Using the Science of Willpower to Be Better With Money


Getting better with money and achieving your financial goals do not happen through passive waiting, wishing for life to be different, or gimmicky quick-fixes that promise you instant wealth. Living a life of abundance requires a (pocket) change of heart. Thankfully, behavioral scientists have uncovered the secrets of willpower that have the power to transform the way you think and behave in relation to money.

Get ready to learn about persistence, self-efficacy, impulse control, and other topics that will help YOU create the motivation for financial change. If you are a thinking person who is ready to be better with money, this website is for you. Let’s create a community of pocket-changers! Please join in on the dialogue by posting your comments.

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Original photo

Have you ever found yourself getting hung up on the things you did wrong in the past? “I always give in to temptation and spend my whole paycheck instead of saving part of it.” Or, “I already blew my budget, so I might as well keep on spending.”

At times, your self-disappointment may grow so strong that you start making assumptions about who you are as a person: “I must be lazy.” Or, “I must not be disciplined enough.”

Regret, guilt, shame, and self-disappointment typically get us nowhere. You cannot change the past. And the past does not define the good money habits you are capable of building in the future.

Your power lies in the present. You can choose to be kind and compassionate to yourself and to interrupt feelings of regret. Here are several things you can do:

(1)    Distinguish between a setback and full-blown relapse. A setback is a temporary lapse, while relapse is an ongoing pattern of setbacks. Remind yourself that setbacks are normal and temporary, and you can easily take small steps to get yourself back on track.

(2)    Borrow another perspective. After you have given in to temptation, ask yourself two questions: If my best friend were beating herself up for having blown her budget, what would I say to be supportive of her? If my best friend knew that I am beating myself up for having blown my budget, how would she gently encourage me to get refocused on my goal?

(3)    Remember the difference between a fixed mindset and a growth mindset. People with a growth mindset understand that setbacks are a normal part of the change process, and they can use them to glean important information about the path to success!

(4)    Create a rational response to your irrational thinking. For example, “Just because I blew my budget, it doesn’t mean that I have to continue giving in to temptation.  I can be kind and forgiving of myself and gently redirect my attention back to better money management.”

(5)    Practice positive self-talk. For example, give yourself a hearty “Good failure, my friend! Failure means that you have taken on a challenge that is worth pursuing and that will be rewarding in the end.”

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Original photo

Many of the questionable financial decisions we make occur because we act without first engaging in sufficient thought and reflection. We don’t give ourselves enough time to become fully aware of what we are about to do, and then we act impulsively.

Experts in the area of self-control and willpower say that the most effective thing you can do to act with greater discipline is to increase the gap between your spending impulse and your action.

What can you use to fill this gap?

  1. Your breath. Take a moment to focus your attention on your breath—perhaps feeling it move in and out at the tip of your nose, or noticing your belly rising and falling. Then you can return to your financial decision with a greater sense of calm.
  2. A walk. Take a walk before you make an important financial decision. Walking can boost your mental clarity which, in turn, supports good judgment and decision making.
  3. Coping thoughts. Tell yourself that you can do this—that you can take a step back from a difficult situation and approach it with greater presence of mind. Remind yourself of times when you have successfully practiced good money habits in the past.
  4. A change of environment. Go into another room or another place where you are far away from the source of temptation. Get immersed in the present moment in that place. Then you can return to your money decision with a fresh perspective.
  5. A review of your dreams and goals. Go back to your list of future financial goals and read it to yourself slowly. Shifting your focus to the long-term perspective can help you overcome short-term impulses.

Remember, when your supply of self-control is depleted, it becomes much harder to think creatively about any important topic. Do a quick assessment of your current state of impulse control before making money decisions.

Share your ideas! How do you increase the gap between your impulse and your action?

