Increase Your Financial Willpower by Making Better Decisions

If you find yourself making poor financial decisions and spontaneous purchases, you might be experiencing decision fatigue. Decision fatigue is when the quality of your decisions decreases with the more choices you had to make during the day. Studies show that consumers, and even judges, typically make poorer decisions later in the day than in the morning.

A person who is mentally depleted becomes more susceptible to impulse buys and makes poorer choices. Think of the snacks and candy at the grocery checkout counter. Why are they there? Because… Management knows that people have less willpower to resist the impulses of candy and sugar after experiencing decision fatigue throughout their shopping experience. This can have a big impact on your finances, like when you shop for a car, get tired of the sales pitch, and agree to the extended warranty. The fact is, the fewer decisions you have to make, the more willpower you have when it comes time to make a financial decision.

The science behind it

In 1999, psychology experiment participants were asked to remember a number—the number was randomly selected to be either a two-digit or seven-digit number—and then walked down a hallway for an interview. They were told that there would be a snack cart on the way and could pick either a fruit salad or a chocolate cake. Participants who were asked to remember the two-digit number chose the fruit salad in equal proportions to those who selected the chocolate cake. Participants who had the harder, seven-digit number overwhelmingly chose the chocolate cake.

Now, imagine if you were in jail and had a parole hearing coming up. Would you rather have it in the morning or afternoon? You would think that it would not matter, however, a study conducted by the Department of Management at Ben Gurion University showed that the number of decisions a judge had to make in a row drastically affected the outcomes of the hearings. The more decisions the judge has to make, the less chance a prisoner may have of getting the proper sentencing.

Increasing your financial willpower

Ever wonder why Steve Jobs wore a black turtle neck and blue jeans? Because… He was saving his mental energy for more important things. The same is true of Mark Zuckerberg and hoodies and Barack Obama wearing only gray or navy suits. They simplified their wardrobe. I am not saying you need to go that far, but be aware of the decisions you are making and try to simplify them to increase your financial willpower. Here are a few ways:

  • Make important decisions first thing in the morning before fatigue sets in, especially for major financial decisions.
  • Simplify or automate inconsequential decisions to save your decision-making ability for more important things. For example, I eat the same thing for breakfast so that I don’t have to use my limited, decision-making resources on something so inconsequential.
  • Get into a routine. For example, I go to the gym every day at the same time and never have to “decide” to go. I just do it.
  • If you have to decide on something that is not important, make the decision quickly. If it is the wrong decision, you can always change your mind. However, it is important to be quick and decisive. For example, when going out for lunch, I pick a place and go there without much more thought.
  • Breathe. Take 10 deep breaths. Step away from what you are making a decision on and go for a walk. Come back with a clear head.
  • Improve the quality of your sleep. We all hear that we should get eight hours of sleep a night, but in reality, each of us has slightly different sleep needs. Focus on the quality of your sleep as well as the quantity.
  • Meditate every morning for at least 5 minutes. Science has proven that meditation increases willpower.

The two most important ways for me to make better decisions and increase my financial willpower are the last two: Improving the quality of my sleep and meditation. So, let me elaborate.

Improving the quality of your sleep

Jeff Bezos, CEO of Amazon, prioritizes eight hours of sleep per day, explaining that he doesn’t want to risk making poor executive decisions because he’s “tired or grumpy.” I believe that each person is different with their sleep needs, but regardless of how many hours you need to function, the quality of your sleep is just as important as the quantity when it comes to making better financial decisions.

1) Stick to a sleep schedule and build a buffer. If you plan to be in bed by 11pm, start getting ready for bed by 10:30 pm. I find that by the time I brush my teeth, wash my face, and read, it takes 30 minutes.

2) Stay away from late-night blue light. Studies show that blue light suppresses the body’s production of melatonin. Instead, avoid electronic screens 30 minutes before bed or turn on the night-shift mode, which automatically removes blue light after a certain time.

3) Avoid caffeine or any stimulants after 5 pm. This seems obvious, but determine the time you should cut off your caffeine intake. Some may need to stop earlier in the day to sleep better at night.

4) Get a pillow suited for your sleep position. Depending on whether you sleep on your back, side, or stomach, use a proper pillow designed to keep your spine in the proper position.

  • If you sleep on your back, most people prefer a thinner, low-loft pillow that is supportive but malleable. You want your head to be only as high as is needed to achieve a neutral position. A pillow that is too thick elevates your head too high, potentially straining your muscles. A pillow too thin results in an uncomfortable, downward bend in your neck.
  • If you sleep on your side, most people prefer a high-loft pillow that is firm or extra firm. More space needs filling between your head and mattress compared to other sleep positions, so you need a thicker pillow. One that is too soft collapses under the weight of the head, becoming too thin. When you lie on your side, your pillow needs to be thick enough to keep your spine straight, but not so thick that it bends your neck.
  • If you sleep on your stomach, most people prefer a low-loft pillow. A higher, thicker pillow forces your head and spine into an unnatural upward bend. Most traditional pillows are too thick for this position.

