Psychology of Money


River Rafting your Way to Financial Success

One of the ways to increase your financial success is to understand the types of mistakes you are making. Of course, it is even more helpful to learn how to prevent and correct the mistakes you make as soon as possible.

Back in 1982, we identified six psychological money traps that can interfere with financial success. We call them the RAPIDS. The first letter of each money trap spells the word, RAPIDS. The RAPIDS are Rationalization, Avoidance, Projection of blame, Idealization, Denial, and Splitting.

We also use the RAPIDS as a metaphor for a river rafting experience.


For those of you who have river rafted, you know about the challenges of navigating the RAPIDS successfully. You also know that the higher level of RAPIDS you raft, the more risk and danger you are taking. If you don’t navigate the psychological money traps successfully, your financial position could suddenly go “Man overboard.” For risk management, you want to have an expert psychological guide who understands your fears–and risk tolerance—before you get in the raft!

If your guide thinks certain RAPIDS are too risky for you, you would want him or her to recommend a river more within your comfort range. That river will flow more slowly and offer less excitement. However, the chances of the raft flipping over or of being knocked out of it are much lower. You know you are much more likely to get there safely. The trade-off is that it may take you longer to arrive at your destination–although not necessarily. Just think about The Hare and The Tortoise.

One more important point before we discuss the RAPIDS: It is human nature for everyone to use these money traps at different times in our lives to protect ourselves from unpleasant or painful experiences with money. When our stress levels are low, we tend to use the RAPIDS less often and to smaller degrees. With high stress, however, the reverse is true. So during periods of economic turmoil such as today, most of us are riding in the RAPIDS more often than we would like.

Some of us use only one or two psychological money traps exclusively while others use most or all of the money traps at different times. The problem with using the RAPIDS is that the price we pay to protect ourselves from unpleasant feelings can be far too costly.

We can benefit by learning to recognize the traps before they have much of an impact on our financial decisions and by learning how to navigate them more effectively. Since they begin as blind spots, this can be a challenging task. To help illuminate the blind spots, it helps to understand their definitions and to hear examples of them. Also, it can be beneficial to reality test our behavior with others.

In our next blog we will examine the first of these money traps: Rationalization. Let’s see if you can become aware of how you may be using (or have used) it to interfere with your financial success. We will present an actual client story with the identifying information disguised. More importantly, we will present tools and strategies that have helped our clients to navigate Rationalization successfully.

Zoreh Gottfurcht

James W. Gottfurcht,

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