**Post by guest blogger Chris Kingsley**
Human beings are complicated creatures. To borrow from Bono, we move in mysterious ways. The phrase knowledge is power is a popular one, especially in the education system, but most of us with much life experience are intimately familiar with how little power our knowledge often has in affecting our decisions. To make matters worse, decisions, by their very nature, incur consequences. As much as we fight it, the two are inseparable.
Unlike physical laws where the correlation between an action and a response is usually immediate and obvious, our decisions sometimes carry consequences that will not impact us noticeably for years to come. When they do impact us, we are not always apt to connect the experienced consequences with the decisions previously made. Because of the lack of immediate feedback with many of our decisions, we human beings are often inclined to take liberties in the present in our decisions and hope that enough fortunate things happen in between now and the inevitable later to bail us out of the consequences that will otherwise be experienced.
All of the above is why, as a financial educator, I focus about 5-15% on disseminating knowledge (I’ve said before, this ain’t rocket science), and 85-95% on behavior. Getting in control of our financial futures is much more about the hard work of programming new habits and behavior patterns than it is about getting more information in almost all cases. (Small note: when I reference control of our financial future, understand that this refers to controlling the things that we can control). One of the great things about us is that if we can learn patterns of making poor decisions, it stands to reason that we can also learn patterns for making healthy decisions, if we have the diligence to see the habit-forming process to its end.
Anyone who has worked at forming a new habit knows that there always comes a point where there is a STRONG desire to give up. This usually comes right before the breakthrough where the behavioral “pathway” in our beings is completed and the habit begins to become our new second nature, if we’ll just push through a little more.
It is infinitely easier to gain knowledge than to put that knowledge into practice. Largely, this is due to the strong wants, desires, urges, feelings, moods, etc. that we experience as people. In many cases, we may not have been trained well in how to navigate and handle these powerful sensations in a healthy manner. Sometimes it is as simple as never having learned that these sensations can be controlled and directed, rather than those emotions controlling and directing us. In many cases, the fatigue that can set in from carrying around the weight of the many responsibilities that we have can cause us to be lax in our spending principles.
I mentioned in my post a couple of weeks ago that our culture has lost a lot of the pragmatism that allowed for the incredible rise of the United States as a nation. My definition of pragmatism is basically the characteristic in a person that allows for navigating the chasm between the ideal and the real. The pioneers who expanded the American frontier addressed the reality of the great sacrifice necessary for a better future, rather than the ideal of an easier now (do note that I am not implying that I agree with all of the actions taken by these pioneers). Because of their willingness to face non ideal circumstances in a real way, future generations have enjoyed more comfort and ease. Basically the old athletic principle of no pain, no gain is at play.
Pragmatism is inherently courageous because it stares down the powerful tug of the emotions and desires of the now ideal and makes necessary choices for a better later. It is not a trait for the faint of heart and it does not come particularly naturally to most of us. It takes practice and exercise to become a better master of the strong sensations that we are subject to as people. The first step is accepting the empowering realization that it can be done. We can and should manage our impulses with a long term perspective.
Let me try to make this more concrete by addressing some I wanna scenarios. First off, we should recognize that I wanna has a very strong voice, partly due to being listened to all too often. I wanna does not have a broad perspective at all…here and now is his only reality (he’ll have plenty of time to complain about ,). Because of this perspective deficiency, I wanna is NOT a good, trusted source for wise counsel (much to the surprise of so many who live almost solely by his counsel). Plus, I wanna only cares about I wanna and no one else. Once in a blue moon he accidentally has a decent idea, but this is not the norm.
I wanna replace my 3-year-old furniture with nice, brand new furniture. After all, I deserve it. Actually, the right to new furniture is not one of those self-evident truths mentioned in the constitution (it’s a common misconception, really). Secondly, even if you do deserve it, do you deserve to have no cash when an emergency arises? Beyond that, the real pragmatic question is realistically, from a long-term perspective, can I afford this? The key to this question is the long-term perspective. This is where we recognize that the consequences to this decision may not be truly manifest in their full glory for a long time. This becomes an income class question. I have mentioned before that Gretchen and I are a lower middle class household. It’s not ideal, but it is reality. This means that the vast majority of my spending must be on things that correspond with a lower middle class income. Brand new furniture is not lower middle class. We can live for a while at a middle class level (because of delayed consequences), but it will be unsustainable for the long-term. Now, if we are upper middle class, we may recognize new furniture as within our income class and posing no great long-term threat to our financial stability. However, even given this, we may decide to get nice, used furniture and save more for later. After all, there’s no guarantee that our current income class will be our future income class.
I wanna have access to every TV station known to man. Okay, fine. But having cable or dish plans will cost you somewhere between $400-$1500 per year. If we take $60 as a conservative monthly tab and instead invest it at a modest 6% return (6% is somewhat modest in terms of investment returns), in 20 years, there’d be an additional $28,000 in assets to our name. You should be warned though that I wanna will work hard to change your mind and be VERY angry. Eventually he might give you the all out silent treatment (hint: this would signify some serious success with controlling impulses and urges). With cable or dish, I will at least say pragmatism will not allow it until there is consistent growth of at least a few hundred dollars in net worth (assets – obligations) monthly. Having the world at our finger tips may seem ideal (although I would argue even this), but may not be sustainably realistic.
I wanna dream home/car. Understandably so. So do I (a dream home, that is…it’s hard to envision a better vehicle than the ’96 Saturn SL1). In the long term, based on your cash flow reality, will you be able to sleep at night in your dream bedroom or will you lie awake stressing about making ends meet? Make sure and ask yourself now the questions that I wanna doesn’t want considered. I could and probably should write a post on Gretchen and my home buying experience, as it has in it many of the battles that we consumers fight against the strong urges and desires that pulsate through us.
In the end, we and those we love and care about, are the ones who will experience the long-term consequences of our spending decisions, be they good or bad. This is an uncomfortable and non-ideal reality, but a reality none the less. All of us can get better at subjecting our desires, wants, urges and impulses to the clear vision of long-term stability of sustainable financial peace, which is worth a lot more than cool stuff. I can say confidently through experience that the more we practice this, the more like second nature it will become. It may never be easy (I don’t think it was ever intended to be), but as our decision making muscles strengthen, the resistance will begin feeling lighter and lighter.
As we master our strong sensations, we model a priceless virtue to our children. Children who learn to live for a higher cause than I wanna will have the tools for a level of satisfaction, fulfillment and peace that few in our culture experience. As households, we want to model a courage, like the pioneers before us, that cuts a pathway to success for our own futures, and, more importantly, that of our children and loved ones. As with questionable decisions, good decisions may not come with immediate good consequences. We can be confident, however