Photo by Jon Sullivan; public domain

We are notoriously bad at predicting how we will think and feel and behave in the future.  Psychologist Daniel Gilbert has devoted much of his research and writing to the topic of the mistakes that we make when we try to imagine our “future selves.”

It turns out, though, that meeting and getting to know our future selves can be a useful way to boost our self-control.

A researcher from Northwestern University’s Kellogg School of Management, Hal Ersner-Hershfield, designed a fascinating study in which selected participants saw a virtual reality image of themselves. The image was specially designed to allow them to see what they will look like when they reach retirement age.  The participants in the control group did not see such an image.

The study participants who saw an image of their future self later allocated twice as much money toward a hypothetical retirement savings account compared to participants in the control group.

Getting to know their future selves made the participants more willing to take care of them.

Psychologist Kelly McGonigal, in her book The Willpower Instinct, reminds us that there are other ways to enhance our connection with our future selves (or strengthen our “future-self continuity,” which is the technical term):

1. Spend some time imaging how your future self will look, think, and feel if you do not stay on track with an important change effort.  Allow yourself to feel the fear, regret, or self-disappointment that may result.  For example, picture yourself unable to pay your rent five years from now because you let your credit card debt build to an overwhelming level.
2. Spend some time imagining how your future self will look, think, and feel if you do remain committed to an important change effort.  Feel the associated sense of pride and accomplishment.  Perhaps you picture your future self relaxing on a beach in Hawaii because she made regular contributions to a savings account instead of spending every last dollar of each paycheck.
3. Write a note to your future self.  If you were to write a message to your future self, what would you want to include?  Can you tell your future self what you are going to do now to help him or her achieve a goal?  Can you hear any wisdom (or gratitude!) from the older, wiser version of you?

What do you want for your “future you?” How does this influence the choices that you make today?

Photo by Hendrik Dacquin; accessed through Wikimedia Commons

Have you ever found yourself in a vicious feedback loop that seems to drain every ounce of your self-control?

How about, “I ate more chocolate cake than I should have, so I’ve already blown my diet.  I might as well eat some more.”  Or, “I already blew my budget, so I might as well keep on spending.”

When we perceive ourselves as having given in to temptation, we end up experiencing feelings of guilt, shame, self-disappointment, and loss of control.  Then, to help ourselves feel better, our brain points us in the direction of things that promise reward.  Unfortunately, the reward is often the same thing that made us feel bad in the first place.

This pattern of indulgence, regret, and greater indulgence goes by several names in psychology, including the abstinence violation effect, all-or-nothing thinking, and the “what-the-hell effect.”

Thankfully, there are several things we can do to interrupt the cycle before it spirals out of control:

(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.”

How do you interrupt the feedback loop of indulgence, regret, and greater indulgence?  Send your thoughts!

Photo by GeorgHH; accessed through Wikimedia Commons

This week, reporter Naomi Mannino wrote a comprehensive piece for Bankrate.com proposing several creative ways to break bad financial habits.  I was honored to be interviewed for the article.  Here is a selection:

Does it really take just 21 days to change a habit? Experts say it’s not that simple.

“Breaking bad habits successfully depends on your readiness to act,” says Heidi Beckman….

John Ulzheimer, president of consumer education at SmartCredit.com, agrees. “If it was easy, we’d all have big savings accounts, and none of us would have credit card debt,” he says.

Beckman says habits change more quickly when you’re in the action stage versus the ambivalence or preparation stages that come before. To catapult yourself into action, she recommends using this three-step approach daily.

1. Create a positive picture in your mind of the result you want, and act as if the bad habit is gone. Use a negative picture of the current stressful result of the bad habit to push yourself further toward action.
2. Identify and focus on your positive financial habits, as proof you can do things the right way.
3. Create simple rules to fall back on when tempted, such as: “Don’t browse shopping websites until all my bills are paid this month.”

Be sure to read the full article: Break Bad Habits That Hurt Your Finances | Bankrate.com

Original photo

It’s Money Smart Week 2012 in Wisconsin.  Yesterday, thanks to the invitation of Amy Crowe who is the Community and Education Liaison at the Summit Credit Union, I was honored to co-present with her at the Money Smart Women Conference in Madison.

When I listened to various speakers over the course of the morning, I heard a common theme.  The message was loud and clear that although financial literacy and knowledge about saving and investing are essential pieces of the puzzle, the picture is not complete until the information is translated into action.

