The hot-cold empathy gap describes the disconnect between what we think we’ll do in certain circumstances and what we actually do in those circumstances. Our cold state is logical and deliberate, while our hot state is overtaken by emotions.
Host Shankar Vedantam summarizes the concept by saying: our hot and cold selves don’t show up at the right time. When we need to be calm and logical, we’re often heated and impulsive. And when we need to take action, we’re often passive or paralyzed. He says we would be wise to remember that who you are now is very different from who you might become.
I can think of many times I’ve surprised myself throughout my life by doing something I couldn’t imagine I’d do. As I was thinking about the applications of the hot-cold empathy gap, I thought of how I and clients I’ve worked with through the years handle life and money.
Our cold state selves know the things we should do. These are things our best selves would do: save for retirement, live within our means, make a will, curb lifestyle inflation, get enough sleep, drink enough water, exercise regularly… you get the idea. But our hot state selves keep us from doing what we know is best for us. We are emotional creatures who find it hard to imagine our granny and grandpa selves; who don’t want to think about the reality of our eventual demise; who feel too tired to get in a workout today; who believe they’ll get a financial strategy in place someday when things settle down; who will finally get that savings plan in place when the next raise comes along.
It’s been said that personal finance is about 80 percent behavior and 20 percent head knowledge (bonus points if you recognize this quote by Dave Ramsey). The head knowledge is our cold selves, and the behavior is our hot selves. And this is where my value is manifested as a financial advisor. I help my clients keep the momentum of their cold (calm, logical) selves going by keeping them accountable to following through on their best laid plans for financial success. I help protect them from their hot (emotional, impulsive) selves in the heat of the moment, say during a volatile market or exciting real estate or business deal, by reminding them of where they’re going and helping bring their minds back to their big picture.
You are always one decision away from a totally different life. The decisions you made days, weeks, months, and years ago led you to where you are today. Will the decisions you make today be ones your future self will be grateful for? In the heat of a tough decision or enticing opportunity, who or what can you depend on to help you keep your cool? Will you let your cold self drive you forward or your hot self steer you in the wrong direction?
I encourage you to take a moment in your cold self state today to make a decision your future self will thank you for. It can be small – like checking your account balances to make sure your spending is in line this week – or big – like finally booking a consultation with an advisor to help you make sure you’re on track to reach your long-term goals. You’ve got this!
Until next time,
Amanda
Amanda Bateman is a CERTIFIED FINANCIAL PLANNER™ professional. She has top-tier institutional experience but is most known by clients for her common sense and pleasant personality. Amanda uses her commitment to holistic planning to guide dentists towards their wealth-building potential.
Image by Mohamed Hassan from Pixabay