How to improve self control

How to improve self-control

No more excuses

I started writing this post and very quickly ended up going down many (necessary) side alleys. Self-control, procrastination and instant gratification are not easy subject matter. So I’ve divided them into three separate posts. This is the first one, focusing on how to improve self-control.

  1. Self-control
  2. Don’t blame others
  3. Less of an excuse if you have the means
  4. How to improve self-control

Self-control is the ability to manage your impulses, emotions and behaviours to achieve long-term goals. It’s what separates humans from the rest of the animal kingdom. Self-control sits in the prefrontal cortex, which is the part of our brain that deals with problem-solving, planning and decision-making.

How to improve self-control
How to improve self control
How to improve self-control
How to improve self control mobile

Self-control

How many of us set grand plans for ourselves at the start of the week which just don’t materialise? Even though the plans were realistic? We periodically fall short of the expectations we place on ourselves because we have limited willpower and are thus unable to exercise self-control to the same degree in all areas of our life. Just think of all those New Year’s Resolutions you didn’t stick to. Fear not: you can learn how to improve self-control.

Many tests have been performed which emphasise the importance of self-control. One study was done at three health clubs in Boston that offered two different membership options, a monthly membership or a pay-per-visit membership. The approximate ratio between the two prices was that if you intended going to the gym more than 8 times a month, it would be cheaper to buy the monthly membership.

The hypothesis developed is that most people look at that ratio and think “sure, I’ll go to the gym more than twice a week” and then commit to the monthly fee. However, the reality is that we’re overconfident in our ability to commit to these things and going to the gym that often. The study found exactly that with members only visiting the health club around 4.5 times a month.

Many tests have been performed which emphasise the importance of self-control. One study was done at three health clubs in Boston that offered two different membership options, a monthly membership or a pay-per-visit membership. The approximate ratio between the two prices was that if you intended going to the gym more than 8 times a month, it would be cheaper to buy the monthly membership.

The hypothesis developed is that most people look at that ratio and think “sure, I’ll go to the gym more than twice a week” and then commit to the monthly fee. However, the reality is that we’re overconfident in our ability to commit to these things and going to the gym that often. The study found exactly that with members only visiting the health club around 4.5 times a month.

Even more concerning is that you would expect that once a member realises that they’re not going as often as to warrant the monthly fee, that they would then either start going more or drop to the pay-per-visit contract. But that did not happen.

The interpretation of this behaviour speaks directly to self-control problems. I want to go to the gym. I sign up expecting to go frequently (naiveté and overconfidence). But then today, I don’t feel like going. This creates a form of tension between what we plan to do and our actions later.

Our lack of self-control trips us up when trying to meet the expectations we set for ourselves. Click To Tweet

An important thing to consider here is how we make our credit decisions. Clothing retailers make high profit margins off what is referred to as ‘teaser-rate’ offers. As an example, you’re offered a store card which doesn’t charge you interest for 6 months. I’d be surprised to hear if you even asked what the interest rate is after those 6 months? We generally don’t ask that question because we’re focused on the fact that we can buy now and its interest free. And we expect to pay the debt back within the 6 months. The reality though, is quite the opposite.

The trickery gets even better once you start using that store card and receive your monthly statements. You’ll always see the statement state the “minimum payment outstanding”. This payment is necessary to avoid the issue of compounding interest and escalating debt. The problem though, is that this amount is also an anchor. It anchors us into paying that minimum amount outstanding, no more.

An article on the ‘cost’ of this type of anchor on minimum payments showed that when minimum payment anchors were removed from statements, the average partial payment went up by 70%. The anchor reduced the amount paid and roughly doubled the amount paid in interest.

The trickery gets even better once you start using that store card and receive your monthly statements. You’ll always see the statement state the “minimum payment outstanding”. This payment is necessary to avoid the issue of compounding interest and escalating debt. The problem though, is that this amount is also an anchor. It anchors us into paying that minimum amount outstanding, no more.