In my opinion, converting information into action is when the fun stuff happens!  It is when we use the topics that I love to read and write about: willpower, motivation, persistence, self-efficacy, and impulse control.

Consider this:  What if someone could promise you a way to be 1,000 percent more successful at producing a change in your financial behavior?

According to author Kerry Patterson and colleagues (Change Anything published by Vital Smarts, LLC in 2011), that is precisely what happens when you apply the science of personal success to your change efforts.  The authors run a lab where they read the latest research findings in social science, conduct research, and interview people who are successful at maintaining behavior change for the long-term.

According to their outcomes, people who understand the science behind success are > 1,000 percent more successful at producing change than individuals who try other methods.

But don’t let the word “science” scare you off. Effective change does not require test tubes, the periodic table of the elements, and molecular formulas. It simply requires an openness to the kind of ideas that I have been describing on this website.

None of the scientific ideas may seem profound or life-changing in themselves. But take a few ideas, apply them purposefully and systematically, be patient, and watch yourself become successful at financial change.

Think about a time when you felt motivated to take positive action in your financial life.  How did you generate the motivation?  Send your ideas!

Photo by George Gastin; accessed through Wikimedia Commons

Think about a time when you had a setback while working toward a financial goal.

We’ve all experienced it before.  You’re plugging away, feeling pretty good about your progress, and then poof!  Instant relapse.  You are flooded by emotions that drag you down and refuse to let you get back on track.

Think about what you say to yourself (that is, your “self-talk”) at these times.  Do you beat yourself up mentally, thinking “I’m a failure; I’m a loser; I’m no good?”  Now think about the consequences of those thoughts.  If you beat yourself up, does that ultimately make you more task-focused and persistent or less?

Chances are good that the negative self-talk makes you less determined and less enthusiastic about working toward your money goal again.

We have a popular expression in our culture that if we make a mistake on a project, we are “back at square one.”  Prochaska, Norcross, and DiClemente, the researchers who developed the theory of the stages of change, offer a competing model for interpreting setbacks.  They suggest that we think about change as an upward spiral.

Each time you circle through a change process, you end up one level higher on the spiral.  Although it may feel like you are back at square one, you are actually in a more elevated spot from which you can see things more clearly.  At this higher perch, you are equipped with wisdom, experience, and life lessons that you didn’t have when you were positioned on the level below.

Using this new image, we can replace “Now I’m back at square one” with a more hopeful expression: “Good setback, Self!  You can see a lot better from this new level of the upward spiral!”

What is your favorite change metaphor? Upward spiral? A caterpillar turning into a butterfly? A flower opening up? Send your thoughts!

Original photo

There must be something extra special about spring if it energizes us to wash windows, remove dead foliage from the planting beds, and complete an assortment of dreaded tasks.

The other seasons don’t motivate us that way.  We often refer to the “lazy days of summer” and the “hibernation effect” of winter.  But spring has always been associated with hope, renewal, and rejuvenation.

How can we bring this energy and life into our personal finance efforts?  We might use some of the discoveries that have been made by researchers who study the topic of “hope.”  Here are some ideas:

(1)    Think of setbacks as “learning,” not failure.  If you think of yourself as having failed at some important aspect of your finances, you will be more likely to procrastinate or avoid the task altogether.  However, if you can reframe your setback as a sign that you are reaching and growing toward something important, you will feel more hopeful and motivated.

(2)    Be compassionate toward yourself.  When you do experience a setback, try not to attribute it to a lack of personal ability (for example, “I must not have what it takes to be an investor.”)  Instead, try to see the important role of effort in your performance, and attribute your setback more to your effort (or lack thereof).  Effort is something that is actually under your control, and by knowing that you can boost your effort, you can maintain hope for the future.

(3)    Find meaning in the financial tasks that may seem meaningless.  For those who deliberately and consciously reflect on the connection between the task at hand and their larger values, they find purpose and hope in the process, and they become energized.

(4)    Relate your financial task to your overall goals in life.  If you can picture your current financial task in the context of your overarching goals for yourself and your life, the task will feel less trivial or aversive, and you will find a reason to get started and work hard!

How do you renew your energy for your personal finance efforts?

Original photo

April is National Financial Literacy Month in the United States.  In 2004, the Senate passed Resolution 316 to officially recognize April as a month for Americans to establish and maintain healthy financial habits.

