How Learning Helplessness Affects Your Wealth – and How to Overcome It

Editor’s Note: This story originally appeared on Boldin.

In the field of psychology, “learning helplessness” is a well-documented phenomenon in which people, after facing repeated challenges or failures, believe that they have no control over the situation.

This mindset can sneak up on you and have a huge impact on various aspects of life, including mental health, career choices, relationships, and healthy financial choices.

What is helplessness?

First coined by psychologist Martin Seligman in the 1960s, learned helplessness occurs when people feel powerless when faced with negative situations.

Over time, this feeling of powerlessness can become a self-fulfilling prophecy, leading individuals to avoid taking action or to think that they will not take action, even when solutions or opportunities exist.

Check out related insights from Seligman: Are you optimistic or pessimistic about your financial plans?

How does learned helplessness affect financial behavior?

Financially, learned helplessness can be seen when someone repeatedly faces financial difficulties or obstacles – a very common occurrence in modern life.

For example, facing a job loss, major debt, or a market downturn can make a person feel out of control of their financial future, leading to disorganization and avoidance of financial planning altogether.

Also, the helplessness you learn can lead to behaviors that reinforce financial difficulties.

Here is the way.

1. Procrastination and avoidance

Those who experience learning disabilities may procrastinate when it comes to financial decisions. Whether it’s setting a budget, opening a retirement account, or creating an emergency fund, the belief that “nothing I’m doing will help” can lead to putting off important actions.

2. Failure to seek 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 irreparable.

This can prevent individuals from gaining professional guidance, resources, and strategies that may change their financial situation.

3. Not doing anything in times of trouble

In times of financial stress – such as during a recession or after a large unexpected expense – learned helplessness can prevent people from taking steps to reduce further damage.

For example, a person who believes they cannot improve their situation may not explore debt restructuring, government assistance programs, or strategic changes in their investment portfolio.

4. Reinforced bad habits

Repeated financial problems may lead people to continue bad financial habits, such as overspending, borrowing money at high interest rates, or neglecting their investments.

This behavior often stems from the belief that they cannot manage their finances properly, perpetuating the cycle of financial instability.

How to combat the powerlessness you have learned in financial planning

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

1. Educate yourself

Financial literacy is one of the most effective ways to end poverty. Understanding how money works – whether through online courses, reading, or working with a financial advisor – can help people feel more confident about making decisions.

Once people understand the tools of saving, investing, and debt management, they can feel more in control of their financial journey.

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

2. Set small, achievable goals

One of the reasons for the lack of help you learn is because people feel overwhelmed by the enormity of their problems. Breaking down financial goals 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 unnecessary expenses. Small wins build confidence, which leads to big financial results.

Financial stability does not happen overnight. The key is to celebrate incremental progress and view setbacks as learning opportunities instead of failures.

By focusing on what you can do today and making consistent efforts, you can eventually overcome financial challenges.

3. Seek professional guidance

If learned helplessness is due to deep fear or confusion, seeking help from a financial planner or counselor can make a big difference. Professionals can provide practical strategies and solutions for dealing with financial stress, helping people feel in control of their future.

Could learning powerlessness mean you miss out on opportunities like early retirement? If you lack confidence in making your own financial decisions, working with a coach or financial advisor can help.

4. Challenge negative beliefs

The key to overcoming learned helplessness is realizing that feelings of helplessness are often not true. Instead of thinking that there is no way out, people should focus on realizing what is within their power.

For example, while we can’t control the stock market, we can control how much we save, how diversified our portfolio is, and how we react to market fluctuations.

5. Take control of your future

When people take control of their finances, they often experience reduced stress, improved mental health, and greater life satisfaction. This new confidence can flow outward, leading to better decisions in your career, relationships, and other aspects of your life.