An article on the ‘cost’ of this type of anchor on minimum payments showed that when minimum payment anchors were removed from statements, the average partial payment went up by 70%. The anchor reduced the amount paid and roughly doubled the amount paid in interest.

Don't blame others

It’s easy to blame a multitude of things for mindless spending or inadequate savings – economics, politicians, banks, globalisation, capitalists, financial advisors, bad luck… But the only person who is truly responsible is the one whose name is associated with that subscription. Or that investment. If we want to adult when investing, then we need to learn how to take personal responsibility.

There’s something known as psychological neoteny: consider a mother of four head-banging to heavy metal. Nothing wrong with that, but some might look at it and think it’s slightly immature. However, the retention of youthful behaviours and attitudes in later adulthood is often a valuable developmental characteristic. That’s psychological neoteny. On the negative side though, sometimes our brains mature without developing the associated basics of responsible adult behaviour. If you can’t control your drinking habit, how are you able to invest intelligently?

Admittedly, it’s difficult being a self-aware adult and being able to control all urges. There is just too much outside stimuli that influences our choices around money. Furthermore, there are industries that do a terrific job of exploiting our weaknesses. But back to the point – the argument of such an industry being immoral is not credible anymore. 

There’s something known as psychological neoteny: consider a mother of four head-banging to heavy metal. Nothing wrong with that, but some might look at it and think it’s slightly immature. However, the retention of youthful behaviours and attitudes in later adulthood is often a valuable developmental characteristic. That’s psychological neoteny. On the negative side though, sometimes our brains mature without developing the associated basics of responsible adult behaviour. If you can’t control your drinking habit, how are you able to invest intelligently?

Admittedly, it’s difficult being a self-aware adult and being able to control all urges. There is just too much outside stimuli that influences our choices around money. Furthermore, there are industries that do a terrific job of exploiting our weaknesses. But back to the point – the argument of such an industry being immoral is not credible anymore. 

Don’t fall under any illusions: the only person who can look after our own selves is ourselves. Financial education on its own doesn’t solve this problem. Learn how to improve self-control!

(Of course – some events our outside of our control. But learn to manage the ones that are within your control before making excuses.)

Less of an excuse if you have the means

Now is where I really start coming down hard on those of you that know you have the means to be doing better. Let’s consider the following dynamic:

What would you say if someone offered to double your monthly salary – forever – if you agreed to abstain from your favourite treat for a month? No alcohol? No coffee? I’ll leave the other examples to your imagination…

Would you take the deal?

It sounds like a no-brainer, doesn’t it? But these are the exact types of deals that we are unable to make a success of because of our lack of self-control. This has been found in some innovative research regarding financial access and poverty action. A study on micro-entrepreneurs noted the following:

“Consider the case of a vegetable vendor in Chennai: Nearly every morning, she takes out loans to buy vegetables from a wholesaler, and in the afternoon she pays the loan off with her daily sales. She does this every day, paying an interest rate of 10% per day. Fruit vendors, flower vendors, and other vendors of perishable products take out similar high interest, short-term loans to finance their working capital.”

The study shows that if these vendors saved 1% of the working capital they were borrowing (equivalent to the cost of two cups of tea), they would be debt free and doubling their profits in 28 days! Knowing how to improve self-control and the power of compound interest! Borrowing at 10% a day is foolish if you don’t have to. It guarantees a perpetual cycle of poverty.

I suppose the key phrase in the above paragraph is “if you don’t have to”. Often, there is just no gap to get out of that cycle. But the immensely revealing impact of self-control is just as telling for wealthy individuals. Of course, there’s an element of financial literacy at play. Understanding the maths behind compounding is immensely motivational if you have the means. But there’s really no excuse if you have the money.

