The list of what conspires against us is growing. We have emotion in decision-making proven by Daniel Kahneman. We have money attitudes subconsciously formed as we matured. We have auto-pilot money behaviors that are hard to catch because, well, they’re on auto-pilot! And all of this is going on as we just get through a day.
And it gets worse! No wonder you're not saving.
Our Own Culture Conspires Against Us
It’s interesting that the Financial Services industry has basically denied or ignored that fact that there is emotion in decision-making for decades. They’ve expected us to be logical and rational about saving and managing our money. And meanwhile the retail industry has whole heartedly embraced emotion in decision-making and used it against us. How can we win?
Retail Psychology is Alive and Well
Amazon recently held a huge 20th anniversary sale online. It was publicized as rivaling Black Friday. The celebration sale began at midnight. Great sales popped up regularly so you were enticed to be vigilant and keeping checking the site. While you were browsing, pictures of other items popped up below under the guise of “What other Amazon Prime members are looking at”. In other words, if they can’t entice you with the product at hand, perhaps others below would be more appealing. If you showed interest in an item by putting it in your cart while you thought about it, a little notice in red may have popped up warning you that there were Only 20 Left!
Wow. Suspense. Competition. Fear of Missing Out. Pressure. Inclusiveness. All online from one retailer. For those of you who visited Amazon, how many of you actually left the site with your wallet intact? It is so easy to get sucked into buying something with so many visual and emotional queues!
When Our Willpower Won’t
We all think we can say No to shopping and deals. Just like we can say No to the moist chocolate cake, or naively plan to get through the cereal aisle without giving in to children’s pleas for sugar coated crap. Well on some days you probably can. And on some days, you just can’t.
Deprivation is proven not to work. If you have a short term goal – such as losing 20 pounds for a class reunion, you may be exceptionally motivated and successful. There is also a 95% likelihood that you’ll put it all back on. Saying no sometimes makes you covet something even more.
If you’re tired and warn down, your likelihood of saying No decreases. You may have said No ten times today. And then you just give in. You’re tired, or the temptation is just too great. You're surrounded by temptation all day, everyday. You may have worn out that strong Willpower muscle. You’re human.
So how do we fight back? How do we manage our attitudes and behaviors? How do we avoid temptation? It’s all within our power. Stay tuned for our next blog and the last of this series.
Related Topic: Pregnant Women are Money Gold Mines
Information shown is for illustrative purposes only and is not intended as investment, legal or tax planning advice. Please consult a financial adviser, attorney or tax specialist for advice specific to your financial situation. Behavioral Cents, LLC and any third parties listed, linked to or otherwise appearing in this message are separate and unaffiliated and are not responsible for each other’s products, services or policies.
Carrie Rattle is Founder of BehavioralCents.com. She helps smart women build money confidence by observing their behaviors with money, and then changing them for the better. Women are then empowered to make wise money decisions.
As a veteran executive of Financial Services, she sees a significant gap where too few are focused on helping people with their actual money behaviors instead of simply telling them what they should do. Thoughts always welcome: firstname.lastname@example.org.