Using the Science of Willpower to Be Better With Money

Illustration by megforce1; public domain

When we’re trying to change a difficult financial behavior, the obvious question we ask ourselves is: “What is getting in the way of doing the right thing?” This helps us to identify barriers and obstacles and to design ways of getting around them.

What we often forget, though, is another important question: “What is allowing the wrong behavior to continue?” This question allows us to identify the excuses or facilitating factors that make our bad habits seem reasonable.

These excuses are a setup for failure, because they allow the 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 facilitating thoughts (or permission-giving thoughts):

It’s not really a violation of my budget because it is 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 do it just 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 stray a little outside my budget, and that won’t hurt anything.

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

I deserve to treat myself.

It can be helpful to make a list of your facilitating thoughts. Then, for each facilitating thought you identify, challenge yourself to develop a more reasonable response.

Example

Facilitating 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?

Photo by Tomwsulcer; Wikimedia Commons

In a previous post, I’ve discussed how self-control training has the power to transform your life. Building up your self-control muscle (what many people think of as “discipline” or “willpower”) can help you be a better self-observer and to pause before acting impulsively. When faced with a choice between immediate pleasure and long-term benefit, your self-control muscle will allow you to pass over temptation and choose the more difficult path.

Imagine how those skills might benefit you in your financial life. If you strengthen your impulse control, it would be so much easier to save part of your paycheck instead of spending it all, to be patient with long-term investments instead of reacting to bumps in the road, and to pay off debt instead of being lured in by the more immediate pleasures that your money can procure.

Recent research has shown that your new skills in self-control will generalize to other areas of your life. For example, Oaten and Cheng (2006) have shown that a group of people who were trained in better money management not only gained better control of their spending habits, but they also became more disciplined in other areas: they became better at regulating their eating, their alcohol intake, their emotions, and their household chores.

That’s not a bad outcome for the price of a regular self-control workout!

For specific ideas on how to exercise your self-control muscle, consider checking out this week’s blog post at heidibeckman.com.

Photo by pcamp; Wikimedia Commons

Sometimes I think I should be writing a food blog instead of a personal finance blog, especially given the number of food entries I have posted (see grits, chocolate cake, marshmallows, soup, and lomi lomi salmon).

Today, I focus on stew. Not the Irish beef stew or the vegetable stew, but the kind of stew where you find yourself obsessing or ruminating (“stewing”) about a difficult situation, and you cannot seem to put any distance between yourself and your thoughts about the topic.

For instance, it is easy to get wrapped up in all of the talk about the economy. It is also easy to get hooked in by worries about one’s personal financial future.

When you start stewing, how can you take a step back and look at things from a different perspective? How can you achieve some emotional distance? How can you shift your thinking a bit so that your body has a chance to recover from the physiological stress reaction that is likely occurring?

Here are some things to try:

• Try to see the humor in the situation. Is there some aspect of the situation that is genuinely funny?

• Talk to someone (preferably an objective party) about the situation. Sharing it with someone else often helps you widen your perspective.

• Ask yourself: “How important will this situation be in one week? One month? One year?  Five years?”

• Complete this statement: “I am certainly glad that I am not ____________________.”

• Imagine taking a helicopter ride or a hot air balloon ride above the situation. See your financial problems beneath you on the ground getting smaller and smaller.

• Consider the distressing thought(s) that you are obsessing about. Ask yourself:

1. Are my thoughts based on fact?
2. Are my thoughts helping me to achieve my goals?
3. Will my thoughts help me to feel and act the way I need to feel and act?
4. Is my thinking in my best interest, or can I change it?

How do you achieve greater perspective when you find yourself stewing?

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Have you ever told yourself that you’d like to save more, spend less, invest more, or follow a budget but you just can’t seem to get motivated?

Does it feel like you are waiting for this feeling called “motivation” to land on your shoulder and gently tap you with its magic wand? Have you been waiting a long time?

Unfortunately, “I just can’t get motivated” turns out to be nothing more than a very popular five-word excuse.

Dr. Russ Harris (2011) tackles the motivation issue head on. First, he reminds us that it is simply not possible to have “no motivation” for a pursuit. It is more accurate to say that we have motivation for several different behaviors, and they all compete—so sometimes the behavior we should pursue does not win out, because we desire something else even more.

He suggests that we shift our focus from motivation to commitment, because there is always some kind of values-driven action we can take to change our behavior in a positive direction. We don’t have to wait for inspiration or a magical feeling to arrive.

In a similar spirit, Dr. Jennifer Gregg (2007) writes that we should think about motivation as something that we just “happen to feel” sometimes before or during an activity. Rather than causing us to be able to do something, it just happens to occur at the same time we are participating in a desired action.

Dr. Harris sums it all up with an important rule: “Committed action comes first; feeling motivated [sometimes] comes later.” I couldn’t have said it better myself.

Do you ever find yourself waiting for some elusive feeling called “motivation” to descend upon you and make you act upon your financial goals? How well does that work? Is there a better way?

Original photo: Temptation in cupcake form

We know that the road to success often requires self-discipline, or choosing long-term gain over short-term pleasure: resisting a cupcake in the service of losing weight, enduring the hardship of homework in order to achieve good grades, spending hours in training in order to win an athletic championship, 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 be able to do what is required of them (and therefore achieve important goals) versus who will wander down the path of temptation.

Studies have shown that students’ level of self-discipline is a better predictor of their future academic success than their scores on intelligence tests. There is fascinating evidence that self-discipline can be “taught” or strengthened in children through certain games that exercise their skills at inhibition and self-regulation.

The adult version of self-discipline is called “grit” by researcher Angela Duckworth and her colleagues. It’s a way of thinking about persistence, or the sustained application of one’s efforts over time. However, the concept has an impulse control component to it, as well.

