Do You Need a Venti Latte? Using Willpower and Developing Habits to Help Save

Take a moment to reflect on what you already know about effective personal finance. Odds are you already know that, if you are living paycheck to paycheck, you shouldn’t buy lattes everyday.  And most people think putting 5% of their monthly income into a savings account is a noble goal.  In the modern world, where entire libraries of financial advice can be accessed by a few Google searches, the hard part of money-managing is not finding information so much as applying it to our everyday lives. Although many individuals fall short of achieving their personal financial goals, the good news is that effective long term budgeting can be made easy by taking what we already know about human psychology and applying it to our day-to-day financial situations.

These days, a common adage is that we need more willpower if we wish to succeed in life and accomplish our goals. In fact, notable behavioral psychologists such as Daniel Kahneman and Richard Thaler have shown that willpower may be a limited resource. Put simply, we humans have only so much willpower we can spend on any given day and, although this amount varies from person to person, reaching long term personal and financial goals can become easier when we focus on conserving rather than recklessly spending that finite resource of willpower we all possess.

One convenient way to limit the amount of willpower-sapping decisions you make on a daily basis is by automating personal finances. Budgeting tools such as Mint ( can allow you to automatically put a percentage of your income into long term savings accounts or 401k’s, making it unnecessary for you to use willpower to part with that percentage of your income on a monthly basis.

Also, a trick to conserving willpower is found in the creation of effective money-saving habits. Habits are developed over weeks and months rather than hours or days so it can be difficult to immediately change dozens of financially irresponsible behaviors without completely sapping your willpower after a few days and ending up back with the same habits as before. Instead of completely reworking your behaviors, try focusing on changing just one aspect of your day-to-day life (e.g., buying a small coffee instead of a venti latte) for several weeks. You will find it is much easier to maintain this change over time, with successively less willpower being spent on each money-saving decision as you build the habit. Over time, this tactic can increase the amount of money you save on a day-to-day basis.

The road to effective personal financial management doesn’t have to be a long and bumpy one. When you efficiently automate your finances and successfully develop day-to-day money-saving habits, there’s no pothole that can slow your forward momentum.

-Mac Z.

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