Of course, there are two requirements for practicing good financial habits: (1) adequate knowledge and understanding of the basic concepts of personal finance, and (2) insight into what gets you motivated, what helps you exercise self-control, and what helps you persist toward your money goals over time.

While many of the writers, speakers, and educators who will help us celebrate Financial Literacy Month will focus on task number one, it is task two that ultimately predicts who will be successful in changing money habits.

As you take advantage of the various programs and offerings this month, challenge yourself to do at least one item from each category.  See if you can learn about one new financial idea, practice, service, or investment vehicle that will make your bottom line stronger.

Then, carry out one new behavior change strategy that will enhance your motivation, persistence, and impulse control.  You might turn to earlier posts on this website for help with this second task.

Make it a great month!

Photo by Prakhar Amba; accessed through Wikimedia Commons

Last week, we looked at the emotions that create the perfect storm to render us defenseless against bad financial habits.

This week, we look at a range of strategies that we might use when we are stressed, distracted, and tempted to stray from our healthy money goals.

There are many activities that we tend to think of as “coping strategies.”  However, it turns out that not all of them help us feel better, shut down the brain’s stress response, and build up our supply of impulse control.

First, let’s look at three strategies that do NOT really work:

1. Shopping.  This one is obvious.  If we turn to shopping as relief from our financial stress, it will actually get us into more financial trouble!
2. Overeating, drinking, smoking, or gambling.  When we are under stress, these activities often become very appealing to us, and the brain is tricked into believing that they will make us happy and fulfilled.  Unfortunately, these activities do NOT help calm the nervous system, reduce stress hormones in the bloodstream, or promote the healing relaxation response.  Most of the time, they just make us crave these bad habits even more.
3. Watching television.  Many of us believe we are “relaxing” when we kick back and watch TV.  However, television-viewing is actually known to be physiologically activating, and it does not bring our nervous system into a state of greater calm.

Now, let’s look at three strategies that are more effective:

1. Engaging in slow, deep, even breathing for five to ten minutes.  Deep breathing allows you to reduce your overall level of tension.  Then, when your body is calmer, your mind has more “space” to be able to think through challenging situations and design a healthy response.
2. Exercising.  Physical activity reduces stress and anxiety, improves your self-confidence, and strengthens your concentration.  It also boosts mood-enhancing brain chemicals.  Who could ask for a better strategy to help resist temptation?
3. Spending time with friends or family.  The people around us can often help distract us in a positive way, help us recover from stress, and prompt us to keep the “big picture” in mind.  They might even provide some much-needed encouragement when we need it most!

How can you use healthy strategies when you are tempted to stray from a money goal?

Impending Storm: Original photo

We know that the more emotionally miserable we feel, the more prone we are to give in to life’s temptations, such as impulse purchases and spending sprees (and chocolate cake!).  When depression, anxiety, and stress combine, they create the perfect storm that renders us defenseless against bad financial habits.

Let’s take a look at why this occurs.

(1)    Depression.  When we feel depressed, discouraged, defeated, or downright disappointed, these feelings slow us down and diminishing our supply of energy, focus, and motivation.  Of course, if we don’t have sufficient energy, focus, and motivation, it is challenging to remain active in pursuing the healthy financial goals we know we should pursue.

(2)    Anxiety.  When we become anxious, our body enters the “fight-or flight” mode, which is a set of physiological changes designed to prepare us to either fight or to run away from a threatening situation.  One of the many changes that occurs during this response is the release of stress hormones into the bloodstream.  Scientific research has shown that these stress hormones actually increase the excitability of our dopamine neurons, which are the neurons that are highly responsive to reward and to the lure of immediate gratification.  Therefore, the more anxious we are, the more tempting temptations become!

(3)    Overall stress.  When we are stressed, we are often experiencing a complex mixture of emotions from frustration and anger to sadness and anxiety.  Research has shown that this mixture of emotions tends to shift the brain into a reward-seeking state.  In other words, the brain starts looking for strategies that seem to promise reward (and therefore release dopamine), such as shopping, spending, and gambling.  Unfortunately, many of these strategies are not all that effective in relieving stress and lead to negative long-term consequences.

What should we do about the emotions that threaten to ruin the pursuit of our carefully-constructed financial goals?  Stay tuned for a list of coping strategies next week!

In the meantime, which emotions do you find most disruptive to your financial goals?