Note from Jenny: there are still four days left to enter the HP Slate 7 Tablet giveaway! Enter here by leaving a comment about your favorite up-and-comer app for your smart phone or tablet. The contest runs until Sunday, September 15, and I will announce the winner next week on the blog.
Today's post is written by Leah Manderson; this is the second in a three-part money series.
I’ll be honest: when I’m just going through the motions in life, I don’t think too much about money.
I know my automated money system is saving and paying bills on my behalf, but I don’t think too critically about my spending. I’ll go out to dinner, order a couple drinks and not look too closely at the check. I’ll fill a lazy Sunday afternoon with a shopping trip to West Elm. Who cares if I overspent my budget by $200? I’m not using it anyway.
But when I dream up an international vacation, a once-in-a-lifetime activity, or a soul-fulfilling purchase, I am Money Maven extraordinaire. You can bet your bottom dollar (ha! I couldn’t resist) that I’m refreshing my Mint.com budget every hour on the hour, allocating leftover dollars toward savings, and cutting back on all purchases that don’t add REAL value toward my dreams.
In fact, this isn’t speculation, but my reality over the past two years.
I’ve been in financial diligence hyperdrive recently--fulfilling my dreams of a hosting a gorgeous Southern wedding, adopting a dog, skydiving, traveling, purchasing a new home and somehow coming out of both of those experiences with more savings than I went in with.
Through all that, I realized this curious (seemingly backward) idea:
To achieve great wealth, you must have big dreams for yourself.
While at first that could be interpreted as a Pinterest-worthy platitude, there is some real science behind it. An neuroscience study at the University of Pennsylvania discovered that people whose brains show added activity when they’re imagining the future also make better financial choices.
Joe Kable, the researcher for the study suspects that people who can deeply imagine their dreams -- and every sensation of what it’s like to achieve those dreams -- have a much easier time saving money for them. On the other hand, people with limited imaginations tend to live more in the present, overspending on things for immediate, rather than delayed gratification.
I want to be wealthy one day and I’m not afraid to admit it. But “wealthy” is such an abstract goal (and so far, far away) that if I’m not constantly focused on it, I’ll whittle away my future wealth on decorative pillows and lazy-cooking-day pizzas. If, however, I’m consistently focused on the next big goal, I have incentives to keep up with my finances, cut costs and save, save, save. That habit leads to wealth.
Without big dreams and goals to fulfill, we fall into the trap of spending to fill our need for novelty and adventure -- our immediate gratification. When you’re either bored with life, absorbed in work, stressed with family or tending to things outside yourself, it’s natural for you to want to buy little jolts of adventure every day -- fro yo, movie tickets, yet another pair of shoes.
None of those are bad, but they could be stopping your money from growing enough to fulfill an ambitious, memorable adventure (or a fuller bank account) instead.
I want the latter for everyone.
Now, the first thing you might be tempted to do is to write down a bucket list of big adventures you want to achieve in the next 5 years, but I’d encourage you not to.
Instead, do this:
-
Pick one “OMG I can’t believe I’m going to attempt this” dream you want to bring to life within the next year or two.
-
Tinker with the math on how much you have to save each month to afford it.
-
Get some accountability -- either from a friend who will join in on the fun or from a program like Jenny’s Make Sh*t Happen course.
-
Set up monthly automatic transfers to savings in the amount you have to save per month to achieve your goal.
Just like magic, when you’re driven to fulfill your dream, you’ll naturally level up your financial responsibility.
So if you’re finding yourself just going through the motions, spending frivolously, and feeling financially stretched, let yourself start to dream. Summon up your imagination and not only will your motivation to save money come, but you’ll transform your financial life forever.
I'd love to hear from you in the comments: What's one of your big dreams at the moment? How much do you need to save in order to make it happen?
More About Leah
Leah Manderson is a financial planner in training who has been featured on Forbes.com, LearnVest and The Daily Muse among other sites. In her blog and newsletter, she publishes weekly tips and tricks on earning more, investing wisely, and living richly. Join her free 7-day Money Made Easy mini-program to learn about how to simplify and automate your monthly financial to-do’s.