While there is no accurate answer, best guesses put about 10% of our behavior as innate while about 90% of our behavior is learned (in adults). This means that 90% of what we do is a direct result of either conscious thought processes or habit. I suggest that nearly 100% of our financial habits are learned behavior. Let me illustrate with an example. (This is a great story – worth taking the time to read it)

In a famous behavior experiment, 4 guinea pigs we put into a cage.

Each guinea pig had an electrode attached to them. There was a small circle on the floor at the center of the cage and whenever a guinea pig ran over the circle, the other 3 guinea pigs we were given an electric shock. At the beginning when the guinea pigs were first put into the cage they sought a way out, and inadvertently scurried over the circle, causing the other 3 guinea pigs to receive an electric shock. It didn’t take long for the guinea pigs to learn the cause. After learning what happened, whenever a mouse would go near the circle, the other 3 guinea pigs would beat on the one.

After a while, one of the guinea pigs was removed and a new guinea pig was introduced into the same environment, but without an electrode attached to it. Of course, when first entering the cage, it scurried about seeking a way out and occasionally would run over the circle, causing the other 3 guinea pigs to receive a shock. The other 3 guinea pigs would then beat on the new guinea pig. After a while, the new guinea pig learns that whenever one of the other got near the circle, you beat on them. But that new guinea pig was not receiving any shock, it just learned from the others that that was how things worked.

After another short while, a 2nd new guinea pig was introduced – same situation, no electrode. It too learned after a short while not to walk over the circle and to beat on any other who approached it.
In time, all of the original guinea pigs were replaced with new guinea pigs who did not have any electrodes. These guinea pigs had never received any kind of shock or other kinds of punishment (other than from the other guinea pigs) for walking over the circle. But the learned behavior continued, and although none knew why, the circle was forbidden territory and you would get beaten up if you went near it. In actual fact, walking on the circle did nothing at this point, but the guinea pigs had learned to enforce this “rule of cage citizenship”.

We should ask ourselves – how similar are we to these guinea pigs? Do we repeat behavior simply because “that’s the way it’s done”? Do any of the following wealth limiters apply to you?

  • continue working in a job you hate because you have to pay your bills
  • continue spending money they way you used to even though your income is not the same or inflation is growing
  • continue living a wealthy lifestyle once you move out from your parents home, even though you can no longer directly benefit from their incomes
  • go on expensive vacations even if you clearly can’t afford it
  • eat out more often than your budget (and diet) should permit
  • etc…

Don’t be a guinea pig. Wake up to the fact that you don’t need to blindly follow habits and patterns of behavior without good reason. More to the point, examine some of the bad financial behavior you do and determine why you do it. If you end up with “that’s just the way it’s done”, seriously consider putting it on the chopping block or at least modify it to suit your actual needs.