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.

Do you know people who exhibit grit or self-discipline in the way they approach their personal finances? How do they do it?

Photo by Jtneill; Wikimedia Commons

When a banker or financial adviser asks us what we are working on, it is easy to come up with an abstract, cerebral response such as “building security for the future” or “trying a new investment strategy.”

But the reality is, if we are going to be motivated to really work on a challenging goal over a long period of time, we have to be able to find the feeling behind our need for change. In other words, we have to be able to recognize the problem or solution in ways that influence our emotions, not just our thoughts. This means that we have to find some aspect of the problem that hits us at an emotional level.

How do you know if you need to create negative emotions (fear, anxiety, doom) or positive emotions (hope, joy, pride) in order to motivate yourself?

After reviewing the literature, authors Chip Heath and Dan Heath concluded that if you need quick and specific action toward your goal, it might be most helpful to generate negative emotions. (Example: You are in a store and you are tempted to spend money outside the budget you allotted for yourself. You need quick and specific action toward your goal of reducing spending, so you conjure up an image of yourself struggling to pay next month’s rent.)

However, if you want to broaden your creativity, ingenuity, and flexibility in your approach to your goal, positive emotions will be most effective. (Example: Your goal is to teach your children the basic concepts of personal finance. You need a creative way to capture their interest, so you plan to approach the topic the next time you are having a relaxing, fun day with them.)

In general, with long-range financial goals that are more ambiguous and require us to constantly refine our approach, we will benefit most from the open mind and broadened view generated by positive emotions.

How have you harnessed the power of your emotions to strengthen your financial behavior?

Photo by Vicki Nunn; Wikimedia Commons

Imagine that there is a slight twist on the old magic genie scenario, and the genie offers to answer three questions for you.

Committed as you are to your financial change efforts, you decide you are going to use your questions strategically. You want the answers you receive to accelerate your progress toward your financial goal. What are the three questions you should ask?

(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 this need in a healthier way?

(2)   What is the price I am paying by NOT changing my behavior? If I consider the negative effects that my behavior has already created, and then I 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? If I see myself living out this change into the future, what will be new, fun, and different about my life? For example, will I have greater peace of mind, a fun-filled retirement, or the ability to give my money to a worthwhile cause?

Thankfully, if you don’t have the benefit of a magic genie, you can still reach deep into your heart and find the answers to these questions. And the answers will help you engage your emotions so you can use them to help you create success.

What other questions do you want to ask in order to positively transform your money habits? Please share your ideas!

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Although we seem to worry the most about catching the flu, perhaps we should be equally worried about “catching” poor habits from other people.

Research on the phenomenon of social contagion has shown that if we witness someone else giving in to temptation, it activates our desire to indulge, as well.

For example, when we watch friends and family members splurge on gifts, vacations, or new vehicles, this may activate our desire to spend, even if we have set a goal to save more money.

The good thing about goal contagion is that if we are aware of it, we can take steps to circumvent it. We can try to spend as much time as possible with people who are demonstrating healthy behaviors, and we can limit the time we spend in risky or vulnerable situations with the people who are deficient in self-control.

Which poor habits have you “caught” from other people in the past?

For thoughts about the positive side of goal contagion, check out heidibeckman.com.

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On January 1, positive feelings surround the clinking of the champagne glasses and the vow to make changes in the new year. For a moment, our feelings of self-disappointment, defeat, and frustration get replaced by hope and optimism.

But are we using the promise of change to fix our feelings and NOT to fix our behaviors?

Psychologist Kelly McGonigal, in her book The Willpower Instinct, describes “false hope syndrome”: we imagine a future change and it helps us to feel better about ourselves, but it does not necessarily lead us to follow through when we are tempted by our old habits.

Dr. McGonigal reminds us that a “dash of pessimism” is actually helpful when we are trying to make and maintain changes. After we make resolutions, there is an important second step that involves anticipating the obstacles to change, and then planning how to deal with those obstacles.

Here are some good questions to ask yourself to get started:

1. When will I be most tempted to revert back to my old habits?
2. What are the excuses I am most likely to use to avoid the new, healthy behavior?
3. What disruptions to my routine do I anticipate that might “throw me off?”
4. What people, places, thoughts, and feelings will distract me from my resolution?

Planning for future temptation will make you prepared with specific strategies to use when your self-control wanes.

For more thoughts about New Year’s change, check out heidibeckman.com.

How do you deal with “false hope syndrome?”

Photo by Semnoz; Wikimedia Commons

For many, it is a time of preparation: for the holidays, for a new year, and for new steps on the journey toward financial transformation. Many people are thinking about setting money goals for 2013: saving more, spending less, or starting a new type of investment.

When we do succeed at reaching a personal finance goal, success doesn’t happen dramatically, spontaneously, or because the calendar tells us that it happens to be January 1st. Instead, successful change efforts follow a long period of gestation and preparation. We think about the change under the surface of our consciousness for a while. Then we do more of the conscious mental work such as researching our options and strengthening our commitment. Eventually, we know what we have to do and find the courage to make our plans known to ourselves and to the world.

Poet Mary Oliver wrote a poem about personal transformation called “The Journey.” Here are my favorite lines from the beginning of the poem:

One day you finally knew

what you had to do, and began,

though the voices around you

kept shouting their bad advice–

though the whole house began to tremble

and you felt the old tug at your ankles.

As she suggests, you will feel the same pull to fall back into old habits that didn’t serve you well. And you will hear feedback from the world resisting your change efforts. But my wish for you is that during your period of preparation for 2013, you take the time to anticipate the temptations and obstacles that will challenge your money goals, and plan for how you will work around them. Perhaps you can use some of the ideas about motivation, persistence, and impulse control that are archived on this blog.

Best wishes for your financial change efforts in 2013!