The richer you are the smaller the proportion of your income you spend on temptation goods. Temptation goods are defined as the goods that generate positive utility for the self that consumes them, but not for any previous self that anticipates that they will be consumed in the future. Think: donuts. But it is such temptation goods that drive the myopic behaviour that limits the poor from getting out of that hole.

I suppose the key phrase in the above paragraph is “if you don’t have to”. Often, there is just no gap to get out of that cycle. But the immensely revealing impact of self-control is just as telling for wealthy individuals. Of course, there’s an element of financial literacy at play. Understanding the maths behind compounding is immensely motivational if you have the means. But there’s really no excuse if you have the money.

The richer you are the smaller the proportion of your income you spend on temptation goods. Temptation goods are defined as the goods that generate positive utility for the self that consumes them, but not for any previous self that anticipates that they will be consumed in the future. Think: donuts. But it is such temptation goods that drive the myopic behaviour that limits the poor from getting out of that hole.

You’re not off the hook yet: replace donut with “Playstation” or “luxury spa weekend”. The lack of self-control isn’t any more prevalent among the poor than it is amongst the rich. It’s often just less obvious when you’re rich(er). Not anymore though… take inspiration from the following extract which illustrates that this kind of discipline also has a positive impact on your mental health:

Like a muscle, the more you exercise self-control on a consistent basis, the stronger you get.

As your self-control increases, the more you gain the ability to direct your life in a manner that is congruent with the true you.

The more congruent your actions are with your thoughts and feelings, the better you feel about yourself and the decisions you make.

Every time you feel good about a decision you make, it raises your self-esteem and your self-confidence. You also reinforced in your mind what you are capable of and it makes it less difficult to make similar decisions in life.

Zero Dean

We need to build good implementation intentions. Continually remind yourself that successful habits can change behavior over time and help you reach your long-term goals. That’s how to improve self-control. Step up!

How to improve self-control

We need to acknowledge that we struggle with self-control. I’m not against setting high goals for oneself but we do need to be realistic when those goals and decisions are related to any monetary payment. We can’t begrudge marketers for doing a good job of using our biases to their advantage, but there is a way to ensure the company AND the consumer wins.

There have been some innovative programs that succeed in doing this. Think of programs where you are paid a refund at the start of the 2nd month based on your performance/attendance/behaviour in the preceding month. And including incentives to better that in the months thereafter. Those self-control exercises are a win-win!

The structuring of any products or services where decisions need to be made pertaining to smoking, alcohol, savings, credit card borrowing etc. have strong implications and the decisions matter.

For credit decisions in particular, start by asking the question: “What is the interest rate after that interest-free period?” Be informed. And if I may… if you know you struggle with self-control in this area, perhaps you’re better off not having that store card in the first place!

Self-restraint is the exception, not the norm. We like consuming! Click To Tweet

The structuring of any products or services where decisions need to be made pertaining to smoking, alcohol, savings, credit card borrowing etc. have strong implications and the decisions matter.

For credit decisions in particular, start by asking the question: “What is the interest rate after that interest-free period?” Be informed. And if I may… if you know you struggle with self-control in this area, perhaps you’re better off not having that store card in the first place!

As difficult as it is to admit, we fall short of our expectations. But the promising thing is that you’re starting to understand your biases a little better. And hopefully you’ve gotten some ideas of how to improve self-control.

Mental accounting (future post) often gets a bad wrap, but spreading your funds out to make it easier to exercise self-control is one of my favourite hacks!

As difficult as it is to admit, we fall short of our expectations.

Self-restraint is the exception, not the norm. We like consuming! Click To Tweet

But the promising thing is that you’re starting to understand your biases a little better. And hopefully you’ve gotten some ideas of how to improve self-control.

Mental accounting (future post) often gets a bad wrap, but spreading your funds out to make it easier to exercise self-control is one of my favourite hacks!

Want to pin this post for later?

