We rationalize and justify our purchases and our money mistakes without realizing it. The bigger the mistake, the more we rationalize it.
Look, we humans make lots of mistakes. Big ones, dumb ones--and once in a while, really big AND really dumb ones.
And, frankly, if we didn't make some effort to explain away our biggest, dumbest mistakes, our fragile psyches would collapse in the face of our profoundest stupidities. Even the most iron-willed of us would curl up into little balls and never leave the house.
That's just no way to live.
Fortunately, our brains have figured out how to make us feel better by using an entire bag of psychological tricks to help us play down--or even hide--all the dumb things we do.
And that's why that Soloflex machine we bought in a burst of optimism and fifteen easy payments of $99! somehow ends up collecting dust in a hard-to-see corner in our basement. Hey, who wants a daily reminder of both our waste and our laziness?
And that's why we convincingly tell our neighbors how much we love having that pool in our backyard, despite the hundreds of hours and thousands of dollars we spend each year maintaining it. Do we vividly remember that we only used it twice last year? Nope, not if we can help it. Instead, we'll vividly remember that it was an "investment" to improve the value of our home.
Of course there's a more pernicious form of rationalization/justification, in which we blame the government, "the system," George Bush, Alan Greenspan, Goldman Sachs--essentially anybody but ourselves--in order to protect our egos. Because that second home we bought at the top of the real estate market couldn't really be our fault.
Now, let's be fair: rationalization and justification have their advantages too. For one thing, they help keep the suicide rate below 100%.
The problem is, they also prevent us from accepting and learning from our mistakes. It's a whole lot easier to rationalize something than it is is to deeply grasp that we've committed a soul-shattering waste of time and money. And thus we fail to protect ourselves from our next gigantic dumb mistake, because we cannot learn from mistakes we rationalize away.
Here's the bottom line. When it comes to buying stuff, rationalization and justification are incredibly useful to the companies selling to us. Hey, if we keep making the same expensive mistakes over and over again, it keeps plenty of companies flush with plenty of our hard-earned money.
A few hints on handling this particular bias. First of all, just be sure to be very, very careful with all of your big-ticket purchases. Always remember one of the ugliest truths of psychology: the bigger the mistake, the more skillfully we'll rationalize it.
Therefore, reframe how you think about big-ticket purchases. Consider them mistakes until proven otherwise. Defer all of your big-ticket purchases until you are really sure you need and want them. Take some time to really roll them over in your mind, and to examine the emotions running underneath. Are you "too" excited to buy? Are events moving along where you think you or your significant other are getting pushed along towards buying something that you're not quite sure about?
You are completely within your rights to say "no," or "not yet" to any big-ticket spending decision. It's your money--you have the right to take as much time as you need. We'll go deeper into this in our next post.
Next up: False Urgency
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