This article is part of a new HerMoney Healthline series where we ask pros in a wide range of fields for their top tips on making it through the social and economic crisis caused by the coronavirus pandemic. Browse past HerMoney Healthlines here.
Now more than ever we need to keep an eye on our finances. In the last month, more than 22 million Americans have lost their jobs, leaving budgets tight and many reliant on government stimulus checks that are slowly trickling into bank accounts and mailboxes. It is crucial to only be buying things we absolutely need, but the boredom we’re facing combined with the targeted ads for great sales from your favorite retailers are ever so tempting.. So, how do you make it through this?
For the best tips keeping our money mistakes in check, especially during a time we really need to, we reached out to Jeff Kreisler, author, comedian, and Editor-in-Chief of People Science. He’s an expert on sunk cost fallacy, solution aversion, and all the ways in which we allow ourselves to make poor financial decisions — despite knowing that we’re doing it. Even though we can’t change human nature, we can use techniques to use our human nature to benefit us. Some of those techniques are below, and they’re some of the ways that you’re going to get through this.
Know That Your Decisions Are Impacted By Stress
“The first thing we should do with our financial decisions is accept that we are all feeling extra stress, and decision making right now is affected by that stress. We make poor financial decisions when our emotions get in our way, and they are on high right now. But we have to remember that is okay,” Kreisler says. If you make a poor spending choice, don’t beat yourself up over it, just learn from it and do better next time. When you set out to make a decision, instead of acting on impulse, try to pull yourself out of the situation and evaluate the entire landscape, instead of pinpointing one piece and focusing on that.
Think About The Bigger Picture
“The Decision Lab came out with a study that says that taking a big picture view will help us get to a cooler state and a more neutral state for decision making. There are ways to do that. Some are as simple as taking deep breaths when you’re at the grocery store checkout line panicking about toilet paper. It also urges us to think about why we are making a decision instead of how we are making that decision. When we are stressed, we focus on details which gets us wound up, but if we step back and ask why, we can reflect on our values and see if that is really a good decision,” Kreisler says.
Don’t Play The Blame Game
“Forgiving ourselves is key. It may sound a little ‘new age,’ but forgiving ourselves for bad decisions helps us prevent every bad one we’ve ever made from snowballing together into one,” Kreisler says. For example, if you are in a rough financial place, rather than blaming yourself for, say, not saving enough, focus instead on what comes next, and how you can improve. In other words, look forward, not backward. Start spending only on essentials. Make sure you have a safe place to live and food to eat. The rest will follow, and you’ll be out the other side of this storm before you know it.
Avoid Herding & Anchoring
“Never heard of it? This is when we base our behavior what others are doing. A current example of this is hoarding toilet paper. Realistically, it is irrational, but other people are doing it so we feel like we have to do it. We need to be conscious that we are not deciding to do something because we see other people do it. We really need to stop and think about why we want and need things,” Kreisler says. The same goes for online shopping. Even though your favorite stores are promoting sales, if you don’t have the means, don’t shop. We promise, you look great in whatever loungewear you already have.
Say Hello To The You Of The Future
If you save now, you’ll be in a better place post-quarantine, too, when you might be returning to “real life” on your own, instead of your parents’ (paid for) home cooking. “Connect with the future consequences of your decisions. To do that, you’ve got to really imagine that future more specifically. Think about what you will want in a year’s time (or more) and how that person will be affected by the decision you’re making right now. Uncertainty leads us to want control, so people are pulling money out of retirement savings to have cash on hand. But that will not benefit the future you. You have to think of all of the future ramifications of the decisions you are making. That will guide you,” Kreisler says.
To hear Kreisler’s original HerMoney podcast about making money mistakes, listen in here.
More From HerMoney Healthline:
- Vicki Robin, author of “Your Money or Your Life” on appreciation during the coronavirus pandemic
- Charles Duhigg on how to keep good habits while working from home
- Financial Therapist Amanda Clayman on staying financially and mentally healthy
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