5) Buy a better mattress. Like pillows, many of us don’t think twice about the mattress we use. I personally take pride in being able to sleep pretty much anywhere, including planes, buses, or even on the floor. But if I want quality sleep, a mattress is just as important as selecting the correct pillow. It’s a little harder to try out, but check out reviews online and test the mattress in-store. Even with doing your research, you likely won’t know for sure how well you will sleep on it until you do.

  • If you sleep on your back, you want a medium-firm mattress so that your spine stays in alignment. An innerspring or memory foam mattress may work for you depending on your preferences.
  • If you sleep on your side, you’ll want more padding since this position is more likely to create more pressure points. Innersprings typically have more pressure relief than foam and latex mattresses. A soft foam mattress could work too.
  • If you sleep on your stomach, you may find memory foam too conforming and a bit smothering. A firmer bed provides the best support so look for a firm foam or dense innerspring mattress.

6) Move the TV out of your bedroom. Watching TV before bed can be a great way to relax, but having one in your room leads to temptation to watch “one more show,” resulting in longer nights and less sleep. Reread item 2 above about blue light!

Meditation

Meditation has been proven to have profound impacts on battling decision fatigue and increasing your financial willpower. The changes are gradual, often taking weeks or months to see the noticeable benefits, but the key is to practice regularly, even if just 5 minutes a day. I meditate every morning when I wake up for between 15 and 20 minutes.

The benefits I’ve experienced include:

  • Reduced stress. Many people stress out when they think about money. As a result, we simply do not think about it, putting off big financial decisions, or worse, making the wrong ones in our haste to decide. Meditation has been shown to lower your heart rate and blood pressure naturally, making it easier to make the right financial decisions.
  • Improved concentration. By regularly focusing on your breath and keeping a clear mind, you train your mind to concentrate better in most life situations, including when to spend money and when you don’t need to.
  • Increased self-awareness. Meditation helps you become more in tune with your body and allows you to better understand why you do what you do. This helps you become more productive at work and aware of ailments, both of which can lead to financial benefits.
  • Elevated happiness. Meditation has been shown to increase happiness so that there is less desire of keeping up with your neighbors. It leads to more internal versus external happiness.

How do you start? I like using the Headspace app, but Calm and 10% Happier are also quite good, although not required. To begin, find a comfortable position. I like to meditate lying down in my bed, but you may find sitting on the floor or in a chair with back support more comfortable. Next, begin to focus on your breath. Start with deep breaths, in through the nose and out through the mouth. Focus on this while keeping your mind clear of thoughts. If your mind wanders, return to the breath. Do this for at least 5 minutes every day, 10 to 15 if possible, and you will find yourself being more mindful of yourself and the decisions you make during the day. This is one of the best ways to improve your financial willpower and avoid decision fatigue.

If you’re looking for recommendations on what I use to improve my decision making and financial willpower, continue reading!

Recommended pillow: Coop Home Goods Original PillowMost of us switch sleeping positions partway through the night, so it’s hard to find the perfect pillow. Personally, I sleep on my side and stomach. So after trying countless pillows, my personal recommendation and the top choice of many online review sites is the Coop Home Goods Original Pillow. It has an incredible ability to adjust to any sleeping position, while remaining comfortable and with the right level of support. The best part is you can add or remove the filling to customize it the way you want. It’s not cheap at $59.99 USD, but after trying this pillow out, I’ve been sleeping like a baby. They also have the Eden, which includes cooling gel in the pillow for $79.99. The best part is that both come with a 100-day trial.

Recommended mattress: Saatva

I’ve searched long and hard for a mattress that provides a luxury feeling at an affordable price point, and the Saatva is the only mattress that met my particular needs. Unlike a memory foam mattress in a box that requires off-gassing, the Saatva is a coil spring mattress made out of environmentally friendly materials. It’s perfect for those who want a firmer mattress and who switch positions when they sleep, offering solid support and a soft pillow top that relieves pressure. If you want something similar, but a little less firm, they offer softer options as well. Personally, I prefer the luxury firm option, which feels just like a luxury hotel mattress. Starting at $1,099 USD for a queen, they include a 120-day sleep trial and free white-glove delivery to Americans and Canadians. It’s made in Canada.

Recommended meditation app: Headspace

I’ve tried meditating off and on for years without much success. Then came Headspace. This fun and quirky app comes with a free 10-day trial and makes the world of meditation a more inviting and less intimidating place with its animated figures and soothing voice. Choose guided, semi-guided, or unguided sessions. I prefer semi-guided to help me focus on my own with a few helpful reminders spread throughout. There are also numerous packs you can download that tackle specific topics if you so choose. After the free trial, Headspace costs $96 USD per year, although if you keep your eye out, you can often find promo codes or promotions to lower the cost.

Legal Disclaimer: The views expressed by Mr. Dumont on Money Sensei are solely his and not intended as investment advice nor a guarantee of any financial return. Mr. Dumont is not an investment or tax professional, so the information contained on the blog is not a substitute for professional advice. The contents of this blog are accurate to the best of his knowledge at the time of posting, but rules and laws are ever-changing. Please do your research to confirm that you have the current information.

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