Portrait of a spendthrift, as a young man

I used to have trouble with discipline when it came to money.

I wasn’t the kind of guy who would go out to the bar and spend a few hundred dollars on booze or go blow way too much cash on clothes.  Instead, I was the kind of guy who would save a few grand and then spend it all on multi-country trips and come home near broke.

I called these trips ‘investments’, a label I still stand by (full disclosure: I work in the industry).  But regardless of the value I think they’ve added to my life, my habits were the same as the boozing spendthrift.  I’d save until I have enough to blow on what I wanted, and then I would go blow it on what I wanted.

Time to grow up

I realized that going on like this was royally pissing off my future self, so I sat down and did some analysis on the bad habits I’d picked up over the years.  I soon realized that coming down from those big spending periods were where I made my best financial decisions.  I saved more, spent less, and was generally just more frugal.

Then, as my bank account swelled (relatively), the things that had been holding my financial decisions to a higher standard began to slip.  The phrase “burning a hole in my pocket” seems apt for my predicament.  I felt flush with cash, so I felt totally OK with spending large amounts of it.

spend graph
Kind of like this.

My spending inflection points had been occurring when I hit a certain amount of money over my monthly expenses.  Once I was confident I could afford rent and have enough to hang out with friends on the weekend, any extra money I had on top of that began nudging me towards questionable financial decisions.

In short, the pain I normally felt spending money dropped off once I felt comfortable that I wouldn’t be out on streets anytime soon.

Obviously, this presented a problem if I had any intentions of building a strong financial future.  Fortunately, I’d already crafted a solution- in the kitchen.

You are what you eat

Some years ago, I decided that I didn’t want to have to police what I ate on the weekends and when I was out with friends in the name of fitness.  To keep this promise to myself, I had to make a compromise.   I found the most potent leverage point I had, and I stopped buying anything unhealthy from the grocery store.

This did two things.  First, it took will power out of the equation.  If there’s a full bag of Doritos in front of me, there will very soon be an empty bag of Doritos in front of me (or crumpled up in the bottom of the nearest garbage can).  So, I just stopped buying Doritos et al. when I got groceries.

Secondly, it forced me to be intentional about what I wanted.  If I really wanted chips, I could go get them at the store- but I would have to both justify my decision and actually put my shoes on and walk down the road.  I’d placed a significant hurdle and pain between me and chips, and this stopped about 95% of my bad food decisions.

Pleasure through pain

This principle dovetailed well with what I was trying to do with finances.  If my goal was to save more money for the longterm, I had to make sure I kept feeling pain when I spent money- even if I had a large pile of savings.  The best way to do that was to proactively limit the amount of money I had access to.  Now, as soon as my bank account passes a certain figure, I make sure that any access money is moved to an investment account where I can’t get it or it’s difficult and time consuming to get back.

Just like the grocery store idea, turning off temptations at the source has proved ot be extremely helpful.  No Doritos means no remorseful food comas.  No extra money means no unwanted spending.

Do you have any cool stories about creating ‘artificial’ constraints or pain to help direct better decisions or behaviour?  I want to hear about them.  Shoot me an email!