How to create self-discipline when it comes to money

Many economists and psychologists have made careers out of trying to understand why we make bad choices that we invariably regret.

We know that we need to eat less and exercise more if we want to lose weight, and we know that we must spend less and save more to grow wealth.

So why do we give in and buy the chocolate bar at the counter when we’re getting our groceries, or whip out our credit card for the latest smart TV or purchase a car with massive monthly repayments, derailing our financial plans?

This is because we all suffer from something called “present bias”.

This means we place more value on the present than the future, so our present happiness or gratification is more important psychologically than future happiness.

But what we do know is that the further away we are from an actual event, the better we are at making “healthier” decisions.

Psychologists conducted an experiment to prove this by telling a group of people they were going to have a meeting in a week’s time and could select a healthy snack such as a banana or an unhealthy snack such as chocolate.

Nearly three-quarters of the group asked for the healthy option. On the day of the meeting, however, they were told there were enough bananas and chocolates for everyone, so they could choose either. Almost everyone took the chocolate.

But what if you couldn’t change your mind on the day? What if you could set your healthy intentions upfront and have them enforced, protecting yourself from present bias?

What if you could make your well-intended New Year’s resolutions stay in place past February?

What we need to do is commit to something in the future when our resolve is high and make sure we cannot change that decision too easily once present bias kicks in.

While you are still in a positive frame of mind, do the following:

  • Cut up your store cards – the hassle of applying for another one will make you think twice.
  • If you want to have paid off a loan by the end of the year, calculate how much you need to pay each month and set up a stop order that goes off the day your salary hits your account – you cannot spend money you don’t have.
  • Put a file together with all your Fica documents (copy of your ID, utility bill and bank statement) so that the paperwork is at hand when you want to open a savings account.
  • Put a stop order or debit order on your account that immediately sends money into a savings account – before you can spend it.
  • Ask your HR department to increase your pension contribution by 2% with your next salary increase. In other words, if you currently contribute 10% of your salary to your retirement fund, increase that to 12%. You will still have extra money after the salary increase, but a portion of the increase will boost your retirement savings.
  • Include an automatic annual 10% escalation on any savings plan.
  • If you go “window shopping”, make sure you leave your cards at home – most of us are not able to resist the temptation to buy.


All your favourite publications in one place.
Read now
Voting Booth
What are you doing to celebrate Heritage Day?
Please select an option Oops! Something went wrong, please try again later.
Nothing, locking it down
63% - 49 votes
It's braai day
28% - 22 votes
The Jerusalema dance
9% - 7 votes