Life / Money

The best-laid financial plans need a back-up plan

Studies show that if you have a back-up for when your best laid plans get derailed, you’re far less likely to do yourself serious damage.

In one study, students had been asked to keep a mood diary. The idea was to stay as positive as possible using an “if/then” mantra, as in “if I get into a bad mood, then I’ll watch funny cat videos.”

21524179@N08/nerrissa's ring / flickr

In one study, students had been asked to keep a mood diary. The idea was to stay as positive as possible using an “if/then” mantra, as in “if I get into a bad mood, then I’ll watch funny cat videos.”

Have you ever just felt like saying, “To hell with it!”? You’ve been trying to get your credit card balance paid off, but for the third month in a row life has gotten in the way.

The car’s transmission gave up the ghost, so now you’re swapping the plans you made for a need-to-fix!

If you let the bad mood that comes with plans being sent sliding get the better of you, you’re likely to make some awful decisions. Sure, you feel like you’ll never get ahead, but saying, “To hell with it!” isn’t the answer. So what is?

Well, studies show that if you have a back-up for when your best laid plans get derailed, you’re far less likely to do yourself serious damage.

One study used an anagram task to put students in a bad mood. Half the participants were told the task was easy and would only take five minutes to complete. It was a trick. Three of the anagrams were unsolvable, putting those participants in a grumpy mood. But other participants were told the truth, so no bad mood.

Then all the participants were asked to describe how they would behave in three imaginary scenarios:
• Whether they’d drive an old car with brake problems;
• Whether they’d disclose a secret to a roommate;
• Whether they’d return deliberately damaged shoes to a shop for a refund.

So did those who were ticked go off the deep end? Some of ’em. Over the previous week, half of the same students had been asked to keep a mood diary.

The idea was to stay as positive as possible using an “if/then” mantra, as in “if I get into a bad mood, then I’ll watch funny cat videos.”

Those who didn’t have experience with the if/then model were prepared to take more risk — to hell with it! Those who had a solid back-up plan were inoculated from the self-defeating behaviour.

The lesson: If you come up with plans that state “if a certain situation occurs, then I will respond in a pre-specified way,” you won’t risk doing yourself in with a stupid decision.

The pre-formulated back-up assuages your need to shoot yourself in the foot.

Your if/then doesn’t even have to be all that concrete. It’s more a matter of acknowledging that a downside is possible and that you’re prepared to deal with it.

So simply having a plan to breathe deeply when a setback occurs, or to look for ways in which you’ve successfully dealt with setbacks in the past, is enough to keep you from going off half-cocked.

To think that crap will never happen because you have carefully thought out your plans is crazy! Crap always happens.

If you don’t have a back-up plan, “To hell with it!” will drive you down the wrong path. Accept that even the best-laid plans can be sent awry by things beyond your control. Have a plan for dealing with a set-back. You’re far less likely to dig your misery hole even deeper.

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