careful not to spend too much money. Today, something special caught his eye on a table covered with a checkered cloth.

Among other electronic items was a pair of sleek noise canceling headphones. Leo had wanted a pair of these for months. His small apartment was often noisy and it was hard to focus on his English listening exercises with the sounds of traffic in his neighbor’s loud salsa music coming through the thin walls.

He stopped walking his eyes glued to the headphones. They looked even better in real life than in the online reviews. He had watched many times. The smooth black surface, the softer cushions, the idea of a quiet space, it all seemed very appealing. He picked them up. They were surprisingly light and felt expensive.

The seller, a man with a friendly smile and a convincing voice immediately started talking about how good the sound quality was and how long the battery lasted. Leo listened, his heart starting to beat faster with excitement. He imagined himself listening to his English lessons. The speaker’s voice clear and easy to understand.

He pictured himself on the bus not hearing the loud engine or other people talking. He thought about quiet evenings spent listening to audio books, learning new words without even trying hard. He knew in his mind that buying these right now was not a good idea. His work hours at the bookstore had been a little less last month, and he was trying hard to save money for a new English textbook.

His teacher had recommended. He had even made a small plan for his money, but it was easy for him to forget this plan. But at that moment, thinking clearly seemed difficult. The strong feeling of wanting these headphones was louder than his good sense. How much are these? He asked his voice showing how much he wanted them.

Ah, these beauties, the seller said with a smile in his eyes. Normally they cost a lot, but today for you, a special price, only $50. $50 was a lot of his savings, more than he had planned to spend on fun things this month. A small voice in his head tried to tell him to be careful to remember the textbook, but the strong desire to have the headphones right now was too powerful.

The feeling of wanting them, the quick pleasure of owning them, made him forget about the future. Okay, Leo said a little too quickly. He reached for his wallet, a small leather one that suddenly felt lighter. He counted out five, $10 bills and gave them to the seller. He felt happy, but also a little guilty as he walked away from the stall,

the headphones safe in their box. He felt very satisfied. He couldn’t wait to use them. He imagined the great sound and the peace and quiet they would give him. For a few happy hours. He enjoyed his new purchase. He even stopped at a small cafe and bought a pastry, feeling like he deserved it. But later that evening, back in his quiet apartment, the happy feeling started to go away.

He took out his small notebook where he wrote down how much money he spent. Seeing the number 50 written down a big number compared to the little money he had left, made his stomach feel tight. The textbook he had promised himself he would buy it this week. Now that seemed less likely. He thought about the extra hours he would need to work to get his savings back up.

He remembered his teacher saying how important that book was for improving his reading skills. A feeling of disappointment came over him, heavy and sad. The excitement he had felt earlier was gone, leaving behind a feeling of regret. He put on the headphones, they blocked out the noise perfectly, making him feel separate from the sounds of the city.

But even in the quiet, the small voice in his head that told him he had made a mistake would not go away. The next morning, Leo was in the park trying to focus on his English grammar exercises. He sat on a bench under a big tree, the sounds of children playing in birds, singing a gentle background noise.

He saw Ms. Evelyn Reed, a kind older woman who often came to the park. He had seen her reading or just watching the world with a peaceful smile. Today she was taking care of a small area of flowers near the edge of the park. Ms. Reed seemed to have a quiet wisdom. She watched things carefully but was not nosy.

She had sometimes said a kind word or given Leo a smile, and he felt comfortable around her Leo sighed, looking at the headphones still in their box in his backpack, Ms. Reed looked up for her flowers. Her eyes, though she had wrinkles around them, were sharp and observant. She seemed to notice that he was not happy.

After a few quiet moments, she walked slowly towards him holding a small garden tool. Good morning, Leo. She said her voice soft but clear. You seem a little worried today. Leo gave a small smile. Good morning, Ms. Reed. Yes, I think I am. He hesitated. Not sure if he should tell her about his small money problem.

Ms. Reed sat down on the bench a little way away from him sometimes she said gently looking at the colorful flowers. Our minds can be like these gardens full of beautiful things, but sometimes a few weeds can grow and distract us. Leo nodded slowly understanding what she meant. Is it something you would like to talk about?

She asked her voice kind. He hesitated again, then sighed. Well, I bought something yesterday, something I really wanted. Noise canceling headphones. Ah, a treat for yourself. Ms. Reed said her face showing no strong emotion. Yes, but Leo stopped talking, taking the box out of his backpack and showing it to her.

They’re wonderful. They really block out the noise, but I spent quite a lot of money on them more than I had planned. Ms. Reed nodded showing she understood. And how does that make you feel now? Leo looked down at the box in his hands, a little disappointed in myself. I think I was saving for a textbook and now it will take longer.

I felt so excited when I bought them, but now that feeling is gone and I feel regret, he finally said the feeling that had been bothering him. Ms. Reed’s eyes became softer. Regret is a heavy feeling, Leo. We often feel it when what we do is not in line with what we really want in the long run. She paused, then looked at him directly.

Tell me, Leo, when you saw these headphones at the market, what was the strongest feeling you had? Leo thought for a moment, remembering the scene. Excitement. Definitely a strong desire to have them right away. I imagine all the ways they would make my English studies easier and more enjoyable. Excitement misread, repeated softly.

A powerful feeling, and it often promises us immediate happiness. But sometimes she pointed to her garden. The most beautiful flowers take time and careful work to grow. Just like our financial wellbeing, she picked a small, bright blue flower. This little flower might catch her eye with its bright color.

It gives a moment of pleasure, but a whole garden carefully planned and looked after, gives lasting beauty and food. Leo looked at the flower in her hand, then back at the headphone box. He was starting to understand what she meant. The quick happiness of buying the headphones had been like the single bright flower, attractive for a moment, but not helping his bigger money goals, his garden.

 Our feelings Leo Ms. reed, continued gently putting the flower back in the ground are strong motivators. They can push us to do great things, but they can also lead us to make choices we later regret. Learning to recognize these feelings, especially when it comes to spending money, is a very important lesson.

She looked at him with kind eyes. The excitement you felt was real, wanting something that would make your life better is understandable. But maybe next time before you give into that immediate feeling, you can take a moment. Ask yourself, is this something I need or just something I want? Does buying this help me reach my bigger goals?

How will I feel about this tomorrow or next week? Leo listened carefully. Ms. Reed’s words made sense with the regret he was feeling. He had acted without thinking, letting the strong feeling of wanting the headphones take over his more sensible thoughts and his plan to save money. It’s not about never buying things you enjoy, Leo ms. reed added gently.

It’s about being aware of the feelings that make you decide to buy them. Are you buying something because it truly makes your life better, or are you just trying to feel happy for a short time? Leo looked at the headphones again. The first happy feeling was now mixed with the wisdom of Ms. Reed’s words.

He had learned something important, a first step in understanding how his feelings and his money were connected. He realized that managing his money while was not just about numbers and plans, it was also about understanding the feelings behind his spending. And that understanding he thought would be important for him as he learned English and built a new life. 