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Original photo

We know that people vary in their ability to handle things well when they are faced with conflicting desires or impulses. We also know that the road to success often requires self-discipline: choosing long-term gain over short-term pleasure. This might mean resisting a decadent piece of cheesecake in the service of losing weight, enduring the hardship of homework in order to achieve good grades, or passing up the unplanned purchases to stick to the household budget.

Research has shown that self-discipline is a crucial factor in predicting people’s future success. It forecasts who will achieve important goals versus who will wander down the path of impulsivity.

One version of self-discipline is called “grit” by researcher Angela Duckworth and her colleagues. According to Duckworth, if a person is “gritty,” he or she is not thrown off course by disappointment, failure, adversity, boredom, or plateaus in progress. While an impulsive person might use these elements as an excuse to give up, the gritty individual chooses to keep working strenuously toward challenges.

Sometimes people are quick to dismiss the idea of grit, believing that they simply do not possess self-control or self-discipline. However, it turns out that self-control is not a quality that you either “have” or “don’t have.” It is a life skill that almost everyone can strengthen with practice. As an added bonus, when you build up self-discipline in one area of your life, it makes it easier for you to extend self-discipline to other areas.

What is one small step you can take to practice increased self-discipline?

Photo by Micky Aldridge; Wikimedia Commons

Photo by Micky Aldridge; Wikimedia Commons

I recently led a “change group” for individuals who were attempting to modify a habit of their choosing. When we reached the last meeting, group members reflected on their experiences, identifying what they found most helpful to their change efforts.

Several group members discovered it was most helpful to take the time to be truly honest with themselves. They felt that their “default” setting was to fool themselves into overlooking or minimizing their problem areas, when what they really needed was to expose the problem areas to the light of day.

If you wish to be more honest with yourself when it comes to your personal finances, here are three questions you may ask yourself:

(1)  What is it that I’ve been gaining by NOT making the financial change I know I should make? In other words, what needs have been served, or what reward has been achieved by staying stuck in my present pattern? For example, if I have been overspending, am I rewarded by a sense of freedom, autonomy, power, or status? If so, how can I meet these needs AND still build good money habits?

(2)  What is the price I am paying by NOT changing my behavior? If I consider the negative effects of my behavior and then imagine these effects multiplying over time, what scenario am I creating for myself five, ten, or twenty years down the road?

(3)  What are the most exciting things I will gain by making this change in my financial behavior? When I picture myself living out this change into the future, what will be new, fun, and different about my life? What will I gain when I exercise good money habits on a consistent basis? For example, will I have greater peace of mind, a fun-filled retirement, or the ability to give my money to a worthwhile cause?

What other questions do you need to ask yourself in order to be more honest about your money habits?

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Original photo

Sometimes when people tell me the story of how they changed a habit, they recall a “moment of clarity” that prompted the shift. At a particular moment, it became clear to them that their old habits weren’t working anymore. The only remaining option was to move forward with a new way of life.

Although it may often seem that there is a single event that kicks your habit change efforts into gear, the reality is that many different change processes were brewing beneath the surface for a long time, and they finally came together to create a tipping point for change.

When other change processes begin to coalesce (gathering information, weighing alternatives, shifting your attitude, and so forth), a moment of clarity can provide a sudden burst of energy:

“I was paying my satellite TV bill online just as I do every month. It suddenly occurred to me that if I keep spending this much money on entertainment every month, I will always be living paycheck to paycheck. It was time for me to do something different.”

“I had been watching my neighbor leave for work every morning for years. This morning I realized that my neighbor is now well past the average retirement age. Then it dawned on me that if I don’t start saving more for retirement, I will be working well into my later years, too.”

