Learned Helplessness: Is It Affecting Your Financial Confidence? Find Out How to Do Better (and Feel Better)

In psychology, “learned helplessness” is a well-documented phenomenon where individuals, after repeated challenges or failures, believe they have no control over a situation. This mindset can creep up on you and significantly impact many aspects of your life, including mental health, career choices, relationships, and financial decision-making.

What is learned helplessness?

Learned helplessness is a psychological condition that arises when a person feels helpless in the face of adverse circumstances. The term was first coined by psychologist Martin Seligman in the 1960s. Over time, this feeling of helplessness can become a self-fulfilling prophecy, causing individuals to avoid taking action or to think they are unable to take action, even when solutions or opportunities are available.

Explore other interesting and relevant insights from Seligman:

Learn about this moving experience that illustrates the devastating impact of learned helplessness.

This video poignantly illustrates the profound impact that setbacks beyond your control can have on your ability to think and act.

How does learned helplessness affect financial behavior?

Financially, learned helplessness can manifest when someone experiences financial difficulties or setbacks on a frequent basis – something that is all too common in modern life.

For example, dealing with a job loss, crushing debt, or a downturn in the market may cause a person to feel like they have no control over their financial future, leading to disengagement and avoidance of financial planning altogether.

Learned helplessness can lead to behaviors that reinforce financial difficulties.

Here’s how:

1. Procrastination and avoidance

Those who suffer from learned helplessness may procrastinate when it comes to making financial decisions. Whether it’s budgeting, opening a retirement account, or building an emergency fund, the belief that “nothing I do will help” can lead to putting off important actions.

2. Not asking for help

People with this mindset often avoid seeking professional financial advice, feeling that no one can really help them or that their financial situation is beyond repair. This can prevent individuals from taking advantage of professional guidance, resources, and strategies that could change their financial situation.

3. Inaction during crises

In times of financial stress—such as a recession or after a major unexpected expense—learned helplessness can prevent people from taking steps to mitigate further damage. For example, someone who believes they can’t improve their situation may not consider debt restructuring, government assistance programs, or strategic changes to their investment portfolio.

4. Reinforcing negative habits

Repeated financial difficulties can lead people to continue their bad financial habits, such as overspending, borrowing at high interest rates, or neglecting their investments. These behaviors often stem from a belief that they are unable to manage their finances effectively, which only perpetuates the cycle of financial instability.

Breaking the Cycle: How to Combat Learned Helplessness in Financial Planning

Fortunately, learned helplessness is not a permanent condition, and it can be overcome with the right strategies. Here are some ways to help individuals break out of this cycle and take control of their financial future.

1. Educate yourself

Financial literacy is one of the most effective antidotes to helplessness. Understanding how money works—whether through online courses, reading, or working with a financial advisor—can help individuals feel more confident in making decisions. Once people understand the mechanics of saving, investing, and managing debt, they may feel more empowered to take charge of their financial journey.

• Use the Boldin Retirement Planner to see the true impact of your financial decisions. The tool, along with courses and articles, will increase your financial knowledge.

2. Set small, achievable goals.

One reason people develop learned helplessness is that they feel overwhelmed by the enormity of their problems. Breaking financial goals down into smaller, more manageable steps can help people feel a sense of accomplishment. Start with small actions like setting aside $50 a month or cutting out unnecessary expenses. Small victories build confidence, which leads to bigger financial successes.

Financial stability doesn’t happen overnight. The key is to celebrate incremental progress and view setbacks as learning opportunities rather than failures. By focusing on what you can do today and putting in consistent effort, you can eventually overcome financial challenges.

3. Seek career guidance

If learned helplessness is rooted in deep-seated fears or confusion, seeking help from a financial planner or advisor can make a big difference. Professionals can offer strategies and solutions specifically designed to deal with financial stress, helping people feel more in control of their future.

• Does learned helplessness mean you’re missing out on opportunities like early retirement? If you don’t have the confidence to make your own financial decisions, working with a financial coach or advisor may help.
  • Book a free discovery session with a Boldin Advisors Certified Financial Planning™ professional to identify and achieve your goals.
  • Try a session with one of our Boldin coaches. Our one-on-one coaching sessions give you fresh, expert insight into your plan. You’ll feel confident entering your data correctly and learn how to make the most of the tools to create a rich, secure future.

4. Challenge negative beliefs

The key to overcoming learned helplessness is to recognize that feelings of helplessness often do not reflect reality. Instead of assuming there is no way out, individuals should focus on identifying what is making them helpless. He is We have control over everything. For example, while we can’t control the stock market, we can control how much we save, how diversified our investment portfolio is, and how we react to market fluctuations.

• Use the Boldin Retirement Planner to get a clear view of your financial reality. The financial health snapshot will show you your true strengths and weaknesses.

5. Take control of your future

When people take control of their finances, they often experience lower stress levels, improved mental health, and greater overall life satisfaction. This newfound confidence can rub off on others, leading to better decisions in your career, relationships, and other areas of your life.

Boldin Retirement Planner puts financial wellness in your hands. Award-winning tools let you:

• Organize all aspects of your financial life – today’s reality and tomorrow’s possibilities.
• Look at your financial strengths and weaknesses.
• Discover opportunities to do better.
• Get a framework for making sound financial decisions throughout your life.
• See your progress over time.