Book: The Psychology of Money

Part: I Traps We Fall Into

CEFR: B2

Episode: Old Family Sayings

 The following week, Leo found himself back on the familiar park bench, the quiet rustling of leaves a peaceful counterpoint to the lingering unease about his recent headphone purchase. He was diligently reviewing English verb conjugations, the irregular verbs as always, a persistent challenge, much like his attempts at consistent saving. He’d managed to walk past the window display of another tempting gadget without going inside, a small victory that felt surprisingly significant.

Ms. Evelyn Reed was tending her beloved patch of flowers, her movements as graceful and unhurried as the blossoming petals themselves. The gentle warmth of the sun seemed to reflect the serenity in her expression. Eventually, she straightened, her gardening gloves dusted off, and made her way towards Leo, a knowing smile gracing her lips.

“Hello again, Leo,” she greeted him, her voice carrying a soothing quality. “Your focus seems intense today. Conquering those tricky English verbs?”

“Hello, Ms. Reed,” Leo replied, a genuine smile returning her greeting. “Trying my best. They seem to have a mind of their own sometimes.” He held up his notebook. “Just like… well, just like my money sometimes.”

Ms. Reed chuckled softly as she settled onto the bench beside him. “Ah, yes. Money often seems to have a life of its own, doesn’t it? It can move in ways we don’t always expect.” Her expression grew thoughtful. “Last week, we were talking about the emotions that influence our spending. Have you had a chance to reflect on the beliefs that might be shaping those emotions?”

Leo nodded slowly. “Yes, I have. I was thinking about some of the things I heard growing up. My grandma, as I mentioned, she always used to say, ‘Money is hard to come by.’”

“A sentiment born from experience, I imagine,” Ms. Reed mused.

“Definitely,” Leo agreed. “She worked incredibly hard throughout her life, and things were often tight. That saying always carried a sense of caution, almost a worry that it would disappear quickly.”

“And how do you think that has influenced you?” Ms. Reed asked gently.

Leo considered this. “I think it makes me hesitant to spend sometimes, almost… guilty. But then, I also have another voice in my head, from my Uncle Elias. He always used to say, ‘Money calls Money.’ He was quite different from my grandma. He took risks, invested… he always seemed to believe that if you had some money, it would naturally attract more.”

Ms. Reed’s eyebrows rose slightly, a thoughtful expression on her face. “Ah, two very different philosophies indeed. Your Uncle Elias’s saying carries a sense of optimism and perhaps a belief in the power of investment and opportunity.”

“Yes,” Leo confirmed. “He always talked about making your money work for you. He wasn’t always successful, but that was his core belief.”

“So, you’ve grown up hearing these two contrasting ideas about money,” Ms. Reed observed. “One emphasizing scarcity and the difficulty of earning, the other suggesting abundance and the potential for growth. That must create quite a dynamic in your mind.”

Leo sighed. “It does. Sometimes I feel like I should hoard every coin because it’s so hard to get, like my grandma said. But then, I also have this urge to… to make it grow, to take chances, like my uncle. It’s confusing.”

Ms. Reed nodded understandingly. “It’s natural to feel that conflict when you’ve been exposed to such different perspectives. Our early environment, the words we hear, the behaviors we witness – they lay down deep tracks in our understanding of the world, including the world of finance.”

She shared a story from her own past. “My parents, as I mentioned last week, were quite frugal. ‘A penny saved is a penny earned’ was their mantra. But my grandfather, on my mother’s side, had a different view. He was a small business owner, and he believed in reinvesting profits to grow his enterprise. He would often say, ‘You have to spend money to make money.’ It wasn’t about wasteful spending, but about strategic investment.”

“So, you had a similar kind of contrast in your upbringing,” Leo noted.

“I did,” Ms. Reed confirmed. “And just like you, I had to reconcile those different viewpoints. I learned that both frugality and strategic investment have their place. The key is understanding when to apply which principle and not letting an ingrained belief dictate every financial decision.”

She then focused on the two sayings Leo had shared. “Let’s look at your grandma’s saying, ‘Money is hard to come by.’ While it’s important to respect the effort that goes into earning money, believing this too strongly can lead to a scarcity mindset. This mindset can make you fearful of spending, even on things that could genuinely improve your life or help you grow. It can also make you miss out on opportunities because you’re too afraid of losing what little you have.”

“That makes sense,” Leo said, thinking about his hesitation to invest in better English learning resources, always worried about the cost.

Ms. Reed then addressed Uncle Elias’s saying. “‘Money calls Money’ has a different energy. It speaks of potential and growth. This mindset can encourage investment and a willingness to take calculated risks. However, if taken too far without a foundation of careful saving and understanding risk, it can lead to recklessness and the belief that money will magically multiply without effort.”

“My uncle did have some… less successful ventures,” Leo admitted with a wry smile.

“Exactly,” Ms. Reed responded gently. “Neither of these sayings, taken in isolation, provides a complete or balanced financial philosophy. They are simply different lenses through which to view money, shaped by individual experiences and values.”

She leaned forward slightly. “The important thing, Leo, is to recognize these early influences. To understand the stories we’ve been told about money. Your grandma’s caution and your uncle’s optimism are both part of your financial inheritance. Now, as you navigate your own financial journey, you have the opportunity to examine these inherited beliefs and decide which ones serve you best and which ones you might need to adjust.”

She suggested another exercise. “Think about your Uncle Elias. What were the positive aspects of his ‘Money calls Money’ philosophy? What were the potential downsides you observed? Do the same for your grandma’s saying. What were the strengths of her cautious approach? What were its limitations?”

Leo nodded, already turning these questions over in his mind.

“Understanding these early narratives,” Ms. Reed concluded, “is like understanding the roots of a plant. To help it grow strong and healthy, you need to know the soil it came from. By recognizing the stories you’ve been told about money, you can cultivate a more conscious and balanced approach to your own finances, one that takes into account both the value of hard-earned money and the potential for it to grow wisely.”

Leo started to feel clear about his thoughts. The simple sayings from his grandma and uncle were not just casual words—they had a strong effect on him. These words shaped how he thought and acted about money. Ms. Reed was gently helping him understand this influence and see how it affected him. She was also guiding him to begin creating his own story about money. He wanted to find a balance between being careful and taking chances, without falling into fear or being too optimistic. As Leo learned English, he also learned more about himself, his role in the world, and the emotions connected to money.

Book: The Psychology of Money

Part: I Traps We Fall Into

CEFR: B2

Episode: The Pain of Losing Out

Welcome, English language learners! Get ready to sharpen your listening skills with a short story set in the lively city of Cali. While the sights and sounds of Cali provide a colorful backdrop, our tale today is inspired by the insightful book, “The Psychology of Money.” We’ll follow Leo, a young man navigating life and language in this exciting city, as he experiences a surprising emotional twist. Fresh from a recent lucky win, a small bet takes an unexpected turn. Join us as Leo seeks answers and stumbles upon a fascinating insight into the way our minds truly value money. Get ready to listen and discover!

Cali was a city full of surprises. The weather could change quickly, with bright sunshine one minute and heavy rain the next. You could find loud, busy markets, and then, just around the corner, quiet, peaceful parks. For Leo, a young man who was learning English and making his way in this exciting city, his feelings could also change a lot.