More in this series on behavioural biases

In case you missed it, see our previous posts in this series:
  • Heuristics and biases in decision making – This was the first post in the series which shares some behavioural economics research. Specifically, the heurstics and biases that influence our relationship with money. It uses System 1 and System 2 thinking examples from Daniel Kahneman’s New York Times best selling book, Thinking Fast and Slow, to help us be more conscious of the workings of our brain. 
  • Mirror, mirror, on the wall, stop telling me I’m wonderful – This post focuses on the impact of overconfidence bias in decision making. It introduces the illusion of knowledge bias and the illusion of control bias to illustrate the difference between confidence and carelessness. It also discusses the better than average effect, the self-serving bias and fundamental attribution error. You’ll learn how to confront some unpalatable truths and get out of any false sense of comfort (if you’re up for the challenge?).
  • Why you can’t argue with a vegan – Ballsy title, we know. But if you read the post you’ll (hopefully) understand why. We’ll be discussing confirmation bias. It’s one of those psychological biases that you can see everywhere. We’ll also touch on cognitive dissonance theory. We all struggle with these biases. They’re both humorous and serious. But because of that, it’s useful to know how to avoid confirmation bias when you need to.
  • Size does matter… when it comes to framing – This post uses framing effect examples to show how framing bias influences the way we interpret information and make decisions. We discuss glossing, the compromise effect, and how the size of the frame can influence the volatility of your investment portfolio.
  • Loss aversion vs risk aversion – Once you understand framing, you’re ready for this post. It introduces an incredibly powerful bias known as loss aversion. It also touches on prospect theory, the disposition effect and impression management.
  • Anchors pulling you down? – Anchoring bias is a straightforward behavioural bias that causes us to focus on a certain initial value and then make decisions with reference to it. This posts looks at some examples of this anchoring effect.
  • The danger of the default – Default options nudge us to make better decisions. The option of opting out also respects freedom of choice. This post unpacks this notion of libertarian paternalism and the perils of status quo bias.
  • Regret, it’s not a nice feeling – Regret influences the decisions we make and pushes us to conform to social norms. Examples of regret avoidance show us how this makes complete sense yet no sense at all.
  • When the past influences the futureThe Concorde effect is a famous example of sunk cost investment. Too often we invest time, money and energy into something we should’ve just abandoned. This post looks at some examples of how sunk cost fallacy affects our human decision processes.
  • What’s mine is more valuable – In this post, you’ll learn why you place extra value on things you own. The endowment effect has implications for our investment portfolio, bonuses and consumer behaviour.
Or if you want to jump ahead...
  • Procrastination is the enemy of success – We know procrastination is the enemy of success. But while it looks like laziness, it’s often just mental exhaustion at play. Learn how to overcome procrastination.

How would you rate your self-control?

Be honest...

Have you signed up for something that you're not committing to?

How much does that set you back financially?

Let us know in the comments below.

Do you struggle with self-control?

Do you need help in releasing some of that financial burden?

How would you rate your self-control?

Be honest...

Have you signed up for something that you're not committing to?

How much does that set you back financially?

Let us know in the comments below.

Do you struggle with self-control?

Do you need help in releasing some of that financial burden?

Related Posts

Recent Articles

Proctrastination is the enemy of success
Procrastination is the enemy of success
November, 2021
The endowment effect and IKEA effect
What’s mine is more valuable
August, 2021
Sunk cost and the concorde effect
When the past influences the future
July, 2021

About the Author

I am passionate about helping people understand their behaviour with money and gently nudging them to spend less and save more. I have several academic journal publications on investor behaviour, financial literacy and personal finance, and perfectly understand the biases that influence how we manage our money. This blog is where I break down those ideas and share my thinking. I’ll try to cover relevant topics that my readers bring to my attention. Please read, share, and comment. That’s how we spread knowledge and help both ourselves and others to become in control of our financial situations.

Dr Gizelle Willows



Dr Gizelle Willows

 

PhD and NRF-rating in Behavioural Finance