Using the Science of Willpower to Be Better With Money

Photo by Nonie; Wikimedia Commons

Last week, I described how you can get stuck in the second stage of change (contemplation). In this stage, you can think of multiple reasons why you should change a given money habit. But you can also think of multiple reasons why you don’t want to. Procrastination and feelings of ambivalence are common.

What do you do if you’re stuck in stage two? Imagine what the future will be like if you do NOT succeed at personal change. Key questions to ask yourself include:

• What will happen if I continue along my current path?
• What will my future look like if I do NOT make progress in this area?
• What aspects of my problem generate feelings of disappointment, disgust, or distress inside of me?
• How much power and control does my problem behavior have over me, and what positive things am I missing in my life because of it?
• What positive things will I miss out on in the future because I am refusing to change this behavior in the present?
• How do I fail myself by refusing to change this habit?

After you’ve painted a detailed picture of the future that focuses on the negative aspects of the problem, design a forward-looking appraisal of how much healthier and happier life will be when you have completed a change. Imagine how you will think and feel about yourself after you change. Picture yourself feeling good about your habits because your behavior is now aligned with your deepest values.

You’ll know you have completed this stage when you have developed a personal conviction about the value of change. Now you are ready to move on to stage three.

Have you ever let procrastination get in the way of a personal finance task? How did you resolve the problem?

Photo by Carschten; Wikimedia Commons

This post is the third in a series examining the “stages of change,” or the stages that mark your readiness to transform a habit.

Last week, I presented the first stage of change (precontemplation). This week, I introduce stage two, which is called contemplation. It is when a person feels strongly pulled in two different directions. On the one hand, he can name several of the potential benefits of change. On the other hand, he is acutely aware of the costs associated with change. In this stage, procrastination and feelings of ambivalence are common.

Imagine a man who is thinking about getting rid of his cable service as a way to cut down on monthly expenses. He makes a list of reasons why this is a good idea: (1) he’d have more money to put in his savings; (2) it would ease the monthly struggle of figuring out how to cover all of the bills; and (3) too much TV is bad for your brain, anyway.

Then, he makes a list of reasons why he isn’t ready to give up the cable: (1) Monday Night Football; (2) Jersey Shore; and (3) keeping up with the neighbors, all of whom have cable TV. When the list-making is complete, he realizes that the two sides balance themselves out perfectly, and he is left teetering between the two choices.

It feels like torture when he tries to make a decision, and so he puts it off. Such is the dilemma faced by people in stage two. If the procrastination goes on too long, individuals get stuck in this stage and become “chronic contemplators.”

Next week, we’ll look at the strategies you can use to move from stage two to stage three.

Do you see any evidence of stage two behavior in your life?

Photo by Michal Osmenda; Wikimedia Commons

Last week I suggested that if you have decided to change one of your money habits, it is helpful to know your starting point, also known as your current stage of change (Prochaska, Norcross, & DiClemente).

If you know your stage of change, it will help you design appropriate challenges or “homework” for yourself. These challenges allow you to focus your energy and avoid exerting yourself on tasks that are not going to help you get ahead.

So what are the stages of change? Stage one is called precontemplation. It is when a person is not particularly interested in changing and does not want to learn more about her problem. Other people may want her to change, but she has no intention to change in the near future.

Consider an organization where the employer matches workers’ contributions to the employer-sponsored retirement plan. Now think of a woman who works at such an organization but fails to take advantage of the match. Her coworkers encourage her to tap this benefit, but she gets defensive and wonders why they have to make such a big deal out of it. She really doesn’t want to hear about the potential consequences of ignoring the match. Her denial is a good example of stage one behavior.

If your starting point is stage one, your primary task is to become more open-minded and less defensive about the possibility of changing a specific behavior. Do what you can to stop resisting and simply observe.

See if you can identify the walls that you put up to avoid thinking about change. Are you in denial about the consequences of a particular habit? Are you aware of the consequences but prone to minimizing them or explaining them away?

Next, see if you can gather information that will allow you to open up to the possibility of changing your behavior. For instance, can you find out how big the problem is if you refuse to make contributions to your 401(k)? No need to make a decision to change at this point. You are just trying to look around, see what other people do, and see why other people think your current behavior might be problematic.

Eventually, you can speculate why you do what you do and pinpoint which defenses are getting in the way of healthier behavior. You’ll know you have completed this stage when you are able to check your defenses at the door and openly consider the possibility of change.

Do you see any evidence of stage one behavior in your life?

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Which of the following people is most likely to succeed in completing a marathon?

Person A believes that if you can walk somewhere, walking beats running hands-down, every single time. Person B can think of a million reasons why participating in a marathon would be a good idea, but he can think of an equal number of reasons why it would take too much effort.

Person C signed up for the race, but he hasn’t purchased his athletic shoes yet. He also hasn’t researched the type of terrain on which he will be running. So far, all of his running experience has been in his backyard. Person D signed up, did his homework, and faithfully executed an appropriate training run every morning for the past several months.

It’s fairly obvious that Person D has the best shot of crossing the finish line in the near future. We would describe him as being in the action stage of change with regard to the goal of completing a marathon. It doesn’t mean that Persons A, B, and C are failures. It doesn’t mean that they won’t eventually get there. It simply means that they are in different states of readiness for taking on this goal.

Before you embark on a journey of personal change, it is helpful to have a sense of your stage of change or state of readiness for change. The stages of change hold important clues about what resources are needed to create forward movement toward a goal.

