Today I want to talk about the two biggest drivers of our habits: pain or pleasure. I was talking with a client this morning and she mentioned that she noticed certain habits she had around spending money.
Your emotional drivers affect EVERYTHING.
We are either always running away from pain or running towards pleasure in some way. And these drivers, emotional drivers that we have, will affect everything. They’ll affect what you choose to put in your mouth. They’ll decide whether or not you want to sit on the couch or go for a walk. They will decide whether you want to get up early in the morning or stay up late at night and they’ll also determine the way you spend money.
So it’s super important to realise what your personal drivers are. My client was telling me how strong her desire to spend money that was sitting in her account as ‘spare’ was.
We’ve got her spending plan sorted, and she’s been living it for quite a while now. And she’s managed to put away – really within the first eight weeks she put away $2,800 into her emergency fund – So, really incredible wins all around for her.
But one thing she noticed recently was that when she got her tax refund, and it was a couple of thousand dollars, deposited into her weekly spending account, she’d forgotten to let them know it should go into a different account.
And so all of a sudden she thought, “Oh, I’ve got this extra money to spend!” And noticed herself starting to spend it. And we were talking about how she felt bad about that because she really wanted to save.
The best thing you can do is embrace your humanness!
I said to her, “It’s really human nature. The way that we’re designed is either with these two drivers – pain or pleasure – and, this is why lottery winners burn through their cash within the first year they received it. They’re as broke or more broke than ever! Often they go into more debt, living it up, they decide that they’re going to take on more debt.
But it happens to us every day in much smaller ways. And so how do we manage that so that we don’t fall into those old traps, those old habit patterns that take us back to spending money that we don’t want to spend?
If you’ve got really strong desires and goals, like you really want to save for a home deposit or you really want to pay off that credit card or you really want to go for an amazing trip, it’s going to take some delayed gratification to actually achieve those goals. And we can think, “Oh, this is extra money on top of that. I’m still saving and, so why not have a bit of fun? Why not live it up a bit and spend that money, right?
Strategies to protect yourself from you.
So with my client, we were brainstorming ways to prevent that from happening. We talked about strategies. And one of those strategies is to make sure that money like that comes into the right accounts the first time. That’s the first thing.
Another thing is that you have thought about a plan before it actually happens of what you’re going to do if extra money, suddenly it manifests itself. Because it will happen when you start to take control of your money.
All of a sudden when you’re not fighting fires all the time and you’re not stressed out and you’re not worried about paying your bills, all of a sudden you will open yourself up to the possibility of money coming into your life.
As to earning more. I’ve had clients who have sorted their finances and all of a sudden they’ve got a job, a new job opportunity or a raise or, a new client or, something like that. So it will happen, and all of a sudden you’ll start to have new money coming in and what are you going to do?
What are you going to do about that? Because our tendency is to go, “Oh goody, I’ve got a pay rise. Let’s spend it!”
That means I can go and buy that piece of home-ware that I’ve had my eye on. Right? And those things are fine, but are they forwarding your primary goal?
What IS your primary goal?
We’re so distracted in society. We’re so taken hither and yon that we forget about what those, what our definite major purpose is. What is it that you REALLY want to get done that would give you a deeply satisfying feeling of accomplishment?
So setting up structures and actually deciding beforehand, what are you going to do with that money when it actually comes in. Thinking about that and having a strategy so that when that money comes in, you put it straight away into whatever account your primary goal is in. So if it’s to pay off your mortgage faster, it gets straight away put into the mortgage.
Should you keep some to play with?
Maybe you keep 10% of it to play with, but the rest of it goes into the mortgage or the rest of it goes into your holiday fund, or the rest of it goes into your kid’s education fund. You decide that at the outset when you’ve got a really clear goal.
You’ll never be a “saver” unless…
The other thing that I wanted to add was that Suze Orman, great personal finance coach. If you haven’t heard of her, Google her. She says you will never be a “Saver”, someone who actually saves more than they spend, unless you actually derive more pleasure from saving than you do from spending. So actually feeling pain when you spend money and feeling pleasure when you see your bank balance going up, when you actually transfer that money into your savings account or into a long-term savings account, maybe it’s an investment fund or something like that.
And so how, how do we cultivate that?
Suze Orman is a real believer gamifying your savings. So even though she’s a very wealthy woman these days, she still gets pleasure from saving in little ways. If she goes to a shop and she gets a bargain, she has a little celebration afterwards.
That’s not to say that you should go to sales so that you can get a bargain. I would personally stay away from sales and shops as much as you possibly can. If you’ve got a serious savings goal it’s going to provide too much distraction from the main message. So the more you can stay away, the better.
But we all have to do the grocery shopping. We all have to go to the shops at some point.
And so if you can, in your regular day to day adventures, get a discount – all the better!
I know that a lot of people experience this feeling of, “Oh goody, I’ve got money, I’ve got a pay rise, I want to spend it!”. And it’s something that we need to talk about more and more. Drop your comments below if this resonates with you.
Do you have any particular strategies for keeping your savings locked down? What do you do to trick yourself into feeling more pleasure from saving than from spending? Put your comments below. I’d love to hear from you.