How can you harness the energy of a moment of clarity? Try these ideas:

  1. Capture the moment. Grab a piece of paper and write a promise to yourself of what you plan to do. Or create a picture of the future positive situation that you are trying to build. Then put that note or picture where you will see it on a daily basis.
  2. Develop the identity of a changer. Research shows that if you make your change effort a larger part of your identity, you will be more likely to make the kinds of decisions that will support your end goal. At the same time, any change effort that violates your identity will be doomed to failure.
  3. Get specific. Researchers have long known that you are more likely to change a habit when you define a specific goal (like “put $300 a month into my Roth IRA”) rather than a vague direction (“save more for retirement”).
  4. Make your change goal public. Tell trusted friends and family members what you intend to do, and then give them the specifics of what they can do to support you.
  5. Think of change as an upward spiral. Know that setbacks are normal. You may feel yourself going around and around the circle of change, but know that for every circle you make, you end up one level higher on the change spiral.
  6. Expect great things. Remember that moment of clarity that you had? If you interpret the situation in such a way that it generates positive expectations of the future, you actually help to create good things in the future (self-fulfilling prophecy).

Have you had a moment of clarity when it comes to your personal finances? How did you use it in your favor?

Photo by Emmanuel Schaffner; Wikimedia Commons

Photo by Emmanuel Schaffner; Wikimedia Commons

When you are trying to change a difficult financial behavior, the obvious question you ask is “What is getting in the way of doing the right thing?” This helps you identify barriers and design ways to get around them.

What we often forget, though, is an equally important question: “What is allowing the wrong behavior to continue?” This question forces you to identify the excuses or “permission-giving thoughts” that make your bad habits seem harmless and reasonable.

These excuses set you up for failure, because they allow the bad habit to continue unchecked.

For example, consider a woman who is tempted to stray outside of her monthly budget. Here is a list of potential permission-giving thoughts that may lead her off track:

It’s not really a violation of my budget because it’s extra money that fell into my hands.

I’ve had a busy day at work and I’m entitled to some extra pampering.

I’ll just do it this one time, and then I’ll get back on track.

If I do it just this one time, I won’t need to do it ever again.

I’ll just stray a little outside my budget, and that won’t hurt anything.

Everyone else can spend whatever they want, so I can, too.

I deserve to treat myself.

It can be helpful to make a list of your permission-giving thoughts, and then for each one, challenge yourself to develop a more reasonable response. For example:

Permission-giving thought: I deserve to treat myself.

Reasonable response: I do deserve to treat myself, but I have a problem sticking to my budget and getting my bills paid. So it is healthier for me to treat myself with the free activities that I love. Once I am engaged in a fun activity, I won’t be thinking about my temptation to spend money I don’t have.

Consider the list of permission-giving thoughts (above). Have you heard any others that you could add to the list?


Last month, I was honored to be the recipient of an Excellence in Financial Literacy Education (EIFLE) award from the Institute for Financial Literacy. My book, Pocket Change: Using the Science of Personal Change to Improve Financial Habits, was named the 2014 Book of the Year in the “Adult, General” category.

Many thanks to the Institute for Financial Literacy for hosting this program and to the sponsors of the conference. I thoroughly enjoyed meeting other people who share a passion for promoting financial literacy in innovative ways.

Photo by Albian19; Wikimedia Commons

Photo by Albian19; Wikimedia Commons

Have you ever noticed how the human brain favors the pleasure of instant gratification over the benefits of long-term health and well-being?

Resisting temptation is difficult, and the inability to resist temptation underlies a wide range of money problems including overspending, accumulating debt, and failing to save enough money for the future.

A recent study at the Northeastern University College of Science (Science Daily, March 2014) demonstrated an interesting way to strengthen patience and impulse control in the financial domain. Participants in the study were assigned to one of three conditions and then were asked to write about an event from their past. Individuals in condition one were instructed to write about an event that made them feel grateful; individuals in condition two wrote about an event that made them feel happy; and individuals in condition three wrote about an event that was emotionally neutral.

Next, participants were asked to make a decision between receiving a lesser sum of money now or a larger sum of money on a future date. It turned out that participants who wrote about a neutral or happy event showed a strong preference for the immediate payouts, but the individuals who wrote about their grateful feelings were much better able to resist temptation, exhibit patience, and wait for the future reward.