Last week, life had felt sunny. Leo, usually careful with his money, had bought a lottery ticket on a whim. It was a small investment, a tiny risk, and he hadn’t really expected anything to come of it. But luck, in its unpredictable way, had smiled upon him. He had won $100!

The news had brought a rush of excitement. One hundred dollars felt like a small fortune. He had celebrated in a way that felt both special and responsible. He treated himself to a nice dinner at a restaurant, a place known for its delicious traditional Colombian food. He ordered bandeja paisa, a hearty platter of beans, rice, meat, and avocado, and enjoyed it slowly, savoring each bite. The restaurant had a warm, inviting atmosphere, with soft music playing in the background. It was a perfect way to mark the occasion.

The dinner had been a highlight. The delicious food, the pleasant ambiance, and the feeling of having a little extra money had combined to create a sense of well-being. But as the days passed, the initial thrill began to fade. The memory of the tasty bandeja paisa remained, but the feeling of having won the money became less intense. The $100, once a special bonus, gradually became integrated into his mental picture of his finances. It was nice to have, but it no longer felt extraordinary.

This week, however, the weather inside Leo’s mind was much stormier. It started with a friendly bet. A friend, Carlos, had proposed a small wager on a football match. Leo, usually cautious about gambling, had agreed. The bet was for $50. It seemed like a reasonable amount, a bit of fun.

He lost.

The loss itself wasn’t catastrophic. Fifty dollars was a manageable sum. But the feeling that followed was surprisingly strong. It wasn’t just disappointment. It was a wave of frustration, a sense of having been cheated (even though it was a fair bet), a feeling of… well, it felt bad. Much worse than the happiness he had felt from winning twice that amount just a few days earlier.

Leo couldn’t understand it. He had won $100. He had lost $50. Logically, he was still $50 ahead. But emotionally, he felt much further behind. The small loss felt like a much bigger setback than the larger win had felt like a victory.

He found himself dwelling on the lost $50. He replayed the football match in his mind, wondering if he had made a mistake in his prediction. He thought about the things he could have done with that money – a new book, a few weeks’ worth of arepas for breakfast, a small contribution to his savings. The loss seemed to magnify itself in his thoughts, growing larger and more significant with each passing hour.

Confused and a little disturbed by the intensity of his own reaction, Leo decided to seek out Ms. Reed. Ms. Reed was a kind, older woman who often spent time in the local park. She had a gentle demeanor and a knack for explaining complex ideas in simple, clear language. Leo had spoken with her on several occasions, and he trusted her wisdom.

He found her sitting on a bench near her favorite spot in the park, a small patch of flowers she tended with care. The flowers were a burst of color, a small oasis of beauty in the bustling city.

Ms. Reed looked up as Leo approached, her face softening into a warm smile. “Hello, Leo,” she said, her voice calm and reassuring. “You seem a little… troubled today. Is everything alright?”

Leo sighed, sitting down on the bench beside her. “Hello, Ms. Reed. I’m not sure. I’m… confused about something. About how I’m feeling.”

“Tell me about it,” Ms. Reed encouraged, turning her attention fully to him.

Leo hesitated for a moment, gathering his thoughts. “Well, last week, I won $100 in the lottery. I was happy, of course. I enjoyed it. But… this week, I lost $50 on a bet with a friend. And I feel… much worse about losing the $50 than I felt good about winning the $100. It doesn’t make sense. I still have more money than I started with, but I feel like I’ve lost more than I gained.”

Ms. Reed nodded slowly, her expression thoughtful. “You’re experiencing a common human tendency, Leo. It’s related to two important concepts in psychology: loss aversion and gain-seeking behavior.”

“Loss aversion and gain-seeking behavior?” Leo repeated, the words sounding a bit foreign to him. “What are those?”

“Ms. Reed explained, ‘Loss aversion means that people feel the pain of losing something much more than the joy of gaining the same amount. So, losing $50 doesn’t just feel like losing $50. For most people, it feels much worse than the happiness of winning $50. It’s like the bad feeling is much stronger than the good feeling.'”

She paused, then continued, “Think of it this way. Imagine someone offered you a simple game. A coin toss. If it lands on heads, you win $50. If it lands on tails, you lose $50. Would you play?”

Leo considered the question. “I… I don’t think so. I probably wouldn’t.”

“And why is that?” Ms. Reed asked gently.

“Because… I don’t want to lose $50,” Leo admitted. “The thought of losing it feels… unpleasant. Even though I could win the same amount.”

“That’s loss aversion in action,” Ms. Reed said. “Even though the odds are equal, the feeling of losing is more powerful, so you might choose to avoid the risk altogether.”

Leo nodded, beginning to understand. “So, my brain is making me feel worse about losing the $50 than it made me feel good about winning the $100?”

“Precisely,” Ms. Reed confirmed. “It’s a fundamental aspect of how our brains process gains and losses. We’re wired to be more sensitive to potential threats, and losses are often perceived as threats.”

She then turned her attention to the small patch of flowers, carefully adjusting a delicate pink blossom. “Gain-seeking behavior, on the other hand, describes our tendency to pursue rewards and positive outcomes. When you won the $100, you experienced a surge of pleasure. That pleasure motivated you to enjoy it, to treat yourself. But the intensity of that pleasure can sometimes be short-lived. We adapt to positive changes relatively quickly.”

“So, I got used to having the extra $100?” Leo asked.

“Yes,” Ms. Reed replied. “And that’s important because it explains why the $50 loss feels so significant. When you won the $100, it became a new reference point. You were, for a time, in a slightly better financial position. Losing $50 then feels like a larger drop from that improved position than it would have felt if you hadn’t won the lottery at all. It’s a change from what your brain now considers ‘normal.'”

She picked a small, smooth stone from the path and held it out to Leo. “Imagine this stone represents your $100 win. It’s a pleasant surprise, and you enjoy it. But after a while, it just becomes another stone. You adjust to having it.”

Then, she picked up a smaller, slightly rougher stone. “Now, this represents your $50 loss. Because you were recently ‘used to’ having the bigger stone, losing this smaller one feels like losing a larger portion of what you now consider your resources. It’s not just the $50 itself; it’s the change from a slightly better situation that makes it feel so painful.”

Leo looked at the two stones, his brow furrowed in concentration. “So, it’s not just about the amounts, but about the change in my financial situation?”

“Exactly,” Ms. Reed said. “Our emotions are often influenced by context and comparison. The recent win created a temporary ‘high’ point, and the loss feels like a greater fall from that point than it would have otherwise.”

She placed the stones back on the path. “This is why people sometimes make seemingly irrational decisions about money. They might hold onto a losing investment for too long, hoping to avoid the pain of realizing the loss, or they might take unnecessary risks after a win, feeling invincible because of the temporary boost to their confidence. Both loss aversion and gain-seeking can lead us astray if we’re not aware of their influence.”

Leo sat in silence for a moment, absorbing the information. The pieces of the puzzle were beginning to fit together. He understood now why losing the $50 felt so much worse than winning the $100 had felt good. It wasn’t just about the numbers; it was about the complex interplay of his emotions, his expectations, and the context of his recent financial experience.

“I… I think I understand,” he said finally. “It’s not just about the money. It’s about how my brain processes the change.”

