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"What-If" Thinking Can Be Harmful

we can't change the past
❝We cannot change the cards we are dealt, just how we play the hand.❞ -Randy Pausch

It's raining out as we sit outside underneath our awning. The rain prevents us from having a campfire, but we're grateful that this awning is keeping us dry. We're talking about our day. We are in southern Indiana, and earlier today, we visited a couple of wineries.

There are more wineries in Indiana than I thought there were. It's nowhere near California's level, of course, but there are a lot more than we have back in Minnesota. After researching the wineries that were a reasonable drive away that also allowed our dog Bingo, we settled on three wineries that we could check out.

After such a great experience at the first winery we went to, we decided it probably made more sense to spend more time at two wineries instead of a little bit of time at three wineries. So we chose to skip the middle one and go straight to the third.

The second winery we went to - the third on our list - wasn't as fun. It was right on the highway, and their patio was more crowded. The tasting felt more rushed even though it was free, and there was more of a salesy vibe.

As we're talking, we thought that we probably screwed up. We should have gone to the second winery and skipped the third one. The first one was so great, and the third one was a drag. If only we had done things differently, we would be happier with our decision.

A little bit of regret showed up as we're talking. Then it hit us. We can only know this because we made the decisions we did. We only know this because of hindsight. Had we went to the first and second winery only, we would be back here wondering what it would have been like had we gone to the third.

What-ifs rarely do us any good.


Thinking about what could have been or what never was is so common that it has a name. Counterfactual thinking refers to thinking about these alternate realities.

This can be healthy if we are using downward counterfactual thinking. In other words, if we are comparing where we are now to various scenarios where we would have been worse off than we are now, then we can appreciate where we are. This is what gratitude is all about.

As good as gratitude is, that's not how most of us engage with counterfactual thinking. Most of us are using upward counterfactual thinking. This is where we compare our lives today with how we imagine our lives might be if only something else turned out differently. We have a long history of being susceptible to social comparison, but we're far more susceptible now in the age of social media.

I think of this as a different version of FOMO. But instead of it being the fear of missing out, it is instead the fear of having missed out (FOHMO?). It's a state of never being happy with our decisions because we're not entirely sure if that would have been the best decision.

counterfactual thinking is wondering what-if


Of course, it can be helpful to reflect back on the role we played and how things turned out. We can always learn from the past. In fact, I argue that we ought to learn from the past.

One thing that we can't do, however, is change the past. This is one of those sentences that sounds very obvious as you read it. Yet, it's very likely that sometime in the last 24 hours, you have replayed something in the past in your head over and over again. Ruminating on the things you can't change is not a good use of your time.

ruminating about the past is a bad use of your time


We all have our own life paths that we've come on. Nobody has seen what we've seen or experienced what we've experienced. It's tempting to think that things would have been better if only something had happened that didn't happen, or something wouldn't have happened that did happen. Unfortunately, we are horrible predictors.

When we think about all the ways our life would have been better, we are imagining an alternate reality where something in the past was different. When we do this, it's easy to gloss over the mundane details of everyday life. That means that even if the alternate reality that we're imagining happened, we ignore much of the details and overestimate the importance of the aspect of that life that we were imagining.

Humans are really good at getting used to their surroundings. This is why lottery winners who were miserable before winning the lottery are miserable after winning the lottery. This is why people who were happy before becoming paraplegics are happy after the fact. It's the same reason we are never satisfied. As soon as we achieve something, we get used to it, and we set out looking for more. Psychologists call this the hedonic treadmill.

there are no alternate realities in life


Of course, we can't rerun the universe to see how things would have been. When you make a decision, there is no control group that you give to compare your decision to. It's generally a bad idea to judge our decisions based on the outcome.

You have permission to stop judging yourself. Right now is exactly how it is, and you can't change it in the moment. What you can do is learn from the past, and use your experience to make a better future going forward.

Regret, remorse, and guilt are not necessarily bad emotions. These provide information to help you make better decisions in the future. It's dwelling on the past that is useless and a waste of our time.

you can learn from the past, but not change the past


Money has a way of bringing up a lot of shame, guilt, regret, and blame. When we identify with these emotions, we end up in a sad state. If we can change our mindset to see these emotions as clues about how we can do better going forward, then we're setting ourselves on a path towards greater happiness and fulfillment.

The question, then, changes from what I could have done differently in the past to what I can do now to make a better future. What do I know now that I can teach my kids about money? What will make me better off in the future based on what I know and what I've been through?

Your behaviors are driven by Money Scripts, but those can be rescripted; you can rewrite your Money Scripts. You can feel gratitude with downward counterfactual thinking - being grateful for how you turned out when it could have been worse. You can feel gratitude with upward counterfactual thinking because you can be grateful for recognizing regret and learning the lessons from your past.

you can't change the past, but what can you do going forward?

What financial decisions can you make this week that will make Future You better off, or your kids better off? Do the best that you can with what you have where you are. Learn from whatever happens, then do the best you can again. This is a cycle that's worth getting into.

Remember, right now, this is how it is. What can you do about it?

You only have one life. Live intentionally.

Related Money Health® Reading
References and Influences

Gilbert, Daniel: Stumbling on Happiness

Hanson, Rick & Forrest Hanson: Resilient

Harris, Sam: Waking Up

Irvine, William: You: A Natural History

Klontz, Brad & Ted Klontz: Mind Over Money

Peterson, Jordan: 12 Rules for Life

Note: Above is a list of references that I intentionally looked at while writing this post. It is not meant to be a definitive list of everything that influenced by thinking and writing. It's very likely that I left something out. If you notice something that you think I left out, please let me know; I will be happy to update the list.



About the Author

Derek Hagen, CFA, CFP, FBS, CFT-I, CIPM is a speaker, writer, and coach specializing in financial psychology, meaning and valued living, resilience, and mindfulness.


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