Overspending and overeating
are quite often two sides of the same coin
Overspending is often the result of a similar behavioural trap to overeating.
And with a lot of our goals, we often follow one step backwards, with two more – in the same direction!
In this short Insight, we’ll look at an amazing example of this behavioural trap and consider how we can overcome it.
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.
A great way to understand this dangerous behavioural trap is to read the description (outlined below) of a real-life experiment …
… and then 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.
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.
- The first group were told that their ‘Purple’ cake contained traditional ‘super rich’ ingredients and was over 700 kcals per slice.
- 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 with an instruction 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.
What do you think the results were?
Answer these 3 questions:
- Which team do think consumed most cake in the afternoon session?
- The purple team – who thought they’d had a rich slice of cake in the morning or
- The orange team – who believed they’d only had a low-calorie slice at that time?
- What’s your rationale for thinking that? and
- How much more do you think one team ate compared to the other at tea party time?
(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, of course, this BBC series was aimed at helping 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.
Small set backs should not be looked upon as ‘catastrophes’ . . .
And it’s this ‘all or nothing’ thinking that can mess up our minds and cause the greatest damage.
So, this is a kind of ‘go in hard or go home’ mindset that you might hear some folk talk about on a night out …
… and yes, I made that mistake, when I was younger too 🙁
So, it’s the same with money
This type of thinking can lead you to spend all your money today – leaving you with 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.
We all know the game …
… we budget to spend, say, £800 on that holiday abroad but then, when we book it up, we load up with every extra and upgrade available.
Result – our budget is smashed to smithereens.
Now, we’re not alone – a lot of people do this.
And retailers spend heavily on marketing to keeping tempting us into this and other spending traps. Learn more about those tricks right here
But clearly, we need to break the habit
And simply being aware of what’s going on in our minds, when we’re in catastrophic (black and white) thinking mode, can help a great deal.
Try this “Shades of Grey” Insight – it might help you escape from this particular behavioural trap.
And if this challenge affects someone you know (it affects most of us!) please share this post 😉
I think we could all use some help with this.
All the best for now
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