Buzz
Your financial choices are shaped by habits, emotions, and behaviors. To change a habit, it's essential to first comprehend the forces that drive it. Here are six key ways our decisions are impacted.
Over on Budgets are Sexy, author J. Money highlights research by Joseph Grenny, who classifies influence into six distinct categories:
Individual motivation
Individual capability
Social motivation
Social capability
Structural motivation
Structural capability
Grenny’s research provides a breakdown of these influences:
The first two areas, Personal Motivation and Ability, focus on internal influences—motivations and skills—that guide an individual's behavioral decisions. The next two, Social Motivation and Ability, deal with how external social factors shape an individual's choices. The final pair, Structural Motivation and Ability, address the influence of non-human elements, such as systems, spaces, and technology.
He also shares a helpful visual to clarify his ideas:
In their study, Grenny and his team examined how children’s spending habits were impacted by temptations. They gave a group of children $40 and tempted them with pricey candy. The goal was to observe how various temptations affected their decisions. One of these temptations was visual: pictures of kids eating candy were displayed in the room, which represented structural ability. Grenny tested each of the six influence categories and tracked how the children’s choices shifted.
When the researchers swapped out the original temptations and introduced smarter financial choices, the children showed a greater tendency to save.
Although it’s just one study, this idea plays a big role in personal finance. For instance, J. Money writes:
How many of these experiences have we probably had just this week? Trying samples at Costco or Trader Joe's? Friends splurging on the latest cool stuff or gearing up for a wild weekend? Using credit cards instead of cash? And what about the constant barrage of ads everywhere we go?
It’s helpful to think about our influences in this way. You gain a clearer understanding of what drives your habits and why they do. Once you grasp that, it’s much easier to resist, adjust, or change those habits. Check out the study below and head over to J. Money’s post for more insights.
Photo by geralt.Screenshot via Budgets are Sexy.
