Science reveals how our human-hardwiring can get in the way and cost us much more than we think.
As humans we have changed a lot over time. Vast periods of time have seen us adapt and evolve—from hunting for food to ordering online and as our behaviour has changed, our brains have developed.
But even though we no longer live in caves, some of our ancient hardwiring still prevails in our behaviour. Behavioural science shines a light on human behaviour and shows how many of us may pay dearly and live less-than-optimal lives unless we consciously override our hardwiring and put strategies in place to overcome these behavioural hurdles.
We’re hardwired for now
It’s been said that failing to plan is essentially planning to fail. And when it comes to financial success, a plan that enables you to enjoy your current lifestyle and reach your longer term financial goals often means the difference between a comfortable successful life and the opposite. But planning can be an issue for many people.
Science show’s we’re hardwired to act in the present moment with little thought of what tomorrow may bring. We naturally put things off and more than that: we discount the importance of our own futures and fool ourselves into thinking an immediate reward is more valuable than a larger future benefit.
When we were cave people, acting for the moment made sense. We lived for today and dealt with tomorrow if and when it arrived. In fact, our survival hinged on the ability to act quickly and make the most of the present. Life was unpredictable and, as one example, the threat of available food being taken was easily avoidable—simply act now and eat.
These days, focussing on the moment is something science has shown we are still hardwired to do, but it’s often at the expense of a comfortable future. In this day and age when living day to day or pay cheque to pay cheque can leave us high and dry, our hardwiring is one of the biggest obstacles to effective financial decision making.
It may be part of being human but the implications that discounting the future can have on our own financial lives can be profoundly negative.
We can override our hardwiring
Behavioural science helps us understand how our own behaviour can work against us and set us up to live futures which are unpredictable and unstable. But the insights from behavioural science can also help empower us to make more effective financial decisions.
With an awareness of our hardwired tendency to discount the future and put off important financial decisions we can take a conscious and rational approach and override our natural short-sightedness.
By setting and achieving goals you can promote positive financial behaviour. The act of consciously setting goals can help you imagine your own future more vividly and in turn, help you act more effectively and realistically in your own best interests.
Regularly tracking and reviewing goals can help remind you of your future. It can overpower the subconscious hardwiring that works against the need to plan ahead by reinforcing a logical state of mind.
What you can do
If your hardwiring is presenting financial obstacles for you, we can help you take take control of your future and achieve your long term financial goals.
It’s time to give yourself the future you deserve. Don’t give in to the tendency to put things off, start a conversion with us about putting plans in place—this time next year you could be in a much stronger financial position.
You need to consider with your financial planner (or adviser), your objectives, financial situation and your particular needs prior to making an investment decision. Sensibly Pty Ltd and its authorised representatives (or credit representatives) do not accept liability for any errors or omissions of information supplied on this website
Nick Shanley, Steve May, Luke Styles and Shanley Financial Planning T/A Steve May Financial Services are Authorised Representatives / Corporate Authorised Representative of Sensibly Pty Ltd, AFSL 533923. Please refer to our website at www.stevemayfs.com.au to reference our Financial Services Guides.