“That’s a very insightful conclusion, Leo,” Ms. Reed said, smiling warmly. “And it’s a valuable lesson. Learning to recognize these emotional patterns can help you make more informed decisions, not just about money, but about many things in life.”

Leo stood up, feeling a sense of clarity he hadn’t had before. The disappointment of losing the $50 hadn’t vanished completely, but it was now tempered with understanding. He knew that his reaction was normal, a product of the way human brains are wired. And he knew that by being aware of these tendencies, he could strive to make more rational choices in the future.

“Thank you, Ms. Reed,” he said sincerely. “You’ve helped me a lot.”

“You’re very welcome, Leo,” Ms. Reed replied. “Remember, it’s not about eliminating emotions. It’s about understanding them and learning to manage them wisely.”

As Leo walked away from the park, the sounds of the city seemed a little less overwhelming, a little less confusing. He still felt the sting of the lost bet, but he also felt a newfound sense of control. He had gained something far more valuable than the $50 he had lost: he had gained a deeper understanding of himself.

We hope you enjoyed today’s story and that it helped you practice your English listening skills! If you did, please give this video a like. And if you want to hear more stories and lessons to improve your English, don’t forget to subscribe to our channel. Thanks for listening, and we’ll see you next time!

Book: The Psychology of Money

Part: I Traps We Fall Into

CEFR: B1

Episode: Maya’s New Phone

Welcome back, English language learners! In today’s story, we’re returning to the vibrant city of Cali, where the mix of old and new can sometimes make you feel like you need the latest trends. Join us as Leo learns about this feeling and discovers an important lesson about making his own choices, especially when it comes to money. Get ready to listen and explore the pressure we sometimes feel to keep up with others!

Cali was a city where many different styles and trends came together. You could see people wearing traditional clothes, and others wearing the latest fashions. This made the city exciting, but sometimes, it could also make people feel like they needed to have the newest things.

Leo was walking through the city center one afternoon. He had his old phone in his hand. It was a bit slow, and the screen was cracked, but it still worked. He used it to check his English lessons, listen to music, and stay in touch with his friends. He didn’t think it was a bad phone.

Suddenly, he saw his friend, Maya. Maya was a student from his English class. She was talking with some other students, and she was holding a brand-new phone. It was the latest model, with a big, bright screen and a shiny case. Leo stopped and looked at his own phone. Compared to Maya’s phone, his looked very old.

Maya saw Leo and smiled. “Hi, Leo! What do you think of my new phone?” she asked. She held it up so everyone could see it.

“Wow, it’s… it’s very nice, Maya,” Leo said. He felt a little embarrassed to take out his own phone. He put it back in his pocket quickly.

“Thanks! I just got it yesterday,” Maya said. “It has so many new features. The camera is much better than my old one, and it’s much faster. You should get one!”

One of the other students, Carlos, agreed. “Yeah, Leo, your phone is, uh, a bit old, right? You should upgrade.”

Leo felt his face get warm. He didn’t like that his friends were talking about his phone. He knew his phone was older, but he had other things he needed to spend money on, like his English textbooks and his apartment rent. A new phone was not a priority.

“I… I’m okay with my phone,” Leo said. But he didn’t sound very sure.

Maya looked at him. “But this phone is so much better! Look at this camera!” She showed Leo a photo she had taken. It was very clear and bright. Leo had to admit, the photo was much better than any photo he could take with his phone.

“It was a little expensive,” Maya said, “but I worked some extra hours at my job, and my parents helped a bit. It was worth it!”

Leo started to think about his phone. Was it really that bad? Was he the only one with an old phone? He began to feel like he was missing out. All the other students probably had new phones. He felt a growing desire to have a phone like Maya’s.

The students continued to talk about Maya’s phone. They talked about all the things it could do, and how cool it looked. Leo listened, but he felt more and more uncomfortable. He started to think less about his English lessons and more about new phones. He wanted to have the same things as his friends. He wanted to fit in.

Later that day, Leo went to the park. He often went there to study and relax. He saw Ms. Reed, an older woman who often gave him good advice. She was looking at her flowers, as usual. Leo sat down on a bench near her.

“Hello, Leo,” Ms. Reed said. “You don’t seem very happy today. What’s wrong?”

Leo sighed. “I saw Maya’s new phone today,” he said. “It’s much nicer than mine. Now I feel like my phone is very old and bad.”

Ms. Reed listened carefully. “And how does that make you feel?” she asked.

“I feel… embarrassed,” Leo said. “And I feel like I want a new phone, too. Maya said I should get one. Carlos said my phone is old. I feel like I need a new phone to be like them.”

Ms. Reed nodded. “I understand, Leo. It’s normal to want things that your friends have. But it’s important to think about why you want them.”

“But Maya’s phone is better,” Leo said. “The camera is better, it’s faster… it’s just a better phone.”

Ms. Reed smiled gently. “It’s true that newer phones often have better features. But do you need those features, or do you just want them because Maya and Carlos have them?”

Leo thought about this. He used his phone to study English, listen to music, and talk to his friends. His old phone could do all of those things. He didn’t need a better camera or a faster processor. He wanted those things because Maya and Carlos had them.

“I… I guess I don’t really need a new phone,” Leo said. “My phone works fine. I just want a new one because Maya and Carlos have new ones.”

“Exactly,” Ms. Reed said. “It’s easy to want things when we see other people have them. This is called social pressure. Social pressure is when you feel like you have to do something or have something because other people are doing it or having it.”

“Social pressure,” Leo repeated. “That’s a good way to describe it.”

“Yes,” Ms. Reed said. “And social pressure can make us make bad choices, especially with money. We might buy things we don’t need, just to impress other people or to feel like we belong.”

She gave Leo an example. “Imagine that all your friends buy expensive new shoes. You have shoes that are comfortable and in good condition. But you start to feel like your shoes are not good enough. You feel pressure to buy new shoes, even though you don’t need them. This is social pressure.”

Leo thought about the expensive shoes. He had seen some students at his English school with very fashionable shoes. He had felt a little jealous.

“I understand,” Leo said. “So, wanting a new phone just because Maya and Carlos have new phones is social pressure.”

“That’s right,” Ms. Reed said. “It’s important to be aware of social pressure. When you want to buy something, ask yourself these questions: Do I really need this? Or do I just want it because other people have it? Will this purchase help me reach my goals? Or will it make it harder?”

Leo thought about his goals. His main goal was to improve his English. He was also trying to save money for the future. A new phone was not going to help him reach those goals. In fact, it would make it harder because it would cost a lot of money.

“I feel much better now,” Leo said. “I don’t need a new phone. My old phone is good enough. I was just feeling pressure from Maya and Carlos.”

“That’s wonderful, Leo,” Ms. Reed said. “It’s important to think for yourself and not let other people control your choices. You are smart, and you know what is best for you. Don’t let social pressure make you spend money on things you don’t need.”

Leo smiled. “Thank you, Ms. Reed. You always give me such good advice.”

Ms. Reed smiled back. “You’re welcome, Leo. Just remember, true confidence comes from within, not from having the newest phone or the most expensive shoes. True wealth is about having peace of mind and reaching your own goals.”

