The Hummingbird Blog

A Series of Insights Into Savings, Personal Finance and Behavioural Science
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Part 1 - How to Transition From Self-Harm to Self-protection

There is no question that humans are creatures of habit. These habits, whatever they may be, make themselves manifest in the behaviour seen on a regular basis. Now, it should be noted that many times, humans act rationally, that is, based on their understanding of the world and experience. On the other hand, there are times when actions are instinctive and based on gut-level reactions. When this type of behaviour occurs, people are prone to act in a less rational manner.

This is why people tend to act out irrational when certain emotions get a grip on them. These emotions are instinctive reactions such as fear, greed, or jealousy. This isn’t to say that they are negative emotions. This is just a reality of human nature. For instance, when people act out of fear, they may be capable of doing anything to protect their lives. By the same token, when people act out of greed, they may be able to act impulsively as their instinct takes over.

Here, we are not questioning whether one behaviour is moral or even justified. We are simply stating the fact of human reactions. When put into context, an instinctive reaction can happen quickly. And they happen, it can be very difficult to get any kind of control over them.

When this is translated into the world of personal finance and money management, it can be very hard to control one’s urge to spend. You see, spending money is more of an irrational action. Often, one gets caught up in the hype of certain products and services. In addition, marketing is often set up to create a sense of urgency. For example, you often see phrases such as “limited time only”. While these expressions may seem like a cliché, they are very effective. They create a sense of urgency that compels individuals to spend now rather than later.

This is a headshot to saving. Saving money is a rational activity that is centred around the understanding that it’s best to save money and spend later. This is especially true when one is dealing with products and services that are not essential. However, reaching this conclusion takes effort; spending money does not.

Do you see how marketing plays off basic human emotions?

This is why it’s important for the average citizen to keep a level head when it comes to making money management decisions. However, this is easier said than done. It’s a lot easier to say that saving money is about making a conscious change. Going about making the change itself takes some effort. Mainly, it’s a question of making a concerted effort to change certain behavioural patterns.

In this article, we are going to take a look at how you can use this understanding of the human psyche to find a positive way of getting a hold on your spending habits while also making the most of your ability to save money.

Going from negative to positive entrapment

When making decisions, we often fall prey to our emotions, prejudices, concepts, and opinions. It’s only natural to assume that all of these elements will somehow factor into the way we go about making any kind of decision in life. Therefore, there is a direct line between what we believe to be true, or not, and the decisions we make.

Consider this situation:

You are asked to eat a food which you know is harmful to your health. Yet, the taste is so good that you cannot resist. And while you have committed to eating healthy, you can justify this action by thinking, “trying a little won’t do any harm”. However, the persistence of this mindset adds up over time. In the end, you wind up eating a lot more than you should, thereby derailing your efforts to eat healthily.

This is a clear example of “entrapment”. Psychologists use this term to refer to a decision-making process in which, despite your commitment to a course of action, which you know is not the best one, you still go ahead with it by justifying some type of corrective action.

In the previous example, you might justify having junk food by thinking you’ll hit the gym harder the next day. In a manner of speaking, you can justify having that extra piece of junk food by promising yourself to make it up later on. This is where you can become a victim of negative entrapment.

Often, negative entrapment is rooted in the belief that we can “delay the pain,” so to speak. In other words, we find ways of justifying sacrificing the long-term for short-term gains. This is what is commonly referred to as “instant gratification”.

When we fall prey to instant gratification, we decide to forego any attempts to delay what we want. This means that we make our best effort to get what we want now rather than wait for later. However, it should be noted that there are occasions in which “now” is not the best time to get what we want. Yet, we find a justification for doing it despite having a clear understanding that it might not be the best thing to do at the time.

Consider another example of this:

You are on a tight budget. Yet, you are eager to purchase the latest smartphone model. And while you are clear that it is expensive and will certainly put a dent in your finances, you choose to go out and get it anyway. The reason for this is that you don’t feel that you should have to wait to get it. After all, you work hard and deserve to treat yourself every so often. As for the dent in your finances, it doesn’t matter because you can always pick up extra hours later on, or just cut expenses elsewhere.

Do you see how you can justify this purchase even though you are not in a position to afford it?

The underlying issue here is the desire to obtain instant gratification. Since you are unable to wait any longer than you think you should, you are willing to do whatever it takes to get your wish. This is why we can consider this type of behaviour as irrational, particularly when good judgment signals this behaviour to be inadequate.

When digging further into this concept, we can see why some people are much more prone to gaming and gambling as opposed to working hard and saving money. The prospect of making “easy” money is almost too hard to pass up. In contrast, the prospect of having to delay gratification for a prolonged period of time can seem practically unbearable.

So, the question begs, how do we go from negative entrapment to positive entrapment?

In short, positive entrapment means that we have to make a decision today, that while it may represent some sort of unpleasantness, it will pay off in the long run.

Here is a good example:

You choose to go to school instead of partying with your friends. Sure, it’s a drag to forego partying and having fun. However, you are clear that by foregoing instant gratification, you are giving your future self the opportunity to reap the rewards of your efforts.

As such, switching over to positive entrapment requires an individual to come to terms with “delayed gratification”. This means that they are willing to wait as long as it is necessary until the appropriate time comes to get what they want.

About exercising self-control

Ultimately, creating an environment conducive to fostering positive entrapment is related to exercising self-control. Now, having self-control is no easy matter. In fact, self-control is one of the hardest things that anyone can attempt to do.

How so?

There is a myriad of psychological and emotional factors that go into self-control. For instance, being in a highly stressful situation can make exercising self-control a very difficult thing to do. This is why marketers like to artificially create stressful situations. This is why you see shops force people to queue for a long time before the doors are opened. Also, you can see this in the way product launches are announced for weeks in advance. The hype that surrounds the product launch makes it so that consumers are fighting over being the first one to get access to the product. Just think about movie premieres…

On the whole, instant gratification and self-control stand at opposite poles. It can be incredibly difficult to step out of the comfort zone that comes with simply doing what is best in the short-term. In fact, pushing the can down the road as much as possible is usually the easiest way people find to “delay the pain.” However, the pain eventually comes. There is no escaping it. Moreover, the longer we delay pain (or at least unpleasant situations), the more difficult it becomes to overcome it once it arrives. As such, it is preferable to address it sooner rather than later.

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