Thursday, May 7, 2009

Financial Willpower

I love NPR podcasts. In fact, it is a bit ridiculous how much I love my podcasts. A coworker of mine, (who feels the same way) and I were talking about this recently. We both commented on how it is almost absurd how much fun we have listening to National Public Radio weekend shows on our MP3 players. We even admitted to each other that sometimes we don't like listening to the radio on the weekends because we don't want to catch just part of a show. We'd rather wait and hear the whole thing as a podcast! Yes, I realize this makes me a total geek, and honestly, I don't care - I'm having too much fun!

I listen to my NPR podcasts while I am doing house work, working in the yard, on long road trips and when I am out walking and getting exercise. Besides being free entertainment, they keep my brain active, especially while doing boring tasks, like pulling weeds. That alone helped keep me sane this winter when I would be out shoveling my sidewalks for the third time... in a single day. I also find that they keep me working, which is especially helpful when I am doing some task I'd rather not be doing!

Anyway, I've been walking a lot lately and, at the same time, catching up on some of my favorite shows. One of these favorites is Radiolab. If you haven't heard it, I definitely recommend checking it out. It is like Mr. Wizard crossed with Alton Brown. Anyway, one of the Radiolab shows got me thinking about personal finance. (You were wondering when I would get to the point, weren't you?) It was called Mischel's Marshmallows. Seriously, give it a listen. If you don't have an MP3 player, you can listen right from your computer. The show is all about willpower.

It feels like some people have willpower and others don't. Or we might have willpower about most things, but have one area that is a trigger. That's me. I consider myself something of a foodie, (though I don't like that term,) so great food is hard for me to resist - which is why my grocery bill is frequently out of whack. It seems to me that most people have problems resisting something, whether it be electronics, good wine, handbags or whatever.

Mischel's Marshmallows talks about the fact that our ability to have willpower or not is set at a very young age, right around 4 years old. Some kids had it, some did not. The interesting thing though, was that all of the kids had the desire. Think about it - willpower isn't about wanting something or not wanting something. If you don't want it, it is easy to avoid it, right? Willpower is about wanting something badly, but knowing there are greater rewards if you wait. Would there be as many blogs about personal finance and physical fitness if we all had a little more willpower?

So, the bad news, according to scientist Walter Mischel, is that willpower is formed when we are very young and the results of that effect our entire lives. (Listen to the show.) However, there is good news...

Willpower can be learned. It is all about strategies. Basically you need a way to divert your behavior and keep your mind distracted. Think about it, what are the two biggest pitfalls for both overspending and overeating? Boredom and opportunity. This got me thinking about strategies I've been using (and need to work on) to increase my willpower:

Avoid temptation

If you are trying to save money, one strategy to strengthen willpower is to simply avoid being around things you are tempted to spend money on. If your trigger is shoes, electronics or gambling then avoid shoe stores, the local Best Buy or casinos. Makes sense right? Sometimes it can be hard though. I think I've been doing pretty good on this as I haven't been shopping in a year, but I still know that there are places that suck me in and encourage me to spend money - bookstores, for example.

Keep the Goals in Mind

Why do so many New Year's resolutions fail? Because by March we have forgotten about them! This is why I love my blog. Each month I list my goals here and admit to myself how I am doing. I know it is only May, but I don't know that I have ever been this successful in tracking my goals before. It has also been great for tracking my extra income. I honestly don't know if I could have achieved as much as I have without this blog. It has been what has kept me going. By looking at and reviewing - and being honest - about my goals I've been able to avoid temptation.

See Success

In order to want to delay gratification, we have to have a reason why. Why shouldn't you spend that money? What reward will you get if you don't? I'll be honest, this is my hardest one. Until now I have never had a reason not to buy something I really wanted, but now, I see things a little differently. I still have a problem looking too far ahead - saving for retirement doesn't mean anything to me. I can't picture myself at 70. However, I can see success in smaller increments. Having been scared and broke, I don't ever want to be that way again. I can picture how it feels when I hit my $900 goal. I know how it feels when you have no safety net, so I understand the peace that will come with building an emergency fund. I know what it is like to be scared to lose your job so I can see myself going back to school and getting a diverse education.

Other Strategies

I think many of the other things we do in correcting our own personal finance are also strategies to help strengthen our financial willpower. Things like budgets, the envelope system, using only cash, daily money tracking and so on, all help keep the goal in mind and focus the brain away from "I WANT IT NOW!" And that is the trick, isn't it? Finding ways to increase willpower so we can achieve our dreams. Willpower isn't something you are born with, it actually is something you can learn.

Photo by: David Robert Wright


getting stuff done said...

I have read that marshmallow story on Millionaire Mommy's first (and slightly more appealing, to be honest) blog. It might still be there, but the blog has changed. but anyway. its a very very interesting thing. And key to mastering - well - anything really isnt it. focusing on the goal and not the immediate WANT. its a good and timely reminder (I just keep splurging on magazines and books at the moment. I dont need them, I just WANT THEM RIGHT NOW)

and there is a word for it in Your Money or Your Life. A thingummywatsit. Cant remember what they called it. a gajingus pin or something. But that thing / those things, that you just cant help yourself buying, for no reason. and we all have them. and they can trash your willpower to pieces unless you have a stategy!!

the blog helps me too. keep it in focus. I want to set up a holiday fund. that is a goal. I must write about that an do soemthing about it

Anonymous said...

I also avoid listening to the NPR weekend shows so I can listen on my commute (I have a 40 minute train ride into Boston every day)

When I was fixing up my just bought condo a few months back before moving in I got very frustrated that I had already heard things while I was painting for 10 hours every sat/sun.

Dawn said...

Getting Stuff Done - some bloggger, meither Frugal Dad or The Simple Dollar, I think, wrote about that gajingus pin awhile back. You are right, the only way to lick 'em is with a clear strategy.

By the way, I set up a holiday fund for the first time a couple of years ago. I love it! It made last year so, so much easier. And it meant I could enjoy Christmas and not have to stress.

Anonymous - Ha! I am the same way! That's why sometimes I like to poke around for shows that aren't offered in my area. I found a wonderful Agatha Christie Radio Hour show that we don't get here, and it was great for when I was dying for some new material!

Frugalchick said...

As I've written before, fun discount stores are definitely an area of temptation for me. Put me in a Marshall's or TJMaxx and I *will* find something great to buy. Even if it's something practical like undies, it doesn't always need to be bought! So I'm still trying to stay out of these stores for awhile.

Dawn said...

Frugalchick - Ah yes, the call of buying something practical! I admit TJs and Marshalls get me too, but I hardly ever shop there, so I am usually okay. But I am drawn many times into making purchases because they are really practical and are a good deal. And like you said, they might be all those things, but that doesn't mean they need to be bought! I agree 100%.