Leo left the park feeling much more confident. He was still using his old phone, and he was okay with that. He knew that his phone was good enough, and he was not going to let social pressure make him buy something he didn’t need. He was proud of himself for making his own decisions. He continued to focus on his English lessons and his other goals. He learned that it was much more important to be true to himself than to try to keep up with others.

We hope you enjoyed today’s story and that it helped you practice your English listening skills! If you did, please give this video a like. And if you want to hear more stories and lessons to improve your English, don’t forget to subscribe to our channel. Thanks for listening, and we’ll see you next time!

Book: The Psychology of Money

Part: II Common Biases

CEFR: B1

Episode: The Unchanged Bank Account

Welcome back, English language learners! Today, we find our friend Leo in the familiar surroundings of a Cali park, but his mind is focused on something less pleasant than the sunny weather: bank fees. Like many of us, Leo has an old, familiar bank account, but it’s starting to cost him money. Have you ever stayed with something simply because it’s what you’re used to, even if it’s not the best option? Join us as Leo talks with the wise Ms. Reed and discovers a common mental trap that keeps us stuck in our old ways, even when a change could save us money and stress. Get ready to listen and learn about the power of the “status quo bias” and how it might be affecting your own decisions!

The warm Cali sun dappled through the leaves of the trees in the park, painting shifting patterns on the ground. Leo sat on his usual bench, a slightly worried frown creasing his forehead as he looked at his phone. He was supposed to be studying his English vocabulary, but instead, he was staring at a notification from his bank.

“Another fee?” he muttered under his breath, switching to the details. “Account maintenance fee… again? But I hardly use this account anymore!”

He’d had this bank account since he was a teenager, opened with the help of his grandmother. It felt familiar, like an old, comfortable pair of shoes. But lately, these comfortable shoes were starting to pinch. The fees were becoming more frequent and the interest he earned was practically zero.

“This is ridiculous,” he said a little louder, startling a nearby pigeon. He knew, deep down, that he should probably look for a new bank, one with better conditions and fewer charges. His friend Mateo had even told him about a credit union where he had an account with no monthly fees and a decent interest rate.

But the thought of switching felt… overwhelming. He imagined the paperwork, the online forms, the hassle of updating all his automatic payments. It’s probably not worth the effort, he told himself. It’s just a few thousand pesos every month. I can manage.

Just then, he heard a gentle voice. “Something troubling you, Leo?”

He looked up and saw Ms. Reed approaching, her kind eyes crinkling at the corners as she smiled. She carried her small gardening tools, ready to tend to her patch of vibrant buganvillas.

“Oh, Ms. Reed,” Leo said, forcing a smile. “Just… bank stuff. More fees.”

Ms. Reed sat down on the bench beside him, placing her tools neatly at her feet. “Ah, the joys of banking. Tell me about it.”

Leo explained his situation, how he’d had the account for years, how the fees were increasing, and how he knew he should probably switch to a better option.

Ms. Reed listened patiently, nodding occasionally. When he finished, she said thoughtfully, “It sounds like you’re experiencing something very common, Leo. It’s called the ‘status quo bias’.”

Leo frowned, trying to pronounce the unfamiliar words in his head. “Status… quo… bias? What does that mean?”

“Well,” Ms. Reed explained, her voice calm and clear, “it’s our tendency to prefer things to stay the same. We have a natural inclination to stick with our current situation, even if a change might be better for us. Think of it like this: you’re used to this bank, even with the fees. Changing to a new one feels like a big step into the unknown, even if that unknown is likely much better.”

Leo considered this. “So… I’m staying with this bad bank just because it’s what I’m used to?”

“Exactly,” Ms. Reed said. “It’s the power of ‘sticking with’ what we know. We often weigh the potential downsides of change more heavily than the potential benefits. Even if the downsides of staying put are actually greater.”

“But… it’s costing me money every month!” Leo exclaimed, feeling a bit foolish.

“I know,” Ms. Reed said gently. “That’s the ‘cost of inaction’. By not doing anything, by not switching banks, you are essentially choosing to pay those fees. It might feel like the easier option in the short term, but over time, those small fees can really add up.”

She picked up a fallen leaf and examined its intricate veins. “Think about your English studies, Leo. Imagine you were using an old, outdated textbook that made learning much harder. You know there are better books available, but you keep using the old one because you’re used to it. You’ve already written in it, you know where everything is, even if it’s not the most effective way to learn. Staying with the old book is the ‘status quo’. The ‘cost of inaction’ is that your English progress is slower than it could be.”

Leo’s eyes widened. The analogy made perfect sense. He had been hesitant to switch to the new grammar book Profe Jaimi recommended, even though his current one was confusing.

“So… ‘why change?’ becomes the default answer, even when change is the logical thing to do?” he asked.

“Precisely!” Ms. Reed smiled. “That little question, ‘why change?’, can be very powerful. It often stops us from considering the potential benefits of doing things differently. We focus on the effort involved in changing, the small inconveniences, and we forget about the long-term advantages.”

She pointed to a vibrant red buganvilla that had just bloomed. “Look at this flower, Leo. It started as a small bud. If it had thought, ‘Why change? I’m comfortable as a bud,’ it would never have opened up to the beauty of the sun and the world. Sometimes, we need to embrace a little change to blossom.”

Leo chuckled softly. Ms. Reed always had a way of making even financial matters sound like lessons from nature.

“So, what can I do about this ‘status quo bias’ with my bank?” he asked.

“The first step is awareness, which you’ve already taken,” Ms. Reed said. “You recognize that you’re staying with your current bank out of habit, not because it’s the best option. The next step is to actively consider the alternatives.”

“Like Mateo’s credit union,” Leo said.

“Exactly. Do some research. Find out what other banks in Cali offer. Compare their fees, their interest rates, their services. Don’t just think about the effort of switching; think about the long-term benefits of having more of your money stay in your pocket.”

Ms. Reed picked up her small trowel and began gently loosening the soil around one of her plants. “Sometimes, we overestimate the difficulty of change. Opening a new bank account might seem like a huge task, but often, banks make the process quite straightforward. They want your business.”

“I guess I’ve just been avoiding looking into it,” Leo admitted. “It feels like one more thing to do.”

“I understand,” Ms. Reed said sympathetically. “Life can feel busy. But think about it this way: every month you don’t switch, you’re essentially paying a small ‘inaction tax’. It’s a cost you’re choosing to bear by not taking a simple step.”

She paused her gardening and looked at Leo intently. “Ask yourself, Leo: what is the real cost of staying with this bank? Is the effort of switching greater than the amount of money you’ll lose in fees over the next year, or two years, or even five years?”

Leo pulled out his notebook and started to do some quick calculations. The monthly fees weren’t huge, maybe five or six thousand pesos each time, but they seemed to be happening every couple of months. Over a year, that could easily add up to thirty or forty thousand pesos – money he could use for his textbook, or save for his future.

“Wow,” he said, surprised. “It’s more than I thought.”

“That’s often the case,” Ms. Reed said. “The small, repeated costs of inaction can be surprisingly significant over time. We tend to focus on the immediate discomfort of change and underestimate the long-term pain of staying stuck.”

