4 Lessons we learned from The Big Short

Unless you’ve been living under a rock, you’ve probably heard about one of this year’s most touted new films, Adam Mckay’s The Big Short. A tragi-comedy about the 2007 global financial crisis, the film takes a look at what went wrong and how a lucky few saw it coming and profited hugely from it.

Michael Burry, played by Christian Bale, correctly identifies a housing bubble in the American market – and predicts that it will pop. By betting against it, he and a group of savvy investors come out of the GFC with billions of dollars under their belts.

It’s worth watching because it’s an enjoyable and critically acclaimed film – where else could you see behavioural economist Richard Thaler and pop star Selena Gomez explain a “collateralised debt obligation” at a blackjack table?

But there are also some important financial lessons to be learnt from the most recent effort from the director of Anchorman and Step Brothers. Go figure.

  • Read the fine print. Even if a bank or financial institution isn’t ‘out to get you’, the bottom line is that they’re looking after their interests – and you need to look after yours. That means knowing the finicky exclusions on your travel insurance or the conditions to get the best deal on your savings account. Make sure you know the details of anything you buy into.
  • Don’t get sucked in by jargon. In The Big Short, Ryan Gosling tells you point blank that finance is confusing on purpose. Whether or not you agree, it’s no secret that complicated jargon can be a confidence killer when looking for the best financial deal. Don’t get discouraged, and check out Mozo’s financial jargon buster to help you make sense of it all.
  • Know your worst case scenario. We don’t want to get too gloomy here, but before you commit, consider what would happen if it all goes belly up. Whether it’s knowing what happens if you’re late on your home loan repayments, or being aware of the danger of credit card fraud, knowing the risks can prompt you to not only budget more effectively, but to make better choices to begin with.
  • Do your research. …And then do it again. If there’s one lesson that comes out of The Big Short, it’s that doing your research into the market pays off. While you may not be looking at making billions of dollars in one hit, you can maximise your savings and cut back on spending by taking the time to compare what’s out there and find the best deal to suit you.
So what are you waiting for? Get started on your financial goals today by checking out Mozo’s collection of free and easy financial tools.