In the field of psychology, “learned helplessness” is a well-known phenomenon whereby individuals come to believe they have no control over their situations after repeatedly facing difficulties or failures. This mindset can become ingrained and have a profound impact on many aspects of life, including your mental health, career choices, relationships, and sound financial decisions.
What is Learned Helplessness?
First coined by psychologist Martin Seligman in the 1960s, “learned helplessness” occurs when people feel powerless when faced with adversity. Over time, this helplessness can become a self-fulfilling prophecy, preventing people from taking action or believing they are unable to act, even when solutions or opportunities exist.
Let’s explore some other interesting and related insights from Seligman:
Check out this moving experiment that shows the devastating effects of learned helplessness
This video poignantly demonstrates the profound impact that setbacks beyond our control can have on our ability to think and act.
How does learned helplessness affect financial behavior?
From a financial perspective, learned helplessness can emerge when a person faces repeated financial difficulties or setbacks, which is all too common in modern life.
For example, dealing with unemployment, high debt, or a downturn in the market can make you feel like you have no control over your financial future, leading you to become apathetic and avoid financial planning altogether.
And learned helplessness can lead to behaviors that intensify financial hardship.
Here’s how:
1. Procrastination and avoidance
People who experience learned helplessness may find themselves procrastinating when it comes to financial decisions. Whether it’s creating a budget, opening a retirement account, or building an emergency fund, the belief that “nothing will work” causes them to put off important actions.
2. Not asking for help
People with this mindset tend to avoid seeking professional financial advice because they feel that no one can really help them or that their financial situation is beyond repair. This can prevent them from benefiting from professional advice, resources, and strategies that could turn their financial situation around.
3. Inaction in times of crisis
During times of financial stress, such as after a recession or a large unexpected expense, learned helplessness can prevent people from taking steps to mitigate further damage. For example, if people believe they cannot improve their situation, they may not consider debt restructuring, government assistance programs, or strategic changes to their investment portfolio.
4. Reinforced bad habits
Repeated financial difficulties may lead you to continue bad financial habits such as overspending, borrowing at high interest rates, and neglecting investments. These behaviors often stem from a belief that you can’t manage your money effectively, which only perpetuates the cycle of financial instability.
Breaking the cycle: How to combat learned helplessness in financial planning
Fortunately, learned helplessness is not a permanent condition and can be overcome with the right strategies. Here are some ways individuals can break out of this vicious cycle and regain control of their own financial future.
1. Educate Yourself
Financial literacy is one of the most effective cures for feelings of helplessness. Understanding how money works – through online courses, reading, or working with a financial advisor – can help individuals make more confident decisions. Understanding how savings, investments, and debt management work can give you the confidence to take control of your own financial journey.
- The Boldin Retirement Planner helps you understand the real impact of your financial decisions. The tools, classes, and articles will improve your financial knowledge.
2. Set small, achievable goals
One reason learned helplessness occurs is when people feel overwhelmed by the magnitude of the problem. Breaking financial goals into smaller, more manageable steps can help individuals feel a sense of accomplishment. Start with small actions, like saving $50 each month or cutting one unnecessary expense. Small successes build confidence and lead to greater financial success.
Financial security isn’t achieved overnight. The key is to celebrate incremental progress and see setbacks as learning opportunities rather than failures. Focus on what you can do today and make consistent efforts, and you’ll eventually overcome your financial challenges.
3. Seek expert guidance
When learned helplessness is caused by deep-rooted fear or confusion, seeking help from a financial planner or advisor can make a big difference. Experts can offer customized strategies and solutions for dealing with financial stress, helping people feel more in control of their future.
- Could learned helplessness mean you miss out on opportunities like early retirement? If you don’t feel confident making financial decisions on your own, working with a coach or financial advisor might help.
- Schedule a complimentary discovery session with a CERTIFIED FINANCIAL PLANNER™ professional at Boldin Advisors to identify and achieve your goals.
- Try a session with Coach Boldin. Our one-on-one coaching will give you a fresh, expert look at your plans, give you peace of mind that your data is being entered correctly, and teach you how to make the most of the tools for a prosperous and secure future.
4. Challenge negative beliefs
The key to overcoming learned helplessness is to realize that feelings of helplessness often do not reflect reality. Instead of assuming there is no way out, you should focus on identifying what the problem is. teeth Within your control. For example, you can’t control the stock market, but you can control how much you save, how diversified your portfolio is, and how you react to market fluctuations.
- The Boldin Retirement Planner gives you a clear picture of where your finances stand, and the Financial Wellness Snapshot reveals your true strengths and weaknesses.
5. Control your future
When people take control of their finances, they often experience less stress, improved mental health, and greater overall life satisfaction. This newfound confidence spills over and leads to better decisions in their careers, relationships, and other aspects of their lives.
The Boldin Retirement Planner puts your financial wellbeing in your own hands. Award-winning tools help you:
- Organize every aspect of your financial life, including both today’s reality and tomorrow’s possibilities.
- Identify your financial strengths and weaknesses.
- Find opportunities to do things better.
- Have a framework for making sound financial decisions throughout your life.
- Check your progress over time.