She pointed to another buganvilla, this one a vibrant purple. “Imagine this flower was stuck in a small pot. It’s comfortable there, it has enough soil to survive. But if you move it to a bigger pot with more nutrients, it has the potential to grow much larger and produce even more beautiful flowers. Sometimes, we need to change our ‘pot’ to allow ourselves to flourish financially.”

Leo felt a sense of clarity washing over him. Ms. Reed was right. He had been letting his fear of the unknown and his comfort with the familiar cost him money. It wasn’t a rational decision; it was the status quo bias at play.

“Okay,” he said, a newfound determination in his voice. “I’m going to do it. I’m going to look into Mateo’s credit union, and I’ll research other banks too.”

Ms. Reed smiled warmly. “That’s wonderful, Leo. Remember, change doesn’t have to be scary. Sometimes, it’s the best way to move forward. And think of all the English vocabulary you’ll learn in the process – ‘fees’, ‘switching’… you’re already using them!”

Leo grinned. He hadn’t thought about it that way. “You’re right! And I’ll finally understand all those complicated banking terms.”

“Exactly,” Ms. Reed said, returning to her gardening. “Don’t let the comfort of the familiar hold you back from something better. Don’t let the ‘why change?’ question prevent you from saving money and reaching your financial goals.”

Leo watched her gently tending to her flowers, each one vibrant and thriving. He thought about his own financial life. He didn’t want to be like a plant stuck in a small pot, just surviving. He wanted to grow and flourish.

He pulled out his phone again, this time not to look at the dreaded bank notification, but to search for “credit unions in Cali.” The initial feeling of overwhelm was still there, but it was now mixed with a sense of excitement and possibility. He was finally taking action, breaking free from the inertia of the status quo. He was choosing to change, and he knew, deep down, it was the right decision. The cost of inaction had become too clear, and he was ready to embrace the potential of a new beginning.

We hope you enjoyed today’s story and that it helped you practice your English listening skills! If you did, please give this video a like. And if you want to hear more stories and lessons to improve your English, don’t forget to subscribe to our channel. Thanks for listening, and we’ll see you next time!

Book: The Psychology of Money

Part: II Common Biases

CEFR: B2

Episode: The Sure Thing Investment

Welcome back, English language learners! Have you ever looked back at something that happened and thought, “I knew that was going to happen!”? Today’s story explores this feeling with our friend Leo. After a successful investment, Leo tells his friend Carlos that it was a “sure thing” and that he “knew” it would go up. But did he really feel that certain at the time? Join us as Ms. Reed helps Leo understand a common way our minds trick us into thinking we can predict the future, especially when it comes to money. Get ready to listen and discover the surprising power of “hindsight bias” and why remembering our past uncertainties is so important.

The afternoon sun was warm, but a gentle breeze made it pleasant in the park. Leo sat on his favorite bench, not really looking at his English book. He was talking excitedly to Carlos, his classmate.

“…and then, boom! The stock went up! I made a lot of money, Carlos! I knew it was going to happen!” Leo exclaimed, gesturing with his hands.

Carlos looked impressed. “Wow, Leo! That’s amazing. You’re really good at this investment thing, huh?”

Leo puffed out his chest a little. “Yeah, I have a good feeling about these things. I knew that company was going to do well. Their new product was great, and everyone was talking about it. It was a sure thing.”

Ms. Reed, who had been tending to her flowers nearby, overheard their conversation. She walked over to the bench, a thoughtful expression on her face.

“That’s wonderful that your investment did well, Leo,” she said kindly. “But you used some interesting phrases. You said you ‘knew’ it was going to happen, and that it was a ‘sure thing’. Is that really how you felt before the stock went up?”

Leo hesitated for a moment. He remembered the feeling of uncertainty he had felt before investing. He had read a lot about the company, and there had been positive signs, but it was also a new product, and there was always the risk that it might not succeed.

“Well… I mean, I was pretty confident,” Leo said, trying to sound sure of himself. “I did my research, and I had a good feeling. But, you know, there’s always a bit of… uncertainty.”

“Exactly,” Ms. Reed said gently. “There’s always risk involved in investments. Even the most promising ones. It’s important to remember how we felt before we knew the outcome.”

Carlos looked confused. “What do you mean, Ms. Reed?”

Ms. Reed sat down on the bench. “Leo is experiencing something called ‘hindsight bias’. It’s a common way our minds work. After something happens, we often change our memory of how we felt beforehand. We remember ourselves as being more certain, more confident, than we actually were.”

Leo frowned. “So… I’m changing my memory?”

“In a way, yes,” Ms. Reed explained. “Your brain is trying to create a clear story. Now that you know the investment was successful, your brain is saying, ‘See? I knew it all along!’ It’s like you’re rewriting the past to make yourself feel like you made a perfect prediction.”

“But why would my brain do that?” Leo asked.

“There are a few reasons,” Ms. Reed said. “One reason is that it feels good to be right. It makes us feel smarter and more capable. Hindsight bias helps us protect our self-esteem. Another reason is that it helps us make sense of the world. Our brains like things to be predictable. When we say ‘I knew it would happen,’ it makes the world seem less chaotic and random.”

She picked up a small stone and showed it to Leo and Carlos. “Imagine I throw this stone in the air. Before I throw it, there are many possibilities. It could go high, it could go low, it could land near us, or far away. But once it lands, there is only one outcome. Hindsight bias makes us think that, before I threw it, we knew exactly where it would land.”

Carlos nodded slowly. “I think I understand. It’s like after a football match. People say, ‘Oh, I knew that team was going to lose,’ even if they weren’t so sure before the game.”

“That’s a perfect example, Carlos!” Ms. Reed said. “People often say, ‘I told you so!’ after the result, even if they had doubts before. They forget the uncertainty they felt. They change their memory of their prediction.”

Leo thought about his investment again. He remembered talking to Mateo about it. Mateo had been more cautious. Mateo had said, “It looks promising, but it’s still a risk. We don’t know for sure what will happen.” Leo had been more excited, but he hadn’t been completely certain. Now, after the stock went up, he only remembered his excitement, not his uncertainty.

“So, hindsight bias makes us forget the risk?” Leo asked.

“Exactly,” Ms. Reed said. “And that can be dangerous, especially when it comes to investments. If you believe you always ‘knew’ what would happen, you might become overconfident. You might take bigger risks in the future, thinking you can always predict the outcome. You might forget that you could lose money.”

Leo felt a bit uncomfortable. He realized that he was already starting to think about his next investment. He had been feeling very confident after his success, but now he understood that some of that confidence was just hindsight bias.

“So, how can I avoid this… bias?” Leo asked.

“It’s difficult to completely eliminate it,” Ms. Reed said. “It’s a natural part of how our brains work. But we can learn to be more aware of it. One thing you can do is to keep a record of your predictions before you know the outcome. Write down how you feel, how certain you are, and what the risks are. Then, after the event, you can compare your original prediction with what actually happened. This can help you see how your memory might be changing.”

She paused and looked at Leo and Carlos. “It’s also important to use the right language. Instead of saying ‘I knew it would happen,’ try saying ‘I thought it might happen,’ or ‘I believed it was likely to happen.’ These phrases show that you understood there was uncertainty.”

