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A Series of Insights Into Savings, Personal Finance and Behavioural Science
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Part 3 - Staying the Course: Using Positive Entrapment to Build a Solid Financial Future

It seems as though we are constantly caught up in one thing or another. In fact, it appears like our entire world is set up in such a way that we are always hooked on something. It is very common to be anxious about an upcoming episode of our favourite TV show, or perhaps the outcome of a sports match. Everywhere you look, there is something that is looking to compel us to do one thing or another.

In this regard, it’s easy to “commit” to certain types of situations. For example, reality television has made it easy for audiences to be captivated by the lives of the individuals reflected on shows. These individuals surrender their privacy for the audience’s viewing pleasure. In turn, the audience is enthralled by the occurrences depicted in the show.

Indeed, it is easy to simply get caught up in practically everything we do. However, it seems that we tend to get caught more on the negative side of things rather than the positive side. This can be seen in the fact that most of us are focused on “trivial” things if you will rather than focusing on “serious” matters. Of course, the definition of “trivial” and “serious” depends on who you ask. Nevertheless, we tend to overlook the fact that we pay more attention to things which don’t appear to have as much importance as others.

Why is this?

Generally speaking, we are bombarded on a daily basis with stimuli from various sources. Many of these sources strive to create a convincing argument that eventually gets us to focus our attention on it instead of something else. Indeed, our attention is a very limited matter. As much as we try to focus on several things at once, it isn’t really feasible to do so. Invariably, our attention tends to fixate on one more than the others.

That is why this article is focused on how making some changes in habit can lead to a solid financial future. Mainly, how some tweaks can go a long way toward making sound decisions.

It’s all about entrapment

When we talk about the term “entrapment”, we’re not talking about being set up by the police. Rather, we’re talking about the psychological phenomenon that occurs when an individual gets caught up in something. Generally speaking, entrapment consists of a commitment that a person makes to one thing or another. However, this commitment is often made to a goal, an aim that is yet to be realized.

In this regard, we often tend to get tied up with the things that we don’t have as opposed to the things that we do. Moreover, we may even become obsessed with an outcome that may not even be plausible. Yet, we are fully committed to somehow seeing the objective through.

 

Consider this situation:

When we get hooked on a television series, reality show, or perhaps a movie, we are engrossed in the idea of an outcome that we wish to be true. And even when the show does not end in the way that we would like it to, we are committed to seeing the entire show to the end. Often, we watch every episode in the hopes of seeing our desired outcome turn into a reality (at least on the show). What’s worse, we may even become engrossed in the idea of watching the show again with the vain hope of seeing a different ending. Of course, we know the ending won’t change. Yet, we hope that the ending will change anyway.

This is where the phenomenon known as “negative entrapment” comes into play. This term is a type of behavioural bias in which we tend to get hooked on something that may never happen. A classic example of this occurs in people who strive to lose weight. They are keen on getting in better shape. Yet, they consistently put off going to the gym to improve their eating habits simply because there is a commitment to an easier outcome. For instance, they may take diet pills or purchase items that claim to reduce weight while watching television.

This kind of bias creates a negative condition in the mind in which the individual is constantly seeking an effortless, or painless, way of doing things. When translated into the world of personal finance, this bias is transformed into actions that promise to solve all financial woes in one fell swoop. After all, how many of us fantasise about finding a briefcase full of money? Or, perhaps the wild fantasy of suddenly waking up with a bank account loaded with funds?

Yes, we all dream about such things. Yet, we know that they are highly unlikely to happen. Still, we cling to this hope. Perhaps today will be the day. As long as there is a will, there is a way. Now, this may be true insofar as working hard and striving to make something with our time and efforts. But as far as hoping for a miracle… well, it might be best to look for another way.

When we get sucked into the spiral of negative entrapment, we tend to hope for quick and easy solutions. Ultimately, we end up hoping for the get-rich-quick scheme or that secret investment that will turn a few quid into millions of pounds overnight.

The psychology of commitment

For better or for worse, our mindset changes once we make a commitment. When a commitment is made, regardless of whether it is positive or negative, our thought process undergoes a series of modifications. These modifications are geared toward accommodating our new habits. As our mindset morphs, we end up modifying other behaviours. In the end, we may end up gradually becoming completely different people.

A great example of this occurs when one gets hooked on playing the lottery. On the surface. Playing the lottery may seem perfectly harmless. In fact, it really is. There is nothing wrong with picking up a ticket every once in a while. Now, when one is convinced that playing the lottery is nothing more than taking a shot in the dark, then one is convinced that any success is essentially the result of a fortuitous event rather than a well-executed strategy. You see, the winning numbers in the lottery are picked at random. Therefore, it is virtually impossible to devise a system that could accurately predict the winning numbers.

Yet, negative entrapment has something else to say about that.

