The Hummingbird Blog

A Series of Insights Into Savings, Personal Finance and Behavioural Science

Part 2 - Stepping Out of Your Comfort Zone

When we are stuck in our comfort zone, it can be nearly impossible to get out of it. Naturally, our comfort zone will always be related to what makes us feel happy, comfortable, satisfied, and so on. No one wants to make it a habit to be uncomfortable. After all, why would anyone make their life hard is they had another choice?

This is where we get stuck in a rut. Once we develop a routine, a comfort zone, leaving it can be nearly impossible. Even if this comfort zone is not good by any means, we still get stuck in there because it “feels” good. As a result, we tend to procrastinate doing unpleasant things.

This concept is often referred to as the “status-quo bias”. In this concept, we tend to do everything that makes us feel comfortable even if we are cognizant of the fact that it is not good for us. Just think about the example of junk food. We know that junk food is unhealthy, but it sure is good to eat it. As such, it can become nearly impossible to break out of that habit. Furthermore, we might end up procrastinating on healthy eating habits. We know that we should eat more fresh foods, but that can always wait for another day. In the end, cleaning up eating habits never happens.

In addition to procrastination, that is putting things off; there is always a tendency to do nothing unless we are compelled to do something. This is called “inertia”, and yes, we are all guilty of it. Many times, we put things off, thereby opting to do nothing until it is absolutely essential to do something about it.

A good example of this concept is seen in government. Often, government does nothing to remedy a situation until it is absolutely necessary for it to act. And by the time government chooses to act, it may be too late to do anything about it.

When we translate this into our financial lives, we find that unpleasant tasks such as saving money and putting it away for a rainy always get shoved to the back of the line. There is always something which is seemingly more important than saving money. Plus, saving money is something that we can always put off for tomorrow. It’s not until something monumental happens that we become aware of the need to save money. However, it may be too late to save money by then. For instance, when a person loses their job, they realize that saving money is essential. Yet, it’s too late to do so at that point as the main source of income is already gone. So, changing the habit becomes a truly painful endeavour.

Breaking out of negative entrapment

Since saving money is a highly desirable endeavour to engage in, though not always practiced, it becomes important to find a means of compelling individuals to do so. To do this, we can approach it by way of a structured manner. In this regard, a good way of looking at saving can be achieved through a careful, logical, dedicated, deliberate, and often passive means. This implies that individuals who seek to turn their personal finances around must put in the time and effort to do so. As such, this means that they must make a conscious choice to save money as often as possible. This often requires the individual to study every spending decision they make. That is not only time-consuming; it is also tiring. After all, can you think about going over every decision you make with a fine-toothed comb?

This approach is favoured by highly conscientious people who actually enjoy studying every decision they make. Moreover, their personality favours them going over their decisions in order to dissect the mistakes they have made. Sure, it seems like a highly structured approach that would pose a number of good results. Nevertheless, this is a slow process that often becomes too slow. Ultimately, an individual who is prone to employing this approach may never actually get around to doing it. They may simply be too busy to sit down and go over their budget. So, they simply keep going about things in their usual manner. This is especially tempting if they are not in dire straits.

To combat any possibility of procrastinating, there needs to be an approach, a system if you will, put into place so that the decision to save money is not a conscious one. Rather, it becomes an automatic one. In other words, the decision to save money is made once and does not need to happen again.

Do you see where the difference lies?

A conscientious individual needs to make the decision to save money every time they are faced with the prospect of spending money. Needless to say, this is an exhausting process that cannot possibly stick unless the person is willing to put up with it.

This is why setting up a system in which the individual can automate their savings is the best way to encourage positive entrapment. Over time, the individual sees that their savings are growing without them seemingly having to make any effort. Sure, the effort is made, but when the individual is not compelled to make the choice to save money on a consistent basis, they can get away from the unpleasant feelings that are associated with delaying gratification.

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