Leo looked at Carlos. “I guess I shouldn’t have said it was a ‘sure thing’.”

Carlos nodded. “Yeah, maybe we should all be more careful with our words when we talk about the future.”

Ms. Reed smiled. “That’s a very good lesson. Remember, the past often seems clearer than the future. Hindsight is 20/20, as they say. But that doesn’t mean we can accurately predict everything. We need to be humble about our predictions and remember that there is always an element of risk.”

She stood up, brushing off her hands. “The most successful investors are not the ones who think they know everything. They are the ones who understand risk, who make careful predictions, and who learn from both their successes and their failures. And they remember how they felt before they knew the outcome.”

As Ms. Reed walked back to her flowers, Leo and Carlos sat in silence for a moment, thinking about what she had said. Leo realized that he had been so focused on the feeling of being right that he had forgotten the feeling of uncertainty. He had let hindsight bias make him feel smarter than he actually was.

“I’m going to start writing down my predictions,” Leo said finally. “I don’t want to get too confident and make a bad decision.”

Carlos nodded. “Me too. And I’m going to try to use better phrases, like ‘I thought it might happen.’ It sounds more… honest.”

They both looked at Ms. Reed, who was now carefully watering her buganvillas. The flowers seemed to be thriving under her care. Leo realized that Ms. Reed’s wisdom, like the water she gave her plants, was helping him to grow, not just as an English student, but also as someone trying to understand the world of money and investments. He was learning that remembering the past accurately, with all its uncertainties, was an important step towards making better decisions in the future. He was learning to be more honest with himself about what he really knew.

We hope you enjoyed today’s story and that it helped you practice your English listening skills! If you did, please give this video a like. And if you want to hear more stories and lessons to improve your English, don’t forget to subscribe to our channel. Thanks for listening, and we’ll see you next time!

Book: The Psychology of Money

Part: II Common Biases

CEFR: B1

Episode: The Discounted Sweater

Welcome back, English language learners! Today, we’re exploring the busy market in Cali with Leo and his friend Mateo. Leo spots a sweater with a big discount, and it seems like a fantastic deal because of the original price. Have you ever been drawn to a sale just because of how much money you think you’re saving? 

Leo was walking through the market in Cali with his friend, Mateo. The market was full of colorful sights and sounds: vendors selling fruit, people chatting and laughing, and music playing from a nearby stall. Leo loved the energy of the market, but sometimes it was easy to spend too much money.

“Look at this sweater, Mateo!” Leo said, stopping in front of a clothing stall. He held up a bright blue sweater with a large tag attached. “It says it was originally 100,000 pesos, but now it’s only 40,000 pesos! That’s a great deal!”

Mateo looked at the sweater and then at the tag. “Hmm, 40,000 pesos is still a lot for a sweater, Leo. Are you sure it’s worth it?”

Leo shrugged. “But it was 100,000 pesos! Think about how much money I’m saving! It’s a really good value.”

Mateo wasn’t convinced. He touched the fabric of the sweater. “It feels a bit… thin. I’m not sure about the quality. Maybe we should look at other stalls.”

But Leo was already imagining himself wearing the sweater. He liked the color, and the discount was too good to pass up. “I’m going to buy it,” he said, pulling out his wallet.

As he paid for the sweater, Ms. Reed walked by. She smiled at Leo and Mateo. “That’s a nice sweater, Leo.”

“Thanks, Ms. Reed!” Leo said, beaming. “I got a great deal on it. It was originally 100,000 pesos, but I got it for 40,000!”

Ms. Reed’s smile became a bit more thoughtful. “That’s interesting… the ‘original’ price was 100,000 pesos?”

Leo nodded proudly. “Yes! Can you believe it? I saved 60,000 pesos!”

Ms. Reed looked at the sweater again. “It’s good to be happy with your purchase, Leo. But sometimes, we need to be careful about how we judge value.”

Mateo, who was still unsure about the sweater, looked curious. “What do you mean, Ms. Reed?”

Ms. Reed gestured to the stall with the sweaters. “The seller put a high price on the tag – 100,000 pesos. That price is the first piece of information you saw, Leo. It’s what we call an ‘anchor’.”

Leo frowned. “An anchor?”

“Yes,” Ms. Reed explained. “It’s like a weight that holds your thinking in place. Your brain sees that first number, and it uses that number to judge the value of the sweater. Even though the seller lowered the price, you are still thinking about the 100,000 pesos. You are comparing the new price to that high price.”

“So, because I saw 100,000 pesos first, 40,000 pesos seems like a good deal?” Leo asked.

“Exactly,” Ms. Reed said. “Your brain is saying, ‘Wow, this sweater is much cheaper than 100,000 pesos! It must be a good value!’ But you’re not really thinking about the actual cost of the sweater. You’re only thinking about the difference between the sale price and the anchor price.”

Mateo nodded slowly. “I think I understand. So, the seller is using the first price to trick us?”

“Not exactly ‘trick’ us,” Ms. Reed said. “It’s more like… influencing our perception. This is called ‘anchoring bias’. It’s a common way that our brains make decisions. We rely too much on the first piece of information we receive, even if that information isn’t very relevant.”

She picked up a colorful scarf from a nearby stall. The scarf had a tag that said “50,000 pesos.”

“Let’s say I want to buy this scarf,” Ms. Reed said. “If the seller tells me, ‘This scarf was originally 80,000 pesos, now only 50,000 pesos!’, I might think it’s a good deal. But if the seller tells me, ‘This scarf is 50,000 pesos,’ I might think that’s too much. The cost of the scarf is the same in both situations (50,000 pesos), but the ‘anchor’ changes my idea of its value.”

Leo looked at his blue sweater. He still liked the color, but now he was starting to wonder if he had made a good decision. “So, even if the sweater is worth only 30,000 pesos, I might still buy it because I’m anchored to the 100,000 pesos?”

“That’s possible,” Ms. Reed said. “The anchor makes you focus on the ‘saving’ rather than the actual cost. You might not even consider if 40,000 pesos is a fair price for that sweater.”

She pointed to a stall selling fruit. “Imagine you want to buy some mangoes. If the first stall you see sells them for 2,000 pesos each, and the next stall sells them for 1,500 pesos each, you might think the second stall is cheaper. But if the first stall sells them for 3,000 pesos each, the second stall might seem like a bargain! Your idea of whether 1,500 pesos is a good price depends on the ‘anchor’ price you saw first.”

Leo sighed. “I guess I didn’t really think about it that way. I was just excited about the discount.”

Mateo patted Leo on the shoulder. “Don’t worry, Leo. We all make decisions like that sometimes. The important thing is to learn from it.”

Ms. Reed smiled. “That’s right, Mateo. And it’s important to remember the difference between value and cost. The cost is the actual amount of money you pay for something. The value is what that thing is worth to you. Sometimes, we let the anchor price trick us into thinking something has more value than it really does.”

She bought a few lulos from the fruit stall and handed one to Leo and one to Mateo. “Enjoy. And remember, when you are shopping, always think about the real cost and the real value. Don’t let the first price you see fool you.”

