Key Takeaways
- We make decisions very quickly—often in three seconds or less.
- Quick decision making is good in emergency situations, but bad when the decision involves spending money.
- Status seeking can cause people to make very quick, unwise decisions about purchases.
- Use various techniques to help you stop and think before making emotional purchases.
Malcolm Gladwell’s 2005 book, Blink, really helped us to understand how quickly we make decisions. In fact, there’s an interesting article written on the same topic, but from a different perspective called The Psychology of Status Purchases: Why We Buy. The author claims it takes us three seconds to make decisions and I’ve even heard some claims that it’s as little as one second.
In fact, many times, when we meet somebody new, our team will ask, “What was your blink on that?” This concept has almost become ubiquitous from that standpoint because we do make decisions very quickly. And that’s both good and bad. It’s a good thing in emergency situations, but it’s not good when it comes to decisions about our money.
Why?
Basically, three things can happen when you make snap decisions involving money, especially if you’re seeking status: you can spend more than you really want to; you can go deeper into debt than you want to; and you can change your behavior, your looks, your diet, etc. This blog post on Thrive Global explains this in more detail and it’s written by a person who works for Lexington Law—a firm that focuses on credit repair.
This is an area of study in the psychology of wants. What’s happened is that new technology has changed the way people relate to the things they want and the decisions they make to buy these things. For instance, people will buy something (according to the blog post, the cost averages $137) and then snap a picture of it and share it on Instagram. What they’re really saying when they do this is, “Hey, look at me! Check out what I have and what I’ve become.”
And this behavior is really very serious because people who seek status will do this regardless of how much money they have available. Obviously, this can cause some real problems in personal finance. And the truth is status-seeking behavior has been around forever. In the past, emperors pointed to a pyramid or coliseum behind them to indicate their high levels of power and status. So, it’s nothing new. It’s just showing up in a new way.
The variety of social media platforms gives people a quicker, easier way to get their message of personal status across to others. The very quick spending decisions people make so they can display their implied elevated status are creating a lot of serious problems. It’s almost like the thing our parents used to say to us when we were angry: count to 10.
Why do you count to 10?
Because counting to 10 forces your brain out of that emotional state that really wants to satisfy these driving emotion-based wants. It moves you to the area where logical thinking happens: the prefrontal cortex.
It’s this limbic part of the brain, rather than the animal part, that makes you slow down and think, “Whoa! I’m not spending $137 on that just so I can post it on Instagram, just to make myself feel better…to show I have grown in status.” It’s a tough thing to do. It requires effort to get some control over that thought process and to use various techniques so you can stop yourself from making these types of purchases.
Status and people’s desire to show off the status they have is nothing new. No doubt it’ll be around in the future and I’m sure there will be new technology causing the same issues we are dealing with today. Until next time, enjoy.
Gary
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