The intriguing link between your money & your pasta sauce
Updated: Nov 20, 2019
There is a TED talk by Malcolm Gladwell about spaghetti sauce. The essence of the presentation (which is worth watching) is that the companies making pasta sauce in the US ran focus groups and asked people to tell them their thoughts. Everyone said it was good and no one ever suggested that they would like sauce to be chunky or spicy or any one of the myriad choices we have these days.
Why? Because we don’t know what we like until it is put in front of us. So people that liked a different type of sauce didn’t realise until it was offered to them.
There are plenty of studies that show financial education does not change behaviour. Teaching someone about budgets does not inspire change, yet we continue to be offered the same old services. Just like spaghetti sauce, people are unable to articulate what they like or what they need. So the system continues on educating people how to budget and save or suggests that they stop buying coffee. It continues on 'educating', not stopping to wonder why despite all this 'education' 86% of Australian’s still don’t know what they spend each month*. It teaches about compound interest, yet only 22% of Australian's expect to be able to fund their retirement^. It explains the benefits of an emergency fund, yet 40% of Australian’s spend all their monthly income^.
Financial education is not working. The old adage about giving a man a fish or teaching him to fish springs to mind. In this context we are handing over all the tools (rod, reel, bait) & knowledge (tide, wind, location) and assuming everyone likes fish/fishing. Financial literacy programs are geared to one outcome – more money, greed, wealth. Does the idea of more money in my bank account or more money in my retirement fund really drive me to change behaviour? Perhaps for some. But for many, if you can’t see it connecting to what you really value in life and also feel that you are giving up present value for some distant version of your future then all this talk of more money is just that - talk.
Attitudes and values drive everyday behaviour. According to research published in March 2019, Australians are clear that they value the welfare of those close to them and social interactions well ahead of power and achievement**.
Sure, having a budget and knowing how to construct one is a useful tool no matter where you are on the income spectrum. Having an emergency fund is beneficial to everyone – whether you have steady income, or seasonal work. Programs that teach us about the benefits of compound interest are fantastic, especially for younger people who have the benefit of time to make use of it. But what would actually make you change?
If you understand your spenditude and align it to your values you find your own reasons for change. Awareness comes well ahead of education when it comes to habit change.
If you don’t know which type of pasta sauce you like, start with your spenditude, rather than your budget.
*Ubank Know Your Numbers Index 2018
^ ME Bank Household Comfort Index 2019
** The Values Project, University of Western Australia & Pureprofile, 2019