Natural consequences are among the most impactful tools for learning and behavior change. They provide clear and relevant feedback about actions. Unfortunately, natural consequences aren’t always safe.
Let’s explore why natural consequences are so powerful, when they’re useful, and why they can be dangerous.
Table of contents
- What Are Natural Consequences?
- Why Are Natural Consequences So Powerful?
- Natural Consequence Examples
- Natural Consequences Aren’t Always Safe
- Personal Finance Examples
- Advantage of Parents Who Understand
- What Can We Do?
- Natural Consequences Are Powerful – But Dangerous for Personal Finance
What Are Natural Consequences?
Natural consequences are the outcome of an action that occurs as a result of that action. They’re not artificially imposed by someone else. You do something and you experience the actual consequence of your choice. This can lead to real and immediate behavior change.
You touch a hot stove? Your hand is burned.
Sometimes people confuse natural and logical consequences. They’re similar, in that the consequence is related to the action in both. That direct relation makes them useful for behavior change.
However, a logical consequence is imposed by someone else. For example, a child tracks mud into the house and is required to clean it up.
Punishment is an externally imposed consequence that isn’t necessarily related to the action. For example, holding a student in from recess due to speaking out. The least effective punishments provide exactly what the individual wants – like schools that stupidly suspend students for attendance issues.
Of the three, punishment is least likely to change behavior.
Why Are Natural Consequences So Powerful?
Natural consequences are incredibly powerful learning tools because they have all the important characteristics of useful feedback.
- Related directly to the action you’ve taken.
- Not imposed by someone else – you can’t offload resentment or responsibility to another person
- Adjusting the action can change the outcome.
It’s important to note that these characteristics make them useful for both children and adults – with a few exceptions.
Very young children don’t always have the ability to link action to consequence. For example, refusing to eat and a stomach ache later from hunger are not obviously linked to a young child.
For young children, and some adults, the inability to integrate the perspective of others can also impede the effectiveness of natural consequences. What is clearly a problem for the group may not appear so for the individual who is getting what they want from the negative action.
In some cases, the positive from the action will outweigh the negative from the consequence. Getting ill from binge drinking is one example – especially for the young. The social or mental benefits the night before outweigh the horrible feeling the following day.
In many situations though, a natural consequence will lead to behavior change much more quickly and effectively than externally imposed punishment. The individual takes the action, experiences the consequence, and realizes a need to change behavior.
Natural Consequence Examples
Let’s look at a few more examples of natural consequences. Remember, the point is that they’re related to the action, not planned or imposed by anyone else, and changing the action will change the outcome.
- A child throws a toy, it breaks. They no longer have the toy to play with.
- You don’t stretch properly before exercise and injure yourself
- You spend money on one item and can’t afford another
- An athlete takes the wrong angle on defense and the opponent scores
- A hiker goes into the woods without a compass or map and gets lost
- Eating expired food makes you ill.
Natural Consequences for Lying
The natural consequences for lying are a great example of the power, and limits, of natural consequences. It also shows how one can be insulated from natural consequences and fail to change behavior.
If you lie frequently, people will stop trusting you. In close relationships this can lead to broken friendships, loss of respect (and advancement) at work, and irreparable damage in marriages.
The consequences will often be in proportion to the frequency or magnitude of the lie. If you tell a friend you can’t meet them for dinner because you’re busy and they find you’re at home – they may be upset and forgive you. If it happens frequently or it’s because you’re meeting their spouse instead, they likely won’t.
Young children often can’t see the consequences of their lies. Punishment sometimes works, but often does not. Eventually, most experience the impact on friendships and adjust their behavior.
An adult in a position of power can be insulated from the natural consequences of lying. A politician who lies frequently but has their lies covered up by unethical allies will learn instead that lying is an effective strategy.
Natural Consequences Aren’t Always Safe
Natural consequences are incredibly powerful, but sometimes the price is too high.
For example, getting hit by a car is a natural consequence of running into traffic. The outcome is so extreme that we instead apply external warnings to prevent the action.
A house burning down is often the result of playing with matches. The risk of death and loss of shelter is so high that we don’t let children play with matches as a result.
Other examples of intervention to pre-empt natural consequences include:
- Seat belt laws – higher fatalities if left to choice.
- Use of a gun safe – potential gunshot wounds if children play with a firearm.
- Building codes – mass fatality if a builder puts up an unsafe apartment complex.
- Professional licenses – unsafe treatments if anyone can operate as a doctor.
Personal Finance Examples
Unfortunately, we often rely on natural consequences to teach personal finances lessons. Sometimes this is effective – other times it is catastrophic.
In the United States, in particular, we lean heavily on the narrative that financial progress is all about personal effort and wise choices. Those who have accumulated wealth have earned it, or recovered from their mistakes.
