Financial Problems and the Three Ps

Recently, I found myself browsing through a book called Learned Optimism by Martin Seligman. The idea behind the book is that an optimistic approach is the best way to handle the problems that life throws at us.

I was particularly struck by Seligman’s comparison of how optimists and pessimists handle problems.

In Seligman’s view, pessimists respond to negative events by explaining them with what he calls “the three P’s” – permanent, personal, and pervasive. If you fail at something, it’s because of something you can’t change (permanent), some inherent characteristic of yourself (personal), and/or something that is woven into the fabric of life (pervasive). In other words, a pessimist views failure as a normal outcome and fighting to overcome failure is pointless because of the three P’s.

On the other hand, optimists don’t buy into the three P’s. In fact, they look for explanations that are the direct opposite – explanations that are short-term, very specific, and limited in scope.

An optimist doesn’t see a failure as permanent – it’s just a short term problem that can be overcome.

An optimist doesn’t see a failure as personal – it’s just an element that you can fix and improve.

An optimist doesn’t see a failure as pervasive – failing at one thing doesn’t mean you fail at other things or even at future attempts.

All of us have a mix of pessimism and optimism inside of us. Sometimes, failure brings out a pessimistic response. At other times, failure brings out an optimistic response.

I’d simply argue that personal finance gets a lot easier if you face money problems in your life with an optimistic response.

Let’s say you don’t have enough money to pay the bills, for example.

A pessimist would see this as a permanent problem – they’ll never have enough money.

An optimist would see this as a short-term problem – they’ll eventually have more cash.

A pessimist would see this as a personal problem – the lack of money is a sign of their failure as a person.

An optimist would see this as a much more limited problem – they’re challenged by money management or by careers, but that doesn’t mean that they’re a bad person.

A pessimist would see this as a pervasive problem – “the man” is holding them back or society is a rigged game that they can’t win.

An optimist would see this as just one setback in a sea of opportunities – there are still plenty of chances to succeed and set things right.

That optimistic approach is going to lead directly to solutions for that problem. Not having enough money to pay the bills is a very solvable problem if you’re not looking for reasons why you can’t solve it. All it takes is the recognition that you might have to change some of your behaviors and the effort to change a few relatively minor things in your life.

No matter how big your money and career problems are, you can fix them. If you choose to believe that you can’t, the only person creating an obstacle is you.

When life knocks you down – and it inevitably will – look very carefully at how you respond when you hit the ground. Are you buying into the three P’s – permanent, personal, and pervasive? Or do you recognize that you can deal with this problem and it’s not the soul-crushing defeat that you might want to believe that it is?

The choice is yours. Do you reject the three P’s and choose to make some changes?

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