“Don’t tell me where your priorities are. Show me where you spend your money and I’ll tell you what they are.”
– James W. Frick
On face value, that quote about priorities from James W. Frick is right. After all, actions speak louder than words; your choices reflect your priorities. It’s easy enough to say you want to save money or buy a house, but your monthly bank balance will tell you where your priorities really lie.
Or will they? Do people actually spend their money or time in ways that reflect their priorities in life? Do you go after what is important in life?
I know I don’t.
For a very long time, I’ve needed to research our investment options and start a share portfolio. I know that index or exchange traded funds (EFTs) are the most popularly advised way to get into the market, but I wanted to look into ethical investing before committing our savings to the ASX 300.
The problem was I was always too busy. Of course, fear played a big part in my busyness – the thought of losing our savings because of my bad investment decision was pretty crippling and humans hate to lose more than they like to win.
Still, I’ve had no excuse. I’m writing a personal finance blog after all! I know how important it is to start investing as soon as possible and I know very well how much we’re losing keeping our money in cash.
My priority was to start a share portfolio, yet I was prioritising everything else. Sound familiar?
Why Your Choices Don’t Reflect Your Priorities: Cognitive Tunnelling
In “Scarcity: Why Having Too Little Means So Much”, Princeton University psychology and public affairs professor Eldar Shafir and Harvard University economist Sendhil Mullainathan describe the concept of cognitive or mental tunnelling. What is it? It’s when you’re completely focused on managing the current problem or deadline in a situation of scarcity, to the exclusion of everything else that’s not related.
Simply put, your focus is on what’s in the mental tunnel and everything else – important or not, reflecting your priorities or not – is outside of the cognitive tunnel. Shafir and Mullainathan explain that this is the reason our actions don’t always reflect our priorities. And the cause is scarcity, whether that’s time or money.
When you’re on the treadmill of everyday life, just keeping up with all your responsibilities means that important issues like making a will, researching shares, calling the bank to get a better interest rate are on the backburner waiting until you have a free moment.
Needless to say, mental tunnelling comes at a big cost.
In fact, it’s why Paula Pant suggests we should stop making goals all together because they cause us to miss the bigger picture.
Neglected Financial Must Do’s
I’ve been in a tunnel recently that’s called blogging. It takes up a huge amount of my time. There’s always something more to be done even if I’ve just spent 6 hours straight on it and it’s completely addictive so it never feels like work.
On the outside of the tunnel there’s:
- Starting a share portfolio
- Researching investment property options
- Opening a kid’s bank account for the little one
- Spending family time with my husband and the little one
Not taking action on the first 3 is costing me big time financially and yet, I’ve been willing to accept this for the trade off that this blog might one day provide a return on investment.
So, trading away virtually guaranteed income for possible future income. It doesn’t make any sense. I’m totally missing the big picture.
Stepping Out of the Mental Tunnel
The way to get out of the tunnel is to cut yourself some slack. Stop packing your life too tightly and not leaving any slack. Plan moments in your week – a half an hour here and there – that are intentionally left open.
With that in mind, I’m ending this post right here to give myself some slack and research ethical investing in Australia. I’ll leave you to tackle whatever task you’ve been meaning to do, but haven’t gotten around to.
Do you have a system to making sure important but not essential tasks get done?
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