By Skyline On Friday, August 03 rd, 2018 · In

FIELD NOTE: AUGUST 2018

WHEN SELF-CONTROL FAILS

77% of Americans report they are always trying to save money, but at 3.2%, the personal savings rate is nearing an all-time low.  A 2007 study revealed that 32% of Americans earning under $30k did not regularly pay their credit card bills in full. Surprisingly, 35% Americans earning $100k and over also reported the same issue.

US Personal Saving Rate

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What is the cause of this cognitive dissonance? Leaving individual differences and socio-economic causes aside, self-control is often latent when we splurge on dining out, shopping, or entertainment. While most of us have a desire to save more and spend less, few have the mental ability to deliver on their aspirational saving goals. Behavioral research suggests that self-control fails us due to the following causes: lack of self-monitoring, conflicting goals or beliefs, and/or depletion of energy. We discuss these causes and psychological tools you can use to counteract them below.

Lack of Self-Monitoring

We often mentally erase splurges, just like we mentally erase eating that sixth cookie. But, just like keeping a food diary can double weight loss, tracking your expenses can help you save money. There are many budgeting apps, like Mint or You Need a Budget, that make daily expenses more salient, but using Excel or the pen-and-paper method will also work.

If necessary, track what causes compulsive shopping by noting your mood in your spending log. Research has traditionally found positive emotions, such as excitement and pleasure, to be a precursor to impulsive buying behavior. However, overspending can also stem from negative moods that diminish self-control. Consumers experiencing anxiety, lack of self-esteem, or frustration may turn to shopping as a means to alleviate their negative feelings.

Conflicting Goals

Self-control is required whenever goal attainment (e.g. saving for a car) comes with the cost of a competing goal or temptation (e.g. getting drinks with friends). When the perceived benefit of the temptation is stronger than the immediacy of the goal, self-control fails. The trick is to intentionally skew the scales; temptations should be anticipated, avoided, paired with a penalty, devalued, and/or bundled to decrease their appeal. Mentally bundling costs can make temptations, such as isolated impulsive purchases, more relevant. For example, buying a single pack of cigarettes seems minute, but smoking a pack a day adds up to $2,000 or more a year. 

Ego Depletion

Self-control is a limited but renewable resource. Research shows that individuals perform more poorly on self-control activities when their self-control has been depleted by prior tasks, a phenomenon psychologists have coined “ego depletion.” Unfortunately, self-control training delivers modest results at best, so external means of control are often necessary. For example, knowing that visual and physical proximity to items increases the desire to purchase, an individual might avoid visiting malls, watching shopping networks, or browsing eBay. Anticipating possible temptations and eliminating the future freedom of choice increases likelihood of goal attainment.

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