If you know your stage of change, it will help you design appropriate self-challenges or change tasks. These change tasks allow you to focus your energy, optimize your problem-solving efforts, and avoid exerting yourself on actions that are not going to help you make progress.

In the next few weeks, stay tuned for my blog entries that will share more details about the stages of change.

Public domain photo of Mary Pickford

Ready to work on a money goal? When you’ve designed your goal, write it down. We are more likely to achieve written goals than unwritten ones.

The findings of neuroscience support this claim. Brain researchers have discovered that neurogenesis (the birth of brain cells, or neurons) continues throughout life. They have also discovered that neurons can change themselves, their organization, and their function through new life experiences. This is known as neuroplasticity. If we direct our attention toward something, our attention exerts physical effects on the dynamics of the brain. The brain starts to rewire itself to accommodate the object of our attention.

When we write down our goals and then reference them again and again during our change efforts, we are repeatedly directing our attention toward our goals. This actually changes our brains to support the end outcome we desire. In contrast, if we do not write down our goals, we do not have an anchor for our attention, and this makes it less likely that a supportive brain-rewiring will occur.

Once you have written down your goal, where will you post it so you can see it on a regular basis?

"Stretch" photo by Charlie Cowins; Wikimedia Commons

Whenever I begin a new personal change group at work, there is a long pause when group members ponder what unique goal they would like to set for themselves.

Last week, one of the group participants gave voice to her hesitation: “It just seems like so much. Like it’s easier to not even start the change journey in the first place, because it’s so daunting.” The others nodded in agreement.

This was a sign that the group members had crossed over into the anxiety zone, where goal-directed efforts are paralyzed and it doesn’t even seem possible to try new habits.

The scenario is a great illustration of an old concept in psychology known as the Yerkes-Dodson law: As your arousal/anxiety level increases, task performance improves, but only to a point. Beyond that point, increases in arousal/anxiety lead to stress and a deterioration of task performance.

This concept was borrowed by an organization called Professional Thinking Partners and transformed into the three “zones of existence”: comfort, stretch, and stress (M.J. Ryan, 2006).

According to their model, when you are in the comfort zone, you are not really challenging yourself to try a new approach, and your anxiety level remains low. When you are in the stress zone, you have moved too far outside your comfort zone, and the resulting anxiety will impede your performance.

Somewhere between comfort and stress is the “stretch” zone, where your new behavior will feel somewhat awkward and uncomfortable, but you won’t experience disabling emotions. New learning and true change occur in the stretch zone.

Think about your financial change efforts. Can you think of times that you have been either too comfortable or too stressed to advance toward an important goal? How do you know when you are in the stretch zone? 

Photo by Jon Eben Field; Wikimedia Commons

Researchers have long known that we are more likely to change a habit when we define a specific goal (like “increase the amount of money in my savings”) rather than a vague direction (“get better at money management”).

Beyond that, researchers have now shown us that if we can attach specific and meaningful labels or images to the outcomes we wish to see, this will increase our motivation for change. For example, it is a lot more motivating to set money aside into a “new computer” account or a “spring landscaping” account rather than a generic “necessities” or “long-term savings” account.

How can you get as specific as possible about the financial outcomes you’d like to see?

Aristotle knew a thing or two about the philosophy of “fake it ‘til you make it.” In his day, though, he didn’t call it that. Instead, he explained that we become virtuous by first putting virtues into action, we become disciplined by first exercising good self-control, and we become courageous by first performing acts of courage. In other words, change your behavior first, and then your sense of identity and your personal story will follow.

Also known as “acting as-if” and the “do good, be good approach,” this technique has lots of scientific support. Watch this clip put together by psychologist Richard Wiseman and his friends at Cognitive Media:

Consider what this means in the financial domain. If I have $100 deducted from my monthly paycheck and automatically deposited into my savings account, I watch the savings begin to grow. Then, I am able to cultivate a sense of myself as a “saver” or as a disciplined steward of my money. This leads me to make other decisions that are consistent with my new interpretation of myself.

What financial behavior do you need to change so that your sense of identity will align with your goals?

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Research by Oettingen (European Review of Social Psychology, 2012) suggests that if we’re working on building a healthy new habit, we might benefit from the “WOOP” exercise.

Although it sounds like a fancy new dance step, it’s really just a quick mental strategy that helps you to predict what problems might get in your way and to map out your alternate routes. Here are the four components of the exercise along with an example:

W = Wish: What is the healthy new behavior that you’d like to achieve? [I’d like to put 10% of my paycheck in my savings account.]

O = Outcome: What are the good things that will happen once you’ve built this habit? For instance, in what ways will you feel better about your situation and about yourself? [I will have more peace of mind because my rainy day fund will be larger. I will feel more responsible and more confident about my ability to exercise discipline.]

O = Obstacle: What are the barriers that might get in your way as you work toward this new, healthy habit? [One barrier is that I might excuse myself from saving that much if an unexpected expense (like a car repair) comes up that month.]

P = Plan: What are the specific behaviors you plan to perform in the specific future situation when the obstacles arise? [If I find myself with unexpected expenses, I will cut back on my food and entertainment budget that month so that I can still contribute 10% of my paycheck to my savings account.]

Studies show that these specific WOOP plans (also known as coping plans or relapse prevention plans) are much more likely to lead to successful habit change than vague goals, visualizing our success, or “thinking positively.”

How do you think a WOOP plan might help you?

For a different example of a WOOP plan, consider checking out this week’s blog post at heidibeckman.com.

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?