Financial Procrastination: 4 Ways We Get in Our Own Way

Alden Wicker

to do listAs a sound money manager, by now you probably know all the good financial things you should do. Save for retirement. Pay off your credit card debt. Ask for a raise. Do some networking. Get a will drawn up.

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But if you’re a human being, you might be procrastinating on getting it done. Tired of being financially sabotaged by your irrational self? Us too.

So when we heard about the Center for Applied Rationality, and their workshops for professionals trying to make better and smarter decisions, we decided to hit them up for their tried and true strategies on crossing things off your money to-do list once and for all.

“There are a lot of causes for procrastination,” Julia Galef, CfAR founder and president, told us. “It’s not just one thing; it’s a whole cluster of things, often coming from very different places. So you need to try multiple strategies to deal with it, and/or try to investigate what’s going on, before you can hit on a strategy that will work for you and your specific case.”

That sure got our attention. Here are the four reasons that usually underlie procrastination. Which one (or more) is yours?

1. Are You Holding Onto the Status Quo?

The Status Quo Bias is when you prefer, irrationally, what you have now. “If you’re holding onto a red coffee cup, you prefer red coffee cups to yellow coffee cups,” Galef says. “If you’re holding onto a yellow coffee cup, you prefer yellow coffee cups to red coffee cups. Maybe that doesn’t overwhelm all your other preferences, but it affects your behavior.”

She talks about the real example of a man who had been offered a programming job in the Bay Area with a $50,000 salary bump. Nice, right? But he was procrastinating about taking the job. He suspected the reason he might be hesitating was that his friends and family were all in his hometown, and taking this job would mean moving far away from them. So he did a thought experiment, reversing the status quo. He asked himself, “How would I feel about taking a $50,000 pay cut to move to be close to my friends and family?” And he realized he would never do that. The status quo bias was affecting his decision.

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“It doesn’t tell you clearly and unequivocally what choice is the correct choice for you, but it does shed a lot more insight on what is actually causing your reluctance,” says Galef.

  • Max

    I liked this a lot. Agreed and noticed myself in a lot of these points.

  • Sadashiv Potadar

    Loss aversion plays an important and decisive role. Many a times a little progress or achievement in the right direction gives you more satisfaction and a renewed hope to act more rigorously. Thanks.

  • Liz

    In the case of the man who was offered a programming job, another factor would be the time, money and effort involved in relocating to a new place, which would make him more hesitant in both the real scenario and the imagined counterexample. Of course, I’m sure the status quo bias plays an important role as well.