You see, when a person gets trapped in playing the lottery, they genuinely believe that it’s only a matter of time before they win. While this is true to a certain extent, the probability of it occurring is extremely low. Without actually getting into the numbers, the probability of winning the jackpot is in the billions. The sheer randomness of the lottery makes it virtually impossible to win.

A negatively entrapped person, while cognisant of this, would still play the lottery. After all, they cling to the hope that they can be the one to hit the jackpot. As long as there is a slim hope that it can happen, that will be enough to convince them that it will occur at some point.

Now here is the kicker: a survey conducted indicated that 67% of participants indicated that they play the same numbers every week. When thinking about this situation, one must ask, why would anyone play the same numbers over and over? After all, if you chose a set of numbers, and they didn’t win, then why not try other numbers?

Still, 30% of those surveyed indicated that they chose their numbers randomly, while 37% reported selecting their numbers based on birthdays, anniversaries, and so on. Needless to say, there is a high degree of superstition at play, as well.

To a certain extent, this seems like irrational behaviour. The fact that anyone chooses numbers at random, or based on superstition, as chooses to play them every week, does not make any sense. The rationale behind this strategy lies in the belief that if that particular set of numbers does not get selected one week, they will eventually get selected at some point. Sure, there is logic to it; however, the likelihood is unbelievably low.

This is how powerful negative entrapment can be.

Therefore, there comes a point in which playing the lottery under this type of pretence is nothing more than a waste of time and money. Most importantly, the money that is wasted would be better served in another type of allocation as opposed to playing the lottery. This is important to note as any lottery ticket that does not win any kind of a prize is essentially money wasted, at least from the perspective of the play. So, if the aim is to build sound financial habits, then negative entrapment needs to be offset by some other type of approach to building financial wellbeing.

How to kick negative entrapment

Kicking negative entrapment is all about creating a shift in mindset. Of course, this is no easy task. Often, it requires a great deal of “unlearning” and thereby replacing old beliefs and conditioning with new habits and behaviours. While this can be seen as a pretty straightforward thing to do, it takes time and effort to achieve.

The ultimate goal, in this case, is to go from a proclivity to spend money, thereby focusing on short-term outcomes rather than long-term ones. After all, there is much more incentive to spend money now and push savings down the road than it is to bite the bullet and save money today. Considering the fact that most of our reactions occur at a gut level, that is, based on our reactions, thinking long-term becomes that much more difficult.

One way to go about fostering positive habits is, positive saving habits is through reason. When you are consciously aware of saving money, you start to think about how important it is to prioritize saving money overspending. Often, this reality sinks in when negative outcomes occur. For example, there is an economic downturn in which the overall economy is in a recession. In such cases, having savings stashed away comes in handy. But it isn’t until the issue is at hand that people realize they should have saved.

On the surface, this seems like a teachable moment that can be used to foster positive saving habits. However, you are basing a potential behaviour modification tactic on a negative outcome. As such, you are not creating a positive incentive to save money. Quite the contrary, you are playing off people’s fear. Therefore, saving money is not seen as a valuable endeavour; it is seen as a chore that needs to be done in order to ward off greater trouble.

In the short run, this fear will drive individuals to save money. But as soon as feelings of fear and panic begin to subside, they will revert to their old ways. Thus, the challenge is to create a series of positive consequences that can compel individuals to save money of their own accord rather than being coerced to do so.

As such, it is imperative to create positive outcomes that can serve as motivators. These motivators need to outweigh the “temptation” to act now, especially since favouring short-term outcomes are almost always detrimental in the long run. Thus, getting people to see that gaming activities such as gambling, or playing the lottery, though they offer the possibility of a massive, short-term gain, are not guaranteed by any means. So, the longer they get caught up in this vicious circle, they will essentially throw their money away. Consequently, the hope that their numbers will eventually come up is nothing more than taking a shot in the dark. In contrast, a more favourable long-term strategy that is based on a real reward will produce far better results than pinning their hopes on a completely uncertain outcome.

Ushering in the era of positive entrapment

So, when we flip the concept of negative entrapment on its head, we get a “positive” outcome. In this case, we are focusing on a positive outcome that has a far greater likelihood of happening though it doesn’t always offer short-term benefits.

Think about this situation:

Going to school to earn a degree is a long-term endeavour which it does not necessarily pay dividends right away. In fact, earning your degree takes several years of work. However, once you earn your degree, the positive outcome emerges as you are able to access better employment opportunities. Therefore, the likelihood of having a positive outcome is far greater.

It’s the same outcome with saving money.

It takes a while to see the positive impact of saving money. However, when that positive impact occurs, the benefits are far greater than pursuing any type of short-term “solution.” As such, saving  money has a far greater possibility of being successful than buying a lottery ticket. Sure, the ticket offers the possibility of instant wealth. However, saving offers long-term benefit that is virtually guaranteed to pay off.

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