How automatic thoughts shape our financial habits

Automatic thought patterns are pervasive and impactful, influencing our moods, behaviours, and even our self-concept. In our everyday lives, we sometimes struggle to recognise their presence in our decision-making, especially when it comes to financial choices.

These automatic thoughts - images, words, or other mental activities - that pop into our minds in response to certain triggers can appear mundane or insignificant. Yet, they are anything but!

So, what is automatic thinking? 

Stemming from the beliefs we hold about ourselves and the world, these surface-level, non-volitional cognitions emerge reflexively based on our current beliefs. While we can't control them directly, we can challenge the assumptions that lead to them, giving us more control over these thoughts.

The concept of automatic thinking found its roots in Aaron Beck's research into negative automatic thoughts' impact on depression development. Beck was a psychiatrist and psychoanalyst, often referred to as the father of cognitive therapy.

Researchers soon found that positive automatic thoughts were equally crucial to understanding overall mental health, leading to extensive studies on both. Research has indicated significant consequences of negative automatic thoughts. For instance, in people living with HIV/AIDS, negative automatic thoughts are associated with depressive symptoms. Among athletes, negative automatic thoughts can lead to burnout, and in university students, they result in more mental health symptoms and decreased self-esteem.

However, to comprehend fully how automatic thoughts impact us, we need to understand our cognitive bias and the construction of our self-concept. Self-concept refers to how we perceive ourselves - our past experiences, abilities, future prospects, and all other aspects of self. A negative self-concept can lead to an unending cycle of negative thoughts, causing us to exhibit biases towards negativity.

This brings us to the concept of Beck’s cognitive triad: someone who is depressed will automatically have a negative view of themselves, their experiences, and their future. These negative views lead to other symptoms of depression, leading to a negative view of oneself, creating a negative cycle of negativity.

We can interrupt and change this cycle by understanding how it begins and how it continues. Take, for instance, negative automatic thoughts such as "I'm no good," "I can't get started," or "I'm a failure." If we continue telling ourselves these things (thinking about them silently), we will continue the negative cycle.

On the flip side, positive automatic thoughts could be "I feel fine," "I can accomplish anything," or "I'm proud of my accomplishments." If we start to think or speak these out loud intentionally, we can restructure how we deal with automatic thoughts and how they shape our habits. Mindfulness practices can also help counteract automatic negative thinking by letting us release negative thoughts or directing our attention elsewhere.

When it comes to financial decisions, these automatic thought patterns play a substantial role. For instance, a person with a negative self-concept might be more prone to financial decisions reinforcing their negative self-view, such as repeatedly entering into bad investments or refraining from saving. On the other hand, those with a positive self-concept might make more prudent financial decisions, reflecting their positive outlook.

Understanding automatic thought patterns is crucial, not just for mental health but also for healthy financial behaviours. By identifying and challenging these automatic thoughts, we can unravel the complex web of beliefs and biases that shape our financial habits, paving the way for healthier and more empowering financial decisions.