Do you struggle with making
impulsive spending decisions that you later regret? Would you like to position
yourself better financially for the future? What do you think it would take in
order to do that?
·
Hiring a professional financial advisor?
·
Signing up for a personal finance class?
·
Long-term intensive psychotherapy?
The answer could be as simple as cultivating
a more grateful mindset. In fact, a study out of the University of California,
Riverside, Harvard Kennedy School and Northeastern University found just that. The
researchers designed a clever experiment where subjects were offered $54
immediately or $80 in 30 days. Participants were randomly assigned to write
about a past event that elicited either happy, neutral or grateful feelings.
The results showed that subjects instructed
to write about an event that triggered grateful emotions were more apt to wait
for the larger payout. And surprisingly, those in the “happy” group were as
impatient as the “neutral” group. Interestingly, those who participated in the
study were not instructed to constrain their memory selection to something related
to money or even a spending decision — it could be about anything at all.
So, what does this say about
real-world investment decisions?
The Cost of Impatience
Much of the success of long-term
saving and investing is cultivating the ability to delay immediate
gratification in favor of saving for the future, and making steady
contributions to your investment and retirement accounts over time.
The “cost” of impatience in the experimental
vignette was limited to a $26 difference. But similar decisions in the real
world can really add up, from last-minute impulse buys at the grocery store to
hitting “buy now” a little too often during late-night online shopping sprees. Additionally,
the tendency of not waiting to save up for big purchases and putting them on
credit cards instead — while paying all the associated interest charges and
fees — can greatly undermine your future financial goals.
An Accessible Option for
Everyone
It’s interesting to note that those
in the “grateful” group were not required to self-identify as being grateful people
in general. The effect was accomplished merely as an experimental manipulation.
If this tendency holds true, then it would appear anyone might be able to
prompt or prime themselves into a more grateful mindset simply by tapping into the
right memories when necessary.
Additionally, fostering a mindset of
gratitude may be easier — and more effective — than trying to rely on brute willpower
alone to resist temptation. And it’s a habit that could be readily cultivated
by maintaining a gratitude journal, keeping those grateful memories top of mind
and more easily accessible when you feel the need to call upon them.
So, the next time you’re feeling
the “urge to splurge” instead of trying to steel your will by mustering up all
the willpower you can, simply try focusing on something you’re thankful for
instead.
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