Leo took a bite of the lulo. It was delicious. He thought about the sweater again. He still liked it, but he realized that he might have been too focused on the discount and not enough on whether 40,000 pesos was a good price for that particular sweater.

“Thanks, Ms. Reed,” Leo said. “I will be more careful when I go shopping next time. I need to pay more attention to the cost and value.”

Mateo nodded in agreement. “Me too. I don’t want to be tricked by anchor prices.”

As they walked through the market, Leo looked at the prices of things with new eyes. He tried to ignore the “original” prices and focus on the actual cost and whether something was really worth that amount of money to him. He was learning to be a smarter shopper, thanks to Ms. Reed’s lesson about anchoring bias. He understood that the first price wasn’t always the right price, and that true value was about more than just discounts.

We hope you enjoyed today’s story and that it helped you practice your English listening skills! If you did, please give this video a like. And if you want to hear more stories and lessons to improve your English, don’t forget to subscribe to our channel. Thanks for listening, and we’ll see you next time!

Book: The Psychology of Money

Part: II Common Biases

CEFR: B1

Episode: Birthday Money vs. Work Money

Happy birthday to Leo! Today’s story in Cali finds him with some special birthday money, and he’s excited to spend it on a new video game. But is birthday money really different from the money he earns? JGet ready to listen and discover why, when it comes to making smart financial choices, all money really matters the same!

Leo was excited. It was his birthday, and his abuela had given him 50,000 pesos as a gift. He felt rich! He had been saving some money from his part-time job at the bookstore, but this birthday money felt different. It was… extra.

He met Mateo at their usual spot in the park. Ms. Reed was there too, tending to her buganvillas.

“Happy birthday, Leo!” Mateo said. “Did you get any good presents?”

“The best!” Leo exclaimed. “My abuela gave me 50,000 pesos! I’m going to buy that new video game I’ve been wanting.”

Mateo nodded. “That’s cool. But don’t spend it all in one place, okay?”

Leo laughed. “Don’t worry, I won’t! But it’s birthday money! It’s for fun!”

Ms. Reed, who had been listening to their conversation, turned to Leo with a gentle smile. “It’s wonderful that you received a gift, Leo. But what do you mean when you say it’s ‘for fun’?”

Leo shrugged. “Well, you know, it’s not like my work money. I have to be careful with that. I use it for my English textbook, for bus fares, and to help my family a little. But this is birthday money! It’s for something special, something I wouldn’t normally buy.”

Ms. Reed looked thoughtful. “So, you treat your birthday money differently than the money you earn?”

“Yeah, I guess so,” Leo said. “I mean, it’s not the same, right? I earned my work money. This money was a gift. It feels… freer.”

Ms. Reed sat down on the bench with them. “That’s a very common way to think about money, Leo. But it’s an example of something called ‘mental accounting’.”

Mateo frowned. “Mental… what?”

“Mental accounting,” Ms. Reed repeated. “It’s how we organize money in our minds. We create different ‘accounts’ for different types of money, and then we treat that money differently, even though it’s all the same.”

“But it feels different,” Leo insisted. “My work money is for necessities. My birthday money is for… for treats!”

“I understand that feeling,” Ms. Reed said. “Many people feel that way. They might have one ‘account’ for ‘bills money’, another for ‘grocery money’, and another for ‘fun money’. And they spend the money from each account in different ways.”

She picked up a small, smooth stone. “Imagine this stone is 10,000 pesos. Now, imagine you got this 10,000 pesos as a gift for your birthday. And imagine you earned another 10,000 pesos from working at the bookstore. Are they different?”

Leo looked at the stone. “No, they’re both 10,000 pesos.”

“Exactly,” Ms. Reed said. “In reality, all money is the same. It’s fungible. 10,000 pesos is 10,000 pesos, no matter where it comes from. But in our minds, we put them in different ‘accounts’ and give them different values.”

“So, it’s like we have different pockets in our brains?” Mateo asked.

Ms. Reed smiled. “That’s a good way to think about it, Mateo. We create these mental pockets, and we treat the money in each pocket according to the rules we’ve made up.”

“And that’s bad?” Leo asked, a little worried.

“It’s not necessarily ‘bad’,” Ms. Reed said. “But it can lead to some… interesting decisions. For example, you might be very careful with your work money, because you see it as valuable and hard-earned. But you might spend your birthday money more carelessly, because you see it as ‘extra’ or ‘free’.”

“That’s what I’m doing,” Leo admitted. “I wouldn’t buy a video game with my work money. That would feel… irresponsible. But with my birthday money, it feels okay.”

“And that’s mental accounting in action,” Ms. Reed said. “You are treating the two sums of money differently, even though they have the same value. You are more willing to spend your birthday money on something you want, but don’t really need, because of where it came from.”

She pointed to a group of children playing in the park. “Think about those children. If their parents give them 2,000 pesos for helping with chores, they might save it carefully. But if they find 2,000 pesos on the ground, they might spend it quickly on candy. It’s the same amount of money, but they treat it differently because of its origin.”

Leo thought about this. He realized he had done similar things in the past. He had once received a small bonus at the bookstore and had spent it on a fancy dinner, something he wouldn’t normally do with his regular income.

“I get it,” he said. “It’s like I have two different attitudes towards money. One is ‘serious’ and the other is ‘relaxed’.”

“Exactly,” Ms. Reed said. “And this can affect our financial decisions. We might save carefully from our salary, but then waste a windfall like a bonus or a gift. We might put money into a low-interest savings account, but also have high-interest credit card debt. We treat the money differently, even when it would make more sense to treat it all the same.”

Mateo frowned. “That doesn’t sound very logical.”

“It’s not always logical,” Ms. Reed agreed. “It’s psychological. We attach different meanings to different types of money. We might see earned money as a reward for our hard work, so we value it more. We might see gift money as a bonus, so we feel more free to spend it. But in the end, money is just a tool. It has the same purchasing power regardless of where it came from.”

She stood up and stretched. “The key is to be aware of this tendency. Don’t let your mental accounts trick you into making decisions you wouldn’t normally make. Ask yourself: what is the best use of this money, regardless of where it came from? Should I save it? Should I invest it? Should I use it to pay off debt? The answer should be the same, whether it’s work money or birthday money.”

Leo looked at his birthday money in his wallet. He still wanted that video game, but he also knew he was saving for his English textbook. Maybe, he thought, he should use some of the birthday money for the book, and some for a smaller treat.

“I think I understand,” he said. “All money should be treated with the same respect. It doesn’t matter if I earned it or if it was a gift. It’s still money, and I should use it wisely.”

“That’s a very mature way to look at it, Leo,” Ms. Reed said, smiling. “Remember, money doesn’t have feelings. It doesn’t care where it came from. It’s we who give it different meanings. And if we’re not careful, those meanings can lead us to make less-than-optimal choices.”

As Leo and Mateo walked home, Leo thought about what Ms. Reed had said. He realized that he had been dividing his money into rigid categories, and that this had been influencing his spending habits. He decided to try to be more mindful of this in the future, and to treat all his money with the same care and consideration. He would still buy the video game, but he would also put some money towards his textbook, recognizing that both were important, regardless of the source of the funds. He was beginning to learn that true financial wisdom lay in seeing all money as equal.

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