Willpower and money
Strong willpower is the key to successful money management.
October 7, 2013 - Author: Terry Clark-Jones, Michigan State University Extension
Willpower is one of the best tools you have to help do the right thing when it comes to money. Accomplishing financial goals often requires choosing between now or later and needs and wants. Making the right choice demands the necessary self-discipline to turn down passing pleasures in favor of the long-term goals you want to accomplish.
Willpower has major effects on your finances; from controlling your little splurges to helping you decide whether you should purchase the car with all the bells and whistles. So what are the signs of weak financial willpower and self-discipline?
- Avoiding making decisions. When our willpower is low we tend to take the path of least resistance, hence we avoid making decisions that might be financially prudent.
- Ignoring the relationship between price and quality. When you’re shopping, you are making constant decisions to purchase or not to purchase. You also face the decision between quality and price. Is a $40 pair of jeans better than a $100 pair of jeans? Because of this choice, shoppers need to figure out where the increase of price out weights the improvement of quality. When willpower is low, a shopper will only look at one factor, either to go with the cheapest option, no matter the poor quality or go with the most expensive no matter how absurd it is.
- Being easily manipulated by sales pitch. The more decisions a person is asked to make the more likely they were to accept the options offered or recommended to them. Good salespeople know this trick and will use it.
- Making short-sighted decisions about money. You would think that if you were given the option between $4,000 now $8,000 within two weeks later, the obvious better choice would be the $8,000. When people’s willpower is depleted or weak, they generally chose the instant cash. A great example of this are tax refunds and refund anticipation loans.
So what are some ways to strengthen your willpower to help make good financial decisions? Monitor yourself. Become aware of your tendencies. Are you utilizing your money to reach the financial goals you have created? Track how you spend your money regularly to see if you are using your funds impulsively. This will tip you off on the times you are at your weakest. Michigan State University Extension offers money management programs that will teach techniques on creating a spending plan and ways to find money to save. For more information on go to www.mimoneyhealth.org.