Pre-commit to change debts to savings

Pre-commit to change debts to savings
05 August 2013

Modern life is a wonderful thing rife with freedom and opportunity, but it comes with a problem many of us are not good at… self-control. 

The evidence is all around us that people are struggling-- and often failing -- to uphold their preferred intentions. Far too many of us are piling on weight, failing to give up smoking or other negative habits, and with fewer than 25% of households saving regularly, the majority of people are adding to a bulging debt crisis.

There are many studies that have looked at the problem of willpower and recommendations on how to improve it. Preventing temptations from derailing long-term goals is one of the most universal and challenging problems faced by humans. But few of these studies have used fMRI brain scans, until now... and the results are quite valuable.


A new study sheds light on why people who “pre-commit” to structured decisions that lock them into a plan are better able to stay the course than those who rely on willpower alone – the study also shows how pre-committing might be rewarding in itself.

In the research, just published in the journal Neuron, a team of neuroscientists based in England, Germany and Switzerland sought to learn more about what enables people to wait longer for a larger reward instead of grabbing a smaller profit sooner.

The scientists found that regions of the brain associated with greater satisfaction lit up when participants were able to delay gratification based on having made a pre-commitment for a later reward instead of taking the immediate choice. Effectively we are far more satisfied with ignoring immediate gratification if we have made a pre-commitment that prevents us from detouring away from our preferred long- term goals.

The pre-commitments did however require an Odysseus tie your hands to the mast type commitment.

Overcoming your own inability to delay gratification

The study shows that we are far more happy if we are able to control our short term impulses in favor of long term goals., but to do this we need to make watertight commitments to prevent us from going off track. The benefits of pre-commitment were especially stronger for participants with weak willpower.

If you struggle with willpower where it comes to your finances consider taking the following actions:

1. Set up a transfer from your salary to a savings account with a lock in period and heavy penalty if you fail to meet the savings target or cash out early.

2. One research showed people putting their creditcards into a freezer so they could not use them until the card was back to normal temperature.

3. Make an agreement with a family friend to act as a joint signature for your savings goal account.

4. Just like every athlete needs a coach, consider seeking out a mentor.

5. If you invest in shares overcome the emotional urge to sell by setting a minimum and maximum price selling point – and stick with it.

Your willpower, no matter how firm you think it is, will probably fail you if you don’t pre-commit to some goal. But if you do you have far much chance of succeeding and your brain reward center will be far happier.

What pre-commitment ideas do you use to overcome low self-control? 


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Head of Behavioral Finance
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