Knowledge is power, and the basis of all knowledge is having the right data. Datapoints (or, data points, if you like) are the smallest form of data. Think of them like information atoms. Alone, they’re seemingly small and insignificant. But when you combine them, you can discover trends, uncover essential information, and better understand the world around you.
These minuscule particles of information can be essential to learning about others and ourselves.
Here’s what you need to know about the small-but-mighty datapoint and how to use it to understand the world.
What are datapoints?
The American Psychological Association defines the term this way:
data point (n) – a specific piece of information derived from a larger set of data. A data point is often formed by the intersection of two other pieces of information, as in the intersection of a person’s score on one variable with his or her score on a second variable in a scatterplot.
A dictionary definition of “data point” (also “datapoint”) is a single fact or piece of information. It’s also roughly synonymous with the singular form of data: a datum.
Datapoints can be collected through research or measurement, and you can represent them as points like the ones you’d put on a graph or chart. But just because you can put them in a graph doesn’t mean they have to be numerical.
Datapoints can be anything from a number or word or a physical object. The only requirement for something to be a data point is to be distinguishable from other datapoints. Otherwise, it loses its singularity — an essential part of a datapoint (without the “s”).
While datapoints can be just about any piece of singular information, there are a few characteristics that make a good datapoint:
- Precise and accurate
- Representative of the entire phenomenon being studied
- Free from bias
- Easy to use and understand
- Current and timely (not outdated)
If your datapoints follow these rules, you should be able to use them to understand nearly any phenomenan life can throw your way.
Datapoints: unique information about ourselves and others
When you think about data points, it’s easy to jump back to high school math class, making graphs and lines of different dots on grid paper. And while that’s a part of data points, there’s much more to it than that. We can use data points to learn about ourselves.
Think about all the various individual pieces of information that make us who we are:
- Demographic characteristics
- Financial characteristics
- Life experiences
- Personality-based characteristics
Details like your gender, where you grew up, and your age are all data points in the graph that are you. Put them all together, and you can see a bigger picture that helps you understand yourself.
Once you understand who you are and the pieces that make the whole (all those tiny, little data points), you can use the information to build better habits, make more confident decisions, and create sustainable growth in life.
How to use datapoints
You can use data points to understand just about anything in life. Astrophysicists use millions of data points to understand the properties of black holes and other celestial bodies; economists use data points to track financial trends for almost every product imaginable; and mathematicians use data points to plot graphs and lines. If you can use data points to understand everything, why can’t you use them to understand someone’s feelings about money?
It’s easy to think that something as complicated and broad as someone’s money habits couldn’t be summed up with a few minute data points, but complex matters are exactly where data points are needed.
Many pieces make up a person’s financial beliefs:
- Life experiences
- General personality
- Attitudes
- Values
- Biases
Within each section, there are dozens, if not hundreds or thousands, of individual data points.
For example, if someone grew up in a low-income household, that’s one life experience datapoint that will likely shape their feelings toward money for the rest of their life. Another valuable datapoint would be if someone has a materialistic personality—but of course, you could dig even further and collect datapoints about whether they enjoy the status of material objects or use them as a crutch to make them feel better about a shortcoming.
When learning about someone’s money behaviors, the datapoints make less of a graph and more of a “connect the dots” type picture. The more data points you collect, the more the overall image transforms from a generic stick figure to a Mona Lisa-esque detailed masterpiece that represents the unique individual.
Understanding datapoints to personalize the client experience
There’s a reason we named our company DataPoints. These tiny pieces of information are crucial to understanding the broader picture of any topic, including an individual client’s money psychology—or even the prevailing money psychology of a larger population. We use these personality-based datapoints to build larger pictures of clients (and client populations) and thoroughly understand their financial attitudes and beliefs.
Take an individual’s perspectives and attitudes about money—a large, complicated string of attitudes that stretch back to their childhood and permeate just about everything they do—and break it down into individual datapoints. You can then more easily see why they believe and act as they do. With that complete understanding, preparing and personalizing the client experience is easier, and achieving client objectives should be more manageable.
For example, if a client tends to avoid risk because of negative past experiences, you can help them build a portfolio of low-risk investments. They might not earn as much immediately, but it could show them that taking a little risk is not always bad. Over time, it may be easier to slowly move them toward a higher-risk, higher-return portfolio with a greater likelihood of increased returns and satisfied objectives.
The more you understand about your clients, the better service you can offer. That’s what DataPoints is (and datapoints are) all about.
When you’re ready to start collecting datapoints about your clients to provide better financial services, uncover the client money mindset using the DataPoints tools. Sign up for the world’s first behavioral finance software platform and see how something as tiny as a datapoint can transform how you work with clients. Or, you can take our personality or retirement attitudes tests here to learn about your own datapoints.