Who doesn’t love reading about vanished civilizations and speculating on the reasons for their demise? Yet the actual causes of such collapse can be far more relatable than we’d like to admit.
Scientist and author Jared Diamond cites inflexible cultural attitudes as a key reason why the Viking colony in Greenland failed to survive the Little Ice Age. They stubbornly clung to a cattle-based diet and customs such as walrus hunting that were incompatible with the harsh conditions. They refused to learn from the neighboring Inuit, who thrived on fish because they deemed those tribes inferior.
Amid an abundance of seafood, with potential role models to follow, Viking Greenland collapsed. They refused to adapt, insisting on behaviors and practices that expended too much energy relative to the environment.
The lesson here has surprising relevance to a common problem many people face today. We often struggle with our finances but fail to adapt. Changing poor money attitudes is the first step, and psychology offers a means of action.
In America, the middle class exemplifies a pattern of bad attitudes towards money. They don’t talk about it. Poor people quickly speak the language of “can’t afford that,” while rich people obviously grow up with financial literacy. But the middle class ends up hollowing out due to this quiet refusal to acknowledge money issues.
How many households use debt to fund their spending? Instead of working with the money they have, they’d rather defer payment towards some unspecified future date.
Further compounding the problem is a lack of awareness of how to make better use of assets. Homeowners use rooms for storage and build backyard cabins and sheds to make a studio when they could rent those spaces for passive income.
A psychological approach
The difficulty with changing such attitudes towards money is that they’re deeply ingrained. They reflect the culture in which people were raised and the values and thoughts of parents and family members.
Effectively changing such thought patterns isn’t as simple as making a yes-or-no decision. It’s a process that requires commitment amid repeated lapses and setbacks. But you can use psychological techniques to achieve lasting change.
The elaboration likelihood model(ELM) in psychology holds that attempts to persuade people result in a cognitive effort or elaboration. If the message is perceived as relevant, people will be motivated to think, and thus a high elaboration results. Low relevance yields less thought, low elaboration, and a greater likelihood that peripheral influences end up determining the outcome.
This peripheral route explains why many of us default to the attitudes shared by our friends and family. If we avoid thinking or talking about money, external cues’ influence is magnified based on their appeal rather than any relevance to the issue at hand.
However, ELM also gives us a degree of agency over our financial outcomes. The first step towards changing your money attitudes lies in being willing to think more about it. Spend more time and cognitive effort trying to process informative articles about finance that urge you to limit spending and save money.
High elaboration is most effective at producing consequential shifts in behavior. But you have to tie it back to the relevance of the message.
Project how much debt you’ll rack up if you continue to neglect your finances and how that will negatively impact your lifestyle. Recognize that the ability to enjoy things you love is most likely associated with some degree of better money management.
This high-low approach combines both elaboration methods to shift your attitude and make you more receptive to further information. From there, you can start delving into the fine details of running a budget, paying off debt, living within your means, and building wealth.