The following is a guest post from William Cowie @ Bite the Bullet Investing.
You still remember those New Year’s resolutions to spend less so you can invest more, right? You’ve kept a tight leash on your finances, holding off on buying new clothes, and throwing away all those catalogs you receive in the mail without even opening them. You’ve kept your eyes on the prize: building that early retirement fund. Great!
But lately, have you caught yourself wavering just a little? Your coworker set her cup of Starbucks on your desk for a meeting and you can’t forget that aroma. Hmmm…
And with a season change upon us, are those spring collections catching your eye with bigger hooks than you bargained for?
(Joe: Not really. I have no desire to buy new clothes at all which is great because it’s helping me keep to my 2013 No New Clothes challenge.)
You’re right, of course. That expensive coffee does smell good. A new season just naturally calls for a change in wardrobe, a new golf club, new fishing lures and… hey, your car payments are going to end soon, so you can afford that “something” with a few bucks to spare.
And so, do you find yourself asking, “Why not? Seriously, will this one little thing really make that big a difference? How long should I deprive myself? What for?”
Welcome to Resolution Fatigue
If it’s any consolation, you’re not the only one.
You’re not alone, we all go through it. And it’s not just money. I’ve noticed the treadmills at my gym aren’t as crowded as in January. The attendant, when asked, confirmed it. Happens every year, she says.
Even though those things winking at us are all attractive, you were also right when you made that resolution to find ways to retire by 40 (or 50, or whichever date you chose).
So, if you were right about both, how come you’re now conflicted?
Here’s why: your mind is grappling with two competing pleasures: the pleasure of those goodies now, or the more distant pleasure of a funded retirement, with similar or better goodies, later.
Your mind tells you the smart thing is to stay the course, keep spending under control, keep whittling down the debt, and keep putting the rest away for RB40/50/xx. You started the year off well, and you had good momentum.
But suddenly your momentum is wavering with the changing season. And it’s hard to get it back. Somehow, the sense of urgency that came with the New Year is gone.
So… what can you do to regain that momentum? Two things:
1. Remember the students!
Students? What students?
A while ago some scientists conducted an experiment with students from a famous Northeastern university. In it, they asked them which they would prefer:
- (a) $40 a year from now, or
- (b) $41 a year and one day from now
Which one would you take?
Most students preferred the $41, figuring an extra dollar is nice to have, and waiting only one extra day was worth it. Clearly, a very rational way of thinking.
Then the same students were offered a second choice:
- (a) $1 today, or
- (b) $2 tomorrow
Which one would you prefer?
Given their preference shown in the first test, we’d expect them to again elect to defer the windfall for one more day to get an extra dollar.
We’d be wrong. Nearly all of the students opted for $1 today. These are the same people who argued, quite rationally, that waiting one day for an extra dollar is the smart and reasonable thing to do.
But when it comes to today vs. the future, reason flies out the window.
This experiment and variations of it have been repeated numerous times with different people. And it produced the same outcome every time. What it tells us is all of us, as humans, have a very hard time maintaining a reasonable, rational perspective when it comes to immediate gratification.
The advertising agencies know this of course, and we know they know it. And even though we know they know it, we still look at their catalogs and websites… and we still let them get us anyway.
Why? Because we’re human.
So, does being human count against us? Yes, but we can make it count for us.
2. Remember the poop!
A short while ago, Mr. RB40 shared with us about the day he spent with Baby RB40, and a great perspective on happiness. That’s the prize, but it’s a prize in the future.
And so, just like our innate human nature trips us up by making us lose perspective when we compare future pleasure and present pleasure, that same innate human nature can get fired up with a reminder that those long term goals are worth short term sacrifices.
It is worth waiting an extra day for an extra dollar. Or freedom. Or having a special day with someone special.
It is worth reminding ourselves about the true prize: freedom, freedom to do the things that have meaning and value in our lives.
It is worth hanging on to our resolutions, be they from this year or years past.
We’re heading into the part of the year when “resolution fatigue” sets in. If you can keep your motivation strong for the next month, your chances are good you’ll see it through to at least Thanksgiving, when the next offensive to spend money will be launched.
William Cowie is a longtime RB40 reader and runs the Bite the Bullet Investing blog, dedicated to help everyone get better at investing, any investing. You can pick up his free Investing Basics series here.
Photo credit: Wikimedia Commons