When was the last time you checked your bank account?
If you’re like a lot of people, it was likely when you were expecting to be pleased with what you saw, as a working paper from the Copenhagen Business School and Columbia Business School explains. And if you were expecting a low balance, well, you might not want to see at all.
As MarketWatch explains:
The findings support previous research on the so-called “Ostrich” effect — a behavioural economics concept that suggests investors will avoid negative information based on the myth that ostriches hide their heads in the sand to evade danger. “Individuals log in because they enjoy seeing money in their bank accounts,” the researchers wrote.
The report finds consumers are significantly more likely to log into their financial accounts on payday, and the likelihood of checking increases with the more money expected.
And that’s problematic for many reasons, the most important being that ignoring your potential money problems — burying your head in the head in the sand — won’t make them go away.
Instead, you could exacerbate them with compounding overdraft fees or a balance below the required minimum.
But there are other ways ostrich-ing affects your life.
For example, a common tip on personal finance blogs is to be completely honest with yourself about your spending habits and what you can cut out. A typical suggestion is go through your latest bank statement and highlight the superfluous spending, and then make a deal to actually stop spending money on those things or at those stores.
But how often do we actually do this, and why do we avoid it? We just don’t want to know.
And while it’d be great if more money magically appeared in our bank account to cover the extra spending, the reality is that it won’t.
If we want more money, we need to be honest with ourselves and actually make sacrifices. And that means addressing our habits head-on, not head-in-the-sand. You can’t afford to be an ostrich.