We all make New Year’s resolutions, but very few of us actually stick to them. Our goals and resolutions lack power if we never master discipline. Discipline unlocks change. Discipline breaks habits. Discipline ensures that what begins in January can carry into a lifetime of progress. When many people hear the word discipline, it conjures up negative feelings. Feelings of being controlled, being told what to do, which makes us feel restricted and trapped. Since you’re disciplining yourself, it is a choice that you are making and so the definition changes. You are forgoing instant gratification, not to please others, but to be a better version of yourself. Developing self-discipline is like building a muscle. The more you do it, the stronger it will get. Anyone who has achieved anything has done so because they’ve been able to control and direct their own inner lives and actions. This in turn has enabled them to become super-able at what they do. In essence, self-discipline is the fuel that gets you places.
If you want to avoid your worst money impulses you are going to have to work hard to challenge your desires and push back against consumer systems that take advantage of your weaknesses. According to Dan Ariely, a behavioural economist at Duke University, it takes a lot of self-initiated action on our part to spend and save better. “We can wait for someone to solve it for us, or you can try to do your own financial hacking yourself.” Ariely highlights three money challenges facing us right now and provides solutions to help you avoid your worst money impulses.
Problem: Invisible Savings
People rarely talk about how much money they make, let alone how much money they are saving. The fact that we often keep schtum about our finances means that there is no risk of public shaming for not having anything stashed away. On the other hand, our spending habits are highly visible. For example, what we wear, buy, drive and display on social media all indicate our “worth” and our ability to afford certain products.
Behaviour Hack: Talk About Your Savings
Ariely suggests that we should talk about what you we are saving as often as we can. The more vocal we are about our savings, the better we can understand it and compare it to our peers.
Problem: Contactless Payments
It is important to note that of all forms of payment, cash is the most transparent – the one that connects us most directly to the fact that we are parting with our money. Thus, we spend more sensibly when using physical notes and coins. Ariely points out that when you make more automatic payments, you don’t experience the necessary pain of paying. “Automation in payment is the second biggest risk right now. Especially for young people who are taking advantage of all of this.”
Behaviour Hack: Intentional Spending
According to Ariely a smart way to control your spending is to put your discretionary money on a prepaid debit card. By ‘paying yourself’ you will be better equipped to manage your finances and stick to a budget.
Problem 3: Instant Gratification
“There is spending, which is happiness now, and saving, happiness later,” says Ariely. “If we’re not making the trade offs the right way, we may get a bit more happiness now, but at the cost of our happiness later.” He notes that the reason why we don’t have much self-control regarding saving is because we are emotionally disconnected from our future selves.
Behaviour Hack: Weekly Budgets
Ariely stresses the importance of weekly budgets. “This is based on the finding that even people who are paid bi-weekly end up spending too much on the first week and not having enough on the second week.”