Self Control Is a Limited Resource. Here’s How to Use That Fact Effectively in Your Financial Life.

Once upon a time, I had a very cognitively intense “nine to five” job – in truth, I worked from about 7:45 AM to about 4 PM many days – and, when work was over, there were many days in which I was completely mentally spent. Even on days when I didn’t feel that way, I could still tell that I was no longer on top of my game mentally.

On my route home, I passed by a number of businesses, but one that always tempted me was that bookstore. Once or twice a week, I’d stop at that bookstore on my way home, just driving into the lot and walking in there without any real conscious thought process involved in the decision.

Once I was in there, my brain would almost completely turn off in terms of good decision making. I’d find two or three books that looked interesting and walk them to the checkout almost in a daze, without really considering seriously whether I really wanted them or not or whether there was a better way to buy them or whether I should just go to the library.

This was ego depletion at work, which is a topic I’ve touched on before at The Simple Dollar. In the words of Wikipedia:

Ego depletion refers to the idea that self-control or willpower draws upon a limited pool of mental resources that can be used up. When the energy for mental activity is low, self-control is typically impaired, which would be considered a state of ego depletion. In particular, experiencing a state of ego depletion impairs the ability to control oneself later on. A depleting task requiring self-control can have a hindering effect on a subsequent self-control task, even if the tasks are seemingly unrelated. Self-control plays a valuable role in the functioning of the self on both individualistic and interpersonal levels.

In other words, as we go through our day and make tons of decisions and exert lots of self-control to stay focused on our work or on our daily tasks, we gradually use up that limited pool of mental resources that we have in a given day. When we make decisions after that point, they’re often not the best decisions, as we have used up our daily batch of self control.

So, in my story earlier, I would work all day, exhibiting mental self-control to stay on task and making lots of decisions. Over the course of that day, I would drain my pool of mental resources for the day. When I left work, my brain was on “empty” or close to it in terms of my ability to make good snap decisions and to stay focused.

You can see the problem with that scenario. If I put myself in a tempting position where willpower and self-control are warranted, then I’m much less likely to make the “good” choice when my pool of mental resources is depleted. In other words, when I went to the bookstore after work, my brain was toast, so I made bad choices and bought unnecessary piles of books.

This idea was reinforced to me by a recent research summary by Christian Jarrett in the Research Digest of the British Psychological Society, which summarizes Ego Depletion Reduces Attention Control: Evidence from Two High-Powered Preregistered Experiments, a prepublished paper by Katie Garrison, Anna Finley, and Brandon Schmeichel. From the summary:

Garrison and her colleagues followed this format. In a first study with 657 student participants, the first task involved either writing for five minutes about a recent trip (easy version) or writing about a recent trip without using the letters “A” or “N” (i.e. a more difficult version requiring more self control). The writing task was followed by one of two versions of the Stroop task: either participants had to name the ink colour of colour-denoting words, such as the word “red” written in blue ink, or the ink colour of emotional or neutral words. It takes a degree of self control to ignore the meaning of colour words, or emotional words, and focus on the ink colour.

Participants who completed the more difficult version of the writing task responded just as fast, but made more mistakes on the Stroop tasks than the control group. “This pattern represents unambiguous evidence for poorer attention control under ego depletion,” the researchers said.

A second study was similar. Over 350 participants completed either the easy or difficult writing task and then the Attention Network Test, which involves repeatedly indicating the direction of target arrows on a computer screen, while ignoring the direction of adjacent, distracting arrows, which either face in the same or a different direction (the task is trickier when they face in a different direction). Participants who completed the harder writing task made more errors on the Attention Network Test, which is again consistent with ego depletion theory.

The idea of ego depletion not only matches up really well with my own life experiences (and financial mistakes), but it’s also pretty well supported in psychology research, too.

So, what can we do about it? While the papers don’t offer great evidence on the topic, they do offer some hints at better behavior which line up well with my own practices for simply and effectively managing ego depletion. Here are six things I do to help:

I try to do all shopping early in the day and avoid spending money after lunch. If I’m going to spend money, I try to do it early in the day. I have a general rule that, if it’s after lunch, I’m not going to buy anything unless I already decided on it earlier in the day. It’s such a simple rule to follow and it shuts down a lot of potentially awful decisions that I might make.

I try to have a strong plan in place for supper early in the day, ideally with some steps already done. The reasoning here is so that I don’t find myself later in the day making a decision about what to do for supper when my cognitive pool is drained. At that point, I’m very prone to use takeout or delivery as a simple way to handle supper, even though it’s an expensive way to handle supper. If I actually plan out supper ahead of time and put things in a position so that it’s easy to complete a great family supper, then I’m much more likely to stick with that plan later in the day. That’s why I often do a lot of initial supper prep in the morning, such as putting a meal in the slow cooker.

I save mindless household tasks for the evening where there isn’t really a window to make major errors. When I’m trying to decide what to do now and what to do later today, I put off tasks that are very mindless and not very prone to error, such as doing dishes or doing a load of laundry or doing some household cleaning chores, and I’ll choose to do tasks right away that involve financial choices, like shopping or paying bills. Thus, you’ll usually find me in the evenings doing things around the house rather than anything that involves my wallet.

If I leave the house in the evenings, I leave credit cards at home and take only needed cash with me. Sometimes I go out in the evenings. When I do, I typically figure out a budget for my activities and take only enough cash to cover it. I’ll take my wallet along, but I’ll usually just have my driver’s license in it. That way, I won’t find myself in a situation where I’m just spending money like a fool.

I generally save major financial decisions for the weekends and make them in the mornings. I don’t make decisions regarding my retirement accounts or big expenses during the week at all if I can avoid it, and I definitely don’t make them in the evenings unless I’m absolutely forced to. Instead, I set them aside until a weekend morning and then I evaluate those decisions. That way, I’m approaching those choices with a maximally fresh mind and full cognitive pool.

A good night of sleep is a high priority for me. There is nothing better that we can do to recharge our cognitive pools and fill them up to the brim than getting a good night of sleep. I consider good sleep to be one of the foundational tools of good personal finance and career management. If you’re cutting out sleep because you have too much to do, then you need to be cutting back on your commitments because you’re likely making poor decisions for those commitments due to tiredness and depleted mental resources.

These strategies line up well with the findings in the literature and, in practice, help me greatly in terms of avoiding foolish spending when my mind isn’t at the top of its game. Most of these things are basically effortless, too, as they’re all about moving financial decisions to the earlier part of the day and keeping them there rather than taking on a big new project. I hope these strategies will help you manage your own impulses just a little better!

Trent Hamm

Founder & Columnist

Trent Hamm founded The Simple Dollar in 2006 and still writes a daily column on personal finance. He’s the author of three books published by Simon & Schuster and Financial Times Press, has contributed to Business Insider, US News & World Report, Yahoo Finance, and Lifehacker, and his financial advice has been featured in The New York Times, TIME, Forbes, The Guardian, and elsewhere.