Why do we take one step backwards

and follow it with two more in the same direction?

Robert Brault Cha Cha

It might seem incredible but with a lot of our goals we often follow one step backwards, with two more – in the same direction!

So, in this short Insight, we’ll look at this classic (and dangerous) behavioural trap.

The fact is that it’s our reaction to failure on our important life goals – that can lead us to a worse position than if we’d made no goal at all.

Let’s look at the evidence

The best way to understand this is to read this description (below) of a real life experiment and try to guess the outcome.

The experiment was filmed by the BBC in 2015

and there’s a link to the video at the base of this page.

But please read this description first and have a go at the questions.

The experiment

This simple experiment involved two similar groups of volunteers, all of whom were on a diet to lose weight.

Their efforts were filmed by the BBC over several months. And, for this part of the series, they were taken to a cake shop 🙂

Here they were each given a BIG slice of cake to eat.

But each group were given cake from a different plate.

  1. The first group were told their ‘Purple’ cake contained traditional ‘super rich’ ingredients and was over 700 kcals per slice.
  2. The second group were told that their ‘Orange ’ coloured cake was made from the high quality ‘super low fat’ ingredients. So, it tasted great but contained less than 200 kcals per slice.

The truth was that both cakes were exactly the same – super rich cakes containing more than 700 kcals per slice  – but the participants didn’t know that.

Later the same day, the two groups were sent off to separate rooms to bake and decorate their own cakes and have a tea party.

Then, when they were finished – an examiner measured how much cake they’d consumed.

Now, try these Questions:

  1. Which team (Purple or Orange) do think consumed most cake in the afternoon session?
  2. Why do you think that?
  3. Have a guess about how much more one team ate when compared to the other?

Now watch here for the outcome

(Note, you may need to allow flash player for this page – on your browser to watch it) 

So, what has this to do with financial planning?

Well, that BBC series aimed to help people control their diet and lose weight.

But clearly, this ‘catastrophic’thinking’ problem is a challenge we all face in overcoming many bad habits that threaten our health and our wealth.

We need to remember that a minor breakage of a resolution along the road to a bigger goal is not necessarily a big deal.

It doesn’t help to look at small set backs as  ‘catastrophes’ . . .

. . . indeed, it’s this ‘all or nothing’ thinking that can mess up our minds and cause the greatest damage.

This is the ‘go in hard or go home’ mindset that you’ll hear some folk talk about at parties – and yes, I did that when I was younger too 🙁

Read more about the dangers of ‘black and white’ thinking here

Happiness in shades of grey

And it’s no different with money.

This type of thinking can lead you to spend all your money today – leaving nothing for your rainy days.

It’s just another side of the same (catastrophic thinking) coin.

The result with your money is the ‘in for a penny – in for a pound’ habit of spending.

You know the game . . .

You budget to spend, say, £800 on that holiday abroad but then, when you book it up, you load up with every extra and upgrade available.

Result?

Your budget is smashed to smithereens.

Yes, and don’t worry . . . you’re not alone. A lot of people do this.

What’s more, the shops and online sellers have a great deal of expertise in their marketing departments to tempt you into this and other spending traps.

Learn more about those tricks right here

Jenny Shoo

But coming back to this ‘catastrophic thinking’ problem . . .

. . . we clearly need to get out of the habit – and fast.

And understanding it (that “Shades of Grey” Insight will help) so that we become more aware of what you’re doing – or not doing – as we do it . . .

. . . can help us escape from this particular behavioural trap.

Catastrophic (black and white) thinking is a real challenge for a lot of people.

So, if it affects someone you know – I hope you’ll share this post.

We all need all the help we can get on this one.

All the best for now

Paul 

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