Cultivating the right habitude
In our last post The Slight Edge – A Discipline for Success we talked about how small ‘slight edge’ actions, like exercising daily or eating well, has a significant cumulative effect over time. It may not make a significant difference in a few months, but over a number of years, and into old age, these actions make an enormous difference.
Instant vs Cold Brew?
Yet we’re constantly in battle between two parts of ourselves: the part that wants us to enjoy all that’s present in the here and now (our present self) and the part that wants us to enjoy a healthy future where all our needs are met (our future self). Research has shown that a key characteristic for success in life is the ability to delay instant gratification. But how do we stay on track when it’s our present self that’s in charge of the decisions we make today for our future and human behaviour is so highly motivated by pleasure-seeking?
Don’t just roll the dice
Delaying instant gratification applies to small decisions in all areas of life and is a crucial skill for anyone, although not so easy to adopt. But the skill is all the more critical for those of you who run your own business. There’s a tug of war between your future and present self in so many every day financial decisions like: deciding on how much to draw out of your business for personal spending; saving the right amount for tax and national insurance; putting aside money for retirement or against the risk of ill health. While employees often have an employer taking care of some of these future financial decisions for them – with access to a pension scheme, sick pay, ill-health insurance, tax deducted at source from their pay – you have to take care of these decisions yourself.
A future you can’t afford
There’s also a lot more work involved in providing for your future self. You have to do the research and make plans for managing cashflow, setting up life insurance and pension plans. You have to motivate yourself to consistently save without any compulsion to do so. You have to overcome the numerous barriers to taking action like overcoming the sense of confusion when faced with complicated financial products and terminology, helplessness about where is best to go for advice.
If this is some of what you face when making decisions for your future self, it’s no surprise that instant gratification is a more powerful force. Who doesn’t naturally feel inclined to take the easy option above the more difficult one? But don’t fall into the trap of doing what’s easy. The happiness and fulfilment of the future you depends on it.
Find your commitment device
One of the key strategies for delayed gratification is to find a way to trick yourself into doing what doesn’t feel so easy.
Think about a mortgage…
When you buy a property, you don’t panic yourself by thinking how the hell am I ever going to pay back £300,000? Well you might do…but there’s a better way. You take out a mortgage, which is a process-driven arrangement to pay back the debt. You commit to paying a set sum every month and sign up to severe consequences – potentially losing your home and investment – if you don’t keep up the payments.
The success of the goal lies in the process, more than in the goal itself. The mortgage becomes your commitment device. It takes away any resistance to the motivation required to do things that don’t feel easy. It forces you to sacrifice the needs of your present self for your future self without fighting the strength of your willpower.
Avoid the puddles by solving puzzles
Other commitment devices when it comes to financial, health or business goals include: create a vision board; use a fitness band; get a zero-overdraft bank account; share goals with a buddy; pre-prepare healthy snacks; automate savings and investments; cut up or freeze credit cards; have a financial consequence for breaking a commitment, e.g. donating to charity; create rules for yourself to avoid impulse spending. And don’t forget to reward yourself when a goal is met.
Here are four steps to help you prioritise your future self:
- Make it ‘easy’. Plan your own commitment devices in advance and automate these wherever possible. The most significant thing is concentrating on the process (for example, saving a set sum every month), not the investment return or the complex finances, but on the actual doing it – consistently. The less decisions you have to make, the more likely it is to happen.
- Shift your mindset. We tend to think of pensions as boring, difficult, confusing, emotionally loaded, shrouded in obscure language and embroiled in an untrustworthy industry… no wonder it’s easy to avoid the whole issue. But this can change if we think of providing for our future self not as a guilty, anxious obligation, but a gift to our future self. Imagine your future self, treat them well, look forward to their gratitude to you for this gift. Imagine what the future would look like without that gift.
- Know yourself. Be honest and acknowledge the type of person you are with money behaviour and your relationship to instant/delayed gratification and work with that. Try using techniques to give your brain the right feedback. Post-it notes or crosses on a calendar give visual stimulation that sets the brain chemistry going. Find your own one, experiment, trick your brain, find something that works for you, that makes the difference to keep you at it. We’d love to hear about what you come up with…
- Find a good balance. Present and future selves can feel like children squabbling with a tug of war over resources, ‘I want it’, ‘I want it more’, ‘give it to ME.’ But it’s a question of balance, not ignoring current needs but not ignoring or denying future ones. Finding a balance between the two, and a way to do both, is not necessarily incompatible. Life Planning can help by encouraging you to tap into what you most profoundly want to create, identifying what will fulfil and nourish you now and in the future.
The Slight Edge approach is significant in all of this. It’s a way to reconcile your present and future self, to stop squabbling and bickering over money and time, and build a productive relationship between you. With every slight edge action you take today, give a little wave to your future self, and you’ll find them smiling back at you.