How To

Why Willpower Isn’t the Secret to Saving Money

When I need to get some writing done—right now, for instance—I have to do two weird things to my computer.

First, I turn on a program called “Freedom.” Available for Mac or Windows, Freedom disables your internet connection for a specified period of time. Twitter is still out there, somewhere, but Freedom cuts the cord.

Next, because my computer still has Solitaire on it, I put my word processor into full-screen mode, blotting out the menu bar and anything else to distract me from writing. (Well, so far I haven’t found an app that makes cute baristas invisible.)

It’s easy to laugh at this stuff—am I really so incapable of resisting temptation that I paid $10 for software that temporarily breaks my computer? Initially, I reassured myself by noting that Nick Hornby, Dave Eggers, and Nora Ephron (I’ll have what she’s having!) also use Freedom.

Recently, however, I read the book, Willpower: Rediscovering the Greatest Human Strength. In the book, authors Roy Baumeister and John Tierney not only explain why my use of anti-distraction software is normal and rational; they also solve a longstanding mystery in personal finance.

Captain, we need more power

Willpower draws upon decades of Baumeister’s psychological research, and it essentially says this: Willpower is real, but limited. We can resist temptation, but only up to a point. Or, as the book puts it, “Willpower looked like much more than a metaphor. It seemed to be like a muscle that could be fatigued through use.”

In experiments, Baumeister found he could deplete subjects’ willpower by, say, forcing them to resist freshly-baked chocolate chip cookies, and this would make them more susceptible to other temptations. The magnitude of the temptation you’re trying to resist is important, but the frequency is even more important. If we invented a machine to tempt people at work every few seconds, it would be hard to get any work done:

“Your body may have dutifully reported to work on time, but your mind can escape at any instant through the click of a mouse or a phone. You can put off any job by checking e-​mail or Facebook, surfing gossip sites, or playing a video game. A typical computer user checks out more than three dozen Web sites a day.”

That’s why Nick Hornby and I use Freedom.

Drink the latte

The book features a chapter about money, and I was pleased to find that it talks a lot about Mint.com—particularly about Mint’s tracking and alert features, and how it lets you compare your spending to other people’s.

I like those Mint features, too. But Willpower also offers a more fundamental insight about money, and it made me think back to a book I enjoyed a few years ago, Smart and Simple Financial Strategies for Busy People by Jane Bryant Quinn.

Quinn offers the old-as-time advice about automatically setting aside savings from each paycheck, which she calls Automatic Budgeting. “Why does automatic budgeting work?” she writes. “Beats me. Some quirk of mind lets you forget the money that’s out of sight. You act as if what’s in your checking account is all you have.”

Automatic budgeting works, I now understand, because it doesn’t require you to deplete your reserve of willpower. If you have money in your pocket and are standing in front of something shiny, choosing not to buy it costs you some willpower. You can make the right choice a couple of times a day, maybe. (Maybe not, if you’ve already used up your willpower by not yelling at your boss.) But you can’t make it the basis of a financial strategy.

Successful savings strategies can’t require massive expenditures of willpower, because humans don’t have massive reserves of willpower. Trying to give up lattes is about the worst possible way to embark on a new savings regime, because lattes are tasty and available everywhere and hard to resist. When you set aside savings from every paycheck, however, it has a way of making your spending priorities clear. If lattes turn out to be high on the list, who cares?

A non-willpower strategy

After reading Willpower, I realized that I’ve designed my whole financial life around minimizing the amount of willpower I have to exert around money. I pay myself a weekly allowance; it gets transferred automatically every Friday into a checking account with no overdraft coverage. If I spend all the money by Tuesday (this happens a lot: willpower depletion) I’m out of luck until Friday. Part of every paycheck automatically goes into retirement, college, and other savings accounts.

I do carry a credit card that I could theoretically whip out on Thursday to buy something regrettable. I seem to have enough willpower to avoid doing that. If I felt myself reaching for the plastic, however, I’d consider trying another old chestnut, freezing my credit card in a block of ice. It’s the financial equivalent of the Freedom software: looks stupid, but it works.

Oh, one last finding from the book: you can give yourself an emergency willpower boost by having a snack, especially one high in sugar. Maybe I’ll have a doughnut and get started on next week’s column.

Matthew Amster-Burton is a personal finance columnist at Mint.com. Find him on Twitter @Mint_Mamster.