Chris writes in:
“I’ve read all of the usual personal finance books and I know exactly what I need to do to get myself out of this hole. The problem is actually doing it. When I make decisions, I make poor ones, even though I know that in the long run they’ll cost me. I convince myself in that moment that the fun I’ll have right then will just trump whatever the rewards might be later on.”
The challenge you’re facing isn’t acquisition of knowledge, which is the problem that a lot of people face as they struggle with the first steps of escaping their financial hole.
The challenge you’re facing is mindfulness, and it requires a completely different toolset than just acquiring knowledge.
Simply put, mindfulness means being as aware as possible in the moment of the short-term and long-term consequences of various choices in that moment. It’s something that can absolutely be learned and improved with practice and it’s something that will help you not just with finances but in almost every aspect of your life.
It’s something I’ve worked on a great deal over the last several years of my life, and it’s led to improvements in my finances, but also in my personal relationships and many other aspects of my life. I actually find it very upsetting now when I find myself letting my mindfulness slip because it’s become my natural state, at least somewhat.
Here are some things you can do to really start building up mindfulness in all aspects of your life.
The first technique is what I like to call “scenarios.” I try to envision in great detail one of the situations I’ve been in where I’ve made a poor choice in the past, one that I now regret and that I now see has negative long-term consequences.
I simply go through that situation, except in the key moment of decision, I try to visualize myself making a better decision. I try to follow the scene at least a bit longer so I can walk through some of the immediate consequences of making that better decision, along with ways to make that outcome better in the short term.
I’ll visualize myself on a shopping trip making good buying choices. I’ll visualize myself out on the town with my wife. I’ll even visualize myself at e-commerce sites.
The second technique I use is the “pro and con analysis.” I take a situation and simply break it down carefully into its pros and cons when I have the time to rationally think about it.
I’ll take a situation I was in recently that bothered me and I’ll work through the pros and cons of different decisions I could have made in that situation. What would have been good about just walking away? Bad about just walking away? What would have been good about buying the item? Bad about buying the item? What would have been good or bad about the various choices?
I look at both the short term and the long term benefits and drawbacks of each of those choices. Often, what you’re trying to do is compare something that’s good in the short term and bad in the medium or long term against something that’s good in the medium and long term but perhaps not as good in the short term. The point is to clearly see how little that short term bump is really worth compared to the longer-term benefits of making a better choice.
The purpose of all of these things is to train my mind to feel that the best decision is truly the “right” one so that it feels normal in that moment.
It takes work. I walk through these types of scenarios all the time in my head – when I’m showering, when I’m going somewhere, when I’m drifting off to sleep. I’m not perfect at making the right choice in the moment – no one is.
However, I can certainly say that these techniques really help me to make the better choice feel more natural in the moment of decision, and that absolutely helps me to raise the percentage of times that I make the right choice. That’s really the best outcome you can home for.