Is It OK to Be a Financial Pessimist?

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The sun is finally starting to beam down in Progressa’s home city of Vancouver, and optimism is in the air – not just here in BC, but across Canada, where consumer confidence continues to rise in national survey results. And while there’s nothing wrong with dreaming big, feeling good, and keeping a positive eye on the future, some people remain staunch financial pessimists, firmly entrenched in what others see as a doom-and-gloom outlook on their finances and generally opting to prepare for the worst rather than plan for what’s to come.

Though your humble blogger advises keeping a positive and upbeat outlook on life in general, there may be some hidden value in staying more sober and grounded¬†when it comes to money matters. We do, after all, talk about saving for rainy days – and if there’s one thing we know for sure, it’s that rain eventually comes down on us, sometimes just at the least convenient moment.

According to a study by Heather Barry Kappes and Gabriele Oettingen, imagining a desired future actually makes you less likely to achieve it. It’s easy to plot a course that moves smoothly from achievement to achievement, without accounting for those rainy days that pop up out of nowhere – no one usually likes to think about adding even the more run-of-the-mill or predictable negative things that happen on the road to their financial goals.

Keeping an awareness of a more “pessimistic” view of financial planning will keep you better prepared. Thinking through the possible pitfalls you could face¬†motivates you to keep saving – one of the most important goals for any financial plan. It also helps our spending practices: we all tend to believe that we will be able to show more restraint in the face of temptation than is realistic. The restraint bias is a hallmark of financial optimism. Such an optimist might think “I’ll spend less this month and bank the savings at the end of the month” – this goes against fundamental financial principles such as paying yourself first.

A slightly more cynical, skeptical or pessimistic outlook may also protect you from being defrauded or scammed. Many scams rely on people’s tendencies to want to reap rewards sooner and more easily, or on the ability for scammers to build trust, intimidate, or otherwise emotionally manipulate their targets. We’re not advocating untrustworthiness – just that you do your homework before committing money to any sort of financial opportunity. Reputable financial providers will bear the marks of agencies and partners that are designed to keep your information secure, both digitally and in the analog world.

In short, keeping a bit of “glass-half-empty” perspective on your personal finances might end up helping you fill that glass right up to the brim sooner.

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