Self-Controlling Your Finances

For me, the best part about being an adult is the freedom of choice to do whatever we want. Do I want to fly to Ecuador for a week's vacation? Do I want to retire early? Do I want ice cream and donuts for dinner? While some of these may be good decisions (Yes, I'm going to Ecuador this year!), some of these options are bad (ice cream and donuts are tasty, but will make you fat).

How do we know the difference between good and bad decisions?


If you're like me, you've had decades of people (parents, older siblings, teachers, coaches, random strangers at the mall…) telling and showing you what is and isn't “right”. I put it in quotations because some people have wildly different views of What Is Right. My mother is basically the model of self-restraint. As a single mom to three children on minimum wage, she had to deny herself most of the time just to be able to put food on the table for us. Even today, in a much more comfortable environment, she's still holding off. I got her a container of salt water taffy for Christmas, which is her all time favorite candy, and I'm pretty sure she's only had 5 or 6 pieces. It sits in the dining room where she has to pass it and see it all the time, so it's not like she forgot about it because it's in a drawer somewhere. She views it as a treat, and recognizes that if she eats it all now, she won't have any of her favorite candy later. In her mind, it's better to have a little bit every once in awhile than it is to have a lot all at once.

I'm pretty sure my mom would've aced the iconic Stanford marshmallow experiment. Wikipedia can summarize it better than I can, but in a nutshell kids were presented with a choice between one marshmallow now or two later if they could wait for a period of time. The most fascinating part of the article is the little blurb at the bottom:

“A 2011 brain imaging study of a sample from the original Stanford participants when they reached mid-life showed key differences between those with high delay times and those with low delay times in two areas: the prefrontal cortex (more active in high delayers) and the ventral striatum(an area linked to addictions) when they were trying to control their responses to alluring temptations.

I never said I was a good artist

Brain not to scale

Wait. What? People who were able to hold off had clear differences in their brain structure? Science is so cool. Seriously. So the prefrontal cortex is responsible for what they call executive functions: figuring out good or bad, long term planning, social control, determining future consequences of actions and way more. The people that were ably to delay in the study had more active prefrontal cortexes (cortices?) than those who couldn't.

I look at it this way: they are using their prefrontal cortex more than the other people. That's like saying someone who does squats at the gym has a nicer butt than someone who sits on the couch and watches tv. It makes sense!

Ok Gwen, that was cool about the science stuff and everything, but how does this relate to personal finance? 

I'm getting there. Hang with me.

Making wise choices about money often means delaying that gratification. I'm maxing out both my 401(k) and my Roth IRA. That's almost $2500 of income PER MONTH I'm not receiving in my paychecks. Would I like to have $2500 more in my bank account every month? Abso-freaking-lutely. But, I'm able to recognize that putting that money to work now will be better for me in the long run then spending it on stuff right now.

I'm trying to think of what I'd do with that extra money and I'm coming up blank. I could take more trips, but I don't have any spare vacation time from work. I could buy nicer shoes, but I already have everything I need. Maybe I could buy more video games, but I don't play the games I have enough right now.

Living on a tighter budget FORCES me to make better decisions. No, I'm not going to buy a $12 gluten-free pizza from Dominos tonight. Instead, I'll thaw out a porkchop and have that for dinner. Without this false forced necessity, I'm going to be sloppy with my money. I know this because I have a year's worth of history that I can look back on (and wince at all the wasted money).

I am perfectly capable of living a full and satisfying life on a smaller income. I'm lucky that I can choose this lifestyle. Some of my friends are forced to live on less without the added benefit of saving so much each month. I used to think it'd be difficult to live off such a small amount, but it's easier (and more difficult) than I thought. The physical part is easy. Set up automatic transfers, don't drive to the mall and boom! No spending. The hardest part about this exercise is reining in the mental aspect. I've got to get better about the decisions I make, like not buying junk food even though I want candy, or not browsing online shopping. I'm exercising my prefrontal cortex daily to make better choices. Are you?

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