Using the Science of Willpower to Be Better With Money

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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.

Financial fitness through time

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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.

Perhaps the most effective thing you can do to act with greater discipline in the area of personal finance is to increase the gap between your impulse and your action.

Consider a few ways to increase this gap:

  1. Give yourself a waiting period. For instance, design a rule for yourself that you will not make any non-essential purchases that cost more than $75 without giving yourself a three-day waiting period.
  2. 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. Shift your attention. See if you can focus your attention on your breath or on sounds in the environment. Get immersed in the present moment. Then, after you have been successful in shifting your attention somewhere else, you can come back to your money decision with a fresh perspective.
  4. Use a checklist of important questions to evaluate your situation. For example, try:
    1. Is this purchase a need or a want?
    2. Do I truly have the money for this purchase?
    3. What will this purchase mean for my level of financial fitness?
    4. Will this purchase truly make my life better?
    5. Will this purchase still have value to me in one year/five years/ten years?

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.

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

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Game to illustrate money goals

Photo by Robin Parker; Wikimedia Commons

Every week in my change groups there is a “check-in” period during which group members report on the progress they are making toward their goals. I am often dismayed to hear them minimizing, belittling, or outright dismissing their weekly accomplishments because they feel they are too “small.”

Somehow, they feel that their progress doesn’t count unless it is dramatic or perfect or complete.

However, most of the time when change happens, it happens one small step at a time. We make a long series of successive approximations, getting closer and closer to our money goals in a slow and steady way.

If change happens gradually, bit by bit, perhaps the proper check-in question is not, “What did you accomplish this week?” Instead, it should be “What did you do even a little bit right?” After all, it is these small steps that we need to celebrate and build upon if we are working toward a long-term goal.

How do you stop to acknowledge the small steps that you have made in the direction of your money goals? Send your ideas!

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Photo by Francesca Cesa Bianchi; Wikimedia Commons

Many of my blog entries are devoted to the topic of what to do when you are thrown off course in the process of changing a money habit. Although it is critical to have a clear process to use that will steer you back in the direction of your financial goal, it is also good to have a method of celebrating the right behavior when it occurs. Behavior you celebrate grows even stronger!

Ways to celebrate your new, healthy behavior include:

  1. Identify what went right. What choices did you make, what thoughts did you think, and what actions did you take that allowed you to do the right thing in this situation? How can you set up your circumstances to increase the probability that you can do this again?
  2. Appreciate the strengths and skills you are building as you stick to your goal. Pause and pay attention to what you’ve accomplished. Are you building discipline, character, patience, impulse control, persistence, or stick-to-itiveness? Great! These traits will continue to get stronger with practice.
  3. Admire yourself for having the courage and strength to start a new change journey. Even if you’ve just started practicing your new, healthy money habit, you’ve started—and that’s more than many other people can say!
  4. Share the good news with a friend. Call a trusted friend who can celebrate the moment with you. Together, you can dream what your next healthy step will be.

How do you celebrate successful execution of a new habit? Send your ideas! 

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Photo by Harald Hoyer; Wikimedia Commons

One of the most common complaints I hear in my change group is that people feel “stuck” or “paralyzed.” They are ready to change a habit, and yet despite their good intentions, they feel unable to begin taking concrete steps.

Here are three ideas that might help to mobilize you into action:

  1. Stop the exhaustive search to understand every aspect of your problem and where the problem came from. Human problems are complex; many times, we cannot know with 100% certainty where an issue came from or what will make it better. The important thing is to choose a solution and try it out.
  2. Stop waiting for the perfect time for change. You can create the optimal time for change by getting all of your ducks in a row and preparing yourself to make things happen.
  3. Stop participating in wishful thinking. Wishful thinking involves the expectation that your desired outcome will occur without you having to be inconvenienced in any way. This rarely works. It makes more sense to be realistic about your goals and then work hard to achieve them.

We’ve all been stuck before. Think about your own financial goals. Are you stuck on any of them? What are you gaining and losing by being stuck? What works for you to get “unstuck?”

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Photo by Oren Bochman; Wikimedia Commons

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 what you are capable of 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 my money goals.”

(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.”

For an additional way to express kindness to yourself, the “self-apology,” check out this week’s blog post at heidibeckman.com.

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At last, the print version (paperback) of Pocket Change is here, available on Amazon.

Every year, millions of people make New Year’s resolutions to save more, spend less, or otherwise become savvier about their financial habits. And every year, most of these resolutions end in failure.

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 healthy financial life requires real personal change (or a pocket change, you might say!) Thankfully, behavioral scientists have uncovered the secrets of habit modification which have the power to convert your resolutions into action.

The basic ingredients of healthy money behavior include motivation, persistence, and impulse control as well as a basic knowledge of personal finance. Most of us have the basic knowledge about money, but we are at a loss when it comes to strengthening our focus and motivation.

