Every decision is a financial decision
-
Trent Hamm Guest blogger
A few days ago, I came across this interesting by Kelly McGonigal in which she describes the vital role of mindfulness in losing weight, citing scientific studies. This paragraph stood out to me:
"Why are we so easily influenced by external factors? According to Wansink, most of our eating decisions are automatic. To demonstrate this, Wansink asked people to guess how many food-related decisions they make each day (Wansink & Sobal 2007). Consider the question yourself. Do you have any idea? If you鈥檙e like most people, you 诲辞苍鈥檛: participants guessed an average of 14.4 choices. In reality, when the participants carefully tracked their decisions, the average was 226.7. That鈥檚 more than 200 choices that participants were unaware of initially. And without awareness, it is hard to listen to the body鈥檚 wisdom or make conscious choices."
Participants guessed an average of 14.4 choices. In reality, they averaged 226.7 choices.
That鈥檚 a startling fact, and it鈥檚 one that doesn鈥檛 just center around weight loss. It鈥檚 highly relevant to every single positive change we make in our lives, whether it鈥檚 weight loss, kicking a bad habit, or controlling our spending.
We make far more decisions every single day than we ever realize when we reflect on it.
How many times a day do you think you make a decision that affects your personal finance? I鈥檓 guessing that a lot of readers of The Simple Dollar who have been around for a while will probably have a higher number than newer readers, but I鈥檓 going to guess it鈥檚 still low.
When you choose a beverage to drink, you鈥檙e making a personal finance decision.
When you choose to open up a window, you鈥檙e making a personal finance decision.
When you choose to flip a light switch, you鈥檙e making a personal finance decision.
Even decisions that seem like single choices are often a combination of a bunch of decisions. When you pump gas, you鈥檙e not just choosing the kind of gas to put in your tank. You choose how low you let your tank get before stopping for gas (below half a tank means quite a bit of gas lost to vapor). You choose which station to go to. You choose what payment method to use. You choose how fast to pump the gas (slower is actually better). You choose whether to go inside for additional purchases.
A trip to the grocery store has an astounding number of decisions. You are constantly choosing between products, what aisle to go down, whether or not to put that impulse buy into your cart, and so on.
All of these decisions are small. Most of them have only a penny or two of impact. The catch is that there are hundreds or thousands of these a day. If you just completely disregard them, the money is going to seriously add up over time.
I鈥檝e found several tactics really help in terms of being mindful of what I鈥檓 doing with my money.
First, I 诲辞苍鈥檛 do decision-rich tasks unless I鈥檓 in a mindful and focused state. In other words, if I鈥檓 not rested or focused, I try very hard to avoid tasks that involve making a lot of spending decisions. I 诲辞苍鈥檛 shop unless I鈥檝e slept well, for example, and I try to avoid shopping alone with all three children. If I鈥檝e had a poor night of sleep or if I have my children with me, I 肠补苍鈥檛 be mindful and focused and it鈥檚 easy to overlook lots of little decisions.
Second, I try to find relaxation and recreation in decision-sparse situations. I鈥檒l go to the park and play disc golf 鈥� there鈥檚 virtually no way to spend money there. I鈥檒l get in a comfortable chair and read a book. I鈥檒l go on a long walk around the neighborhood.
I 诲辞苍鈥檛 relax while shopping. I 诲辞苍鈥檛 relax while browsing e-commerce sites on the internet.
Third, I try to reflect on my decisions after the fact. I鈥檒l examine my grocery receipt and ask myself if all of these purchases were good decisions. At the end of the day, I鈥檒l reflect on how the day went. I try to reflect on the little decisions I鈥檝e made along the way and decide for myself outside of the moment whether I made a good choice.
Finally, when I know I鈥檓 going to be in a challenging decision environment, I put constraints on that temptation. If I鈥檓 going to a bookstore, for example, I鈥檒l take only a $20 bill with me into the store. I鈥檝e given myself permission to spend that $20, but I鈥檓 not spending anything else. I 肠补苍鈥檛 spend anything else (at least, not easily).
These tactics work well (in some form) with almost every personal challenge we face.
听