This fails to recognize that some financial natural consequences are hard to recover from – the financial equivalent of getting hit by a car because your parents let you wander into traffic.
Credit cards are perhaps the ultimate example of the usefulness, and danger, of natural consequences in personal finance.
If you’ve never had exposure to credit cards, or their danger, it’s amazing when you first acquire one. It feels like free money. You can buy without saving! Then, suddenly, you’re struck by how difficult it is to pay off with high interest rates.
If you discover this lesson early, or have sufficient income, you can dig your way out. You’ve experienced the natural consequence and will never make that mistake again. This was my experience. I now see credit cards as a useful tool for rewards, but never carry a balance.
However, if you realize the danger too late, or have so much debt that interest outstrips your income, credit cards become a death spiral to bankruptcy. You’re either forced into years of grinding to climb out (which impacts your ability to invest for the future) or bankruptcy which impacts your ability to borrow.
Initial credit card limits used to be low. It was challenging to get credit cards when young or with limited income. Those things allowed for manageable natural consequences. Unfortunately, those things are no longer true. It’s much easier to stack up high credit limits. Ouch.
Learning early, or on a small scale is useful. The natural consequence for others can be crippling.
Losing Money in the Market
Another area where a small natural consequence is useful, but a larger one can be catastrophic.
I’m an avid reader of the millionaire series at ESI Money. One of the most frequent learning experiences cited by is losing a small amount of money early by investing in something you don’t really understand. I too had this experience – losing $1500 on a “stock tip.” A useful lesson that made me an index fund investor for life.
On the other end, you have this type of loss (shared on social media recently):
Now, I’m not sure if this was converted into actual loss, the investment recovered partially, or will recover eventually. He invested in something he didn’t understand and experienced the natural consequence. A loss like this can set someone back years, or even decades, in their financial journey.
Student loans is one of the most controversial topics in politics and personal finance. On one side, you have those who believe that borrowers should suffer the natural consequence of decisions made by 18 and 19 year olds. Others believe the consequences are so great that the loans should be forgiven.
My wife and I had six figures of student loan debt as new teachers. Fortunately, we had some teacher loan forgiveness options and the ability to earn enough to pay off the remainder. It was a good learning experience for us, that delayed our financial journey by only a few years.
The natural consequences of the ever increasing student loan debt are real. For many younger borrowers they are long-term and catastrophic: delayed savings, inability to afford a house, limiting education important to career advancement.
Student loan debt is limiting the ability of a generation to build financial stability. Is that an acceptable natural consequence?
Advantage of Parents Who Understand
One of the biggest advantages an individual can have is parents who understand, teach, and model good financial practices. The power of this cannot be understated – and is often unrecognized by those who’ve experienced it.
Those models can help one avoid the worst natural consequences of financial choices. They can create scenarios of smaller failure, impose logical consequences early, or provide a safety net to avoid the worst outcomes.
It’s important we recognize and acknowledge this. It’s not to impose guilt or diminish the accomplishments of those who made progress with this support.
Instead, it helps build empathy for those who didn’t have this advantage and now are struggling with the very real outcomes of financial natural consequences. Rather than assuming they ran into traffic knowing they’d get hit by a car, maybe they were just chasing a ball that was thrown there by a system that could profit off their chase?
What Can We Do?
Recognizing both the power and danger of natural consequences, we should approach financial outcomes more like other physically dangerous ones.
I consider it blind luck that my financial natural consequences were all recoverable. I ran into traffic and narrowly avoided being hit by the cars speeding by. I want to help others avoid the traffic entirely.
How can we create learning that helps people recognize the financial danger before they put their hand on a hot stove? It will require real financial education by parents, schools, and yes – online content writers.
Let’s be honest about the risks, and not just the rewards, of investing. Balance out the stories of success with the stories of financial mistakes.
Acknowledge that some systems are designed to lead people into dangerous situations – it’s not all misguided choice or personal responsibility. Credit cards are powerful tools and are built to keep people in horrible debt cycles. Student loans can be a leg up and a weight holding someone down.
Let’s support people in learning without crippling them financially for life. Destigmatize debt and provide scaffolds up – not false narratives about bootstraps.
Natural Consequences Are Powerful – But Dangerous for Personal Finance
Natural consequences are incredible for behavior change when the consequence isn’t crippling for life.
They’re effective because of the direct link to action and the ability to avoid with behavior change. When we experience learning that allows for small losses and recoverable consequences it makes us wiser and better equipped for the future.
Some financial consequences cripple people for decades (or generations) and cause irrecoverable damage. These are created by systemic incentives, not only greed or intentional action. These impacts fall disproportionately on communities already experiencing financial challenge.
It is our job to help people avoid the catastrophic consequences and dismantle the systems that create them.