In this book, Dr. Heidi Beckman teaches readers how to use well-tested techniques from the field of psychology to build and sustain positive money habits. She covers topics that range from goal-setting and self-monitoring to personal efficacy and discipline. She also suggests how to design the social, psychological, and environmental context in which good habits will thrive. In this way, Dr. Beckman gives readers renewed energy for healthy money management well into the future.

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Effertrux Publishing is pleased to announce the release of the electronic version of Pocket Change: Using the Science of Personal Change to Improve Financial Habits. For those who prefer the print version, the paperback will be released next month. I am happy to be able to share my writing with you and look forward to ongoing dialogue about the ideas and concepts described in the book.

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Photo by Ildar Sagdejev; Wikimedia Commons

“When it comes to money, I know what I am supposed to do; I just can’t make myself do it.” Have you ever uttered these words in desperation after yet another failed attempt to rescue your finances?

We know that short-term change is typically easy. You are able to save more, spend less, or be more financially savvy for at least a few days in a row.

But what happens when you pursue better money management for the long term? For many people, that’s when negative emotions such as discouragement, frustration, and hopelessness enter the picture. Eventually, then, the old, unhealthy habits return.

How can you give your persistence a much-needed boost? Like all good stories, the story of persistence has a beginning, a middle, and an end. Different strategies are warranted at different phases of the story. Here is the beginning of the story:

In the beginning, your hopefulness and optimism run high. You have newfound enthusiasm for the financial journey you are about to launch. Two strategies are helpful to you at this phase.

First, you need to make your change effort a bigger part of your identity or self-image. Research shows that if you make your change effort a bigger part of your identity, you will be more likely to make the kinds of decisions that support your end goal. At the same time, any change effort that violates your identity will be doomed to failure.

Second, to stay motivated when you are working on better money management, you have to know in advance that there will be setbacks along the way, and you have to be careful how you think about those setbacks. The easiest way to understand this is to think about the two “mindsets” that are described by psychologist Carol Dweck: the fixed mindset and the growth mindset.

People with a fixed mindset believe that their abilities are unchanging and simply reflect the way they are wired. For instance, they are born with a certain amount of intelligence, athletic ability, and financial savvy, and there is nothing they can do to change this. From this perspective, if you fail at something, failure simply confirms that you lack an ability.

People with a growth mindset believe that their abilities are like muscles, and they can build them up with practice. From this perspective, it is worth it to accept and embrace challenges, because you have the potential to improve yourself and improve your life.

If you want to reach a goal, you need to adopt a growth mindset. People with a growth mindset take risks, accept feedback, and take the long-term perspective. They know that defeat in the present does not necessarily mean failure in the long-term. Instead, a setback is an opportunity to learn and grow and improve. Take a chance, then, and be receptive to the feedback that you receive. You will be more resilient, and you will have more energy for the road ahead.

Stay tuned in the weeks ahead for the “middle” and “end” of the story!

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Photo by Dave Dugdale; Wikimedia Commons

Need to work on changing a money habit but finding it hard to get going? Consider increasing the level of tension associated with your poor financial habits.

As a human being, when you encounter a truth that makes you feel uncomfortable, your natural tendency is to ignore it, suppress it, or push it to the back of your mind. However, discomfort can actually be motivating. If you find a way to hold the discomfort in a prominent place in your mind, you can use it in the service of change.

Try calling to mind your moments of discomfort. You know the ones—they are the moments that you are embarrassed to admit to yourself, let alone share with your friends and family members. Have you had to borrow money to cover your monthly bills? Has your credit card been rejected at a store? Do you get calls from debt collectors? Do you ever purchase a “want” when you can’t even cover your needs? Do you spend more than you earn?

Now, as you focus on your moments of discomfort, notice what feelings arise. Do you notice fear, self-disappointment, or dread? Great! These feelings can create a sense of urgency and get you moving toward your goal before it’s too late. Better to experience these emotions now when you still have the opportunity to change your behavior, rather than later when the emotions are compounded by regret.

How do you create a sense of urgency for your money goals? For more thoughts on this topic, check out this week’s blog post at heidibeckman.com.

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Photo by Spreadfilms; Wikimedia Commons

This week, reporter Naomi Mannino wrote a comprehensive piece for Mainstreet.com proposing several links between physical health and financial health. I was honored to be interviewed for the article. Here is a selection:

Regular physical activity can boost your brain power. Much research has proven that regular exercise has cognitive benefits and can boost your ability to plan, focus and multitask, all hallmarks of successful money management. This 2011 review published in the Journal of Applied Physiology entitled, “Exercise, Brain, and Cognition Across the Life Span” concluded that one hour of light aerobic activity at least three times per week and resistance training two to three times per week allowed participants to see benefits. Increasing resistance is a key factor in increasing cognitive skills, according to the review. Beckman says that exercise is also known to reduce stress levels, a well-known trigger in both overeating, smoking, alcohol consumption and compulsive shopping…all of which can cause overspending.

Check out the full article: Can 10 squat-thrusts per day improve your bottom line?

Which do you think is easier: boosting your physical fitness or your financial fitness?

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