Interestingly, “the degree of patience exhibited was directly related to the amount of gratitude any individual felt.” So it appears that being thankful and heightening your sense of fulfillment help to reduce economic impatience and strengthen self-control. This could certainly come in handy to reverse societal trends such as impulse buying and insufficient saving.

When you are feeling grateful and content, what impact does this have on your financial decision-making?

Photo by Martin Hirtreiter; Wikimedia Commons

Photo by Martin Hirtreiter; Wikimedia Commons

Over the last three blog posts, you’ve learned about the limits to self-control, and you’ve learned how your impulses can sometimes take over your money behavior.

Now take a look at the strategies for strengthening self-control. Here are the top ten tips:

  1. Gain knowledge about the “high risk situations” that may disrupt your progress toward your financial goal, and then create a plan for dealing with each potential obstacle.
  2. Make simple changes in your environment that will allow you to avoid temptation.
  3. Design prompts, triggers, or systems that will allow you to make a goal-consistent decision without having to agonize over it each time it comes up (for example, automatic savings plans).
  4. Formulate subgoals or intermediate goals that will allow you to take steps toward your larger objective, and set clear expectations and a time frame for each one.
  5. Practice, practice, practice! Repeat healthy behaviors until they eventually become more automatic and replace their unhealthy counterparts.
  6. Train your working memory to strengthen your ability to focus on a goal despite multiple distractions. You can do this through simple mindfulness or present-focus exercises.
  7. Strengthen your ability to shift your attention to the less tempting aspects of the situation you are in.
  8. Reduce the stress (both emotional strain and cognitive overload) in your life. Stress makes you more vulnerable to acting impulsively.
  9. Get enough sleep in order to make certain that your frontal lobes are in good working order. This will allow you to exercise good judgment and to inhibit your impulses when needed.
  10. Plan breaks throughout the day that allow you to monitor your level of self-control and prevent regulatory depletion.

Which of these strategies have you tried? What are the strategies with which you are willing to experiment?

Photo by Johannes Otto Foerst; Wikimedia Commons

Photo by Johannes Otto Foerst; Wikimedia Commons

Over the past couple of blog posts, you’ve learned about the “unthinking side” of yourself, which includes the gut reactions and snap decisions that happen underneath the radar of your consciousness. You’ve also learned about the “thinking side,” which is the systematic, logical planning system that makes sure the impulsive self does not always get its way when you are making financial decisions.

Now, think for a moment about the reasons why the unthinking/automatic system can overwhelm your thinking/controlled system. In other words: Why do your impulses take over your behavior, even when you have the best intentions to stick to a financial goal?

Here are five reasons:

  1. Ego depletion. This is also known as regulatory depletion. Think about all of the situations you encounter in a day which require you to regulate your behavior, hold back distressing emotions, suppress certain things you want to say or do, or choose from an overabundance of options. Scientists have discovered that all of these tasks drain your supply of self-control and make it more difficult for you to persist in the face of obstacles. Regulatory depletion means that if you’ve used up much of your supply of self-control on one task, you have limited self-control available to use on the next task, even if it is a completely different task.
  2. Cognitive overload. Basically, the more you have on your mind, the easier it is to give in to temptation.
  3. Emotional overload. The more stressed you become, the more difficult it is to maintain self-control.
  4. Lack of awareness. If you aren’t aware that a given situation is one that could cause you to lose sight of your financial goals, your self-control can be obstructed.
  5. Overpowering urges. Sometimes, an urge is so powerful that it saps every bit of energy required to maintain self-control. For those who have good inhibitory control and who have cultivated discipline in their lives, this happens less frequently. But no one is completely immune to overpowering urges.

In the next blog post, you’ll learn several strategies for strengthening self-control.

Until then, ponder this: Which one of the five conditions listed above do you think is most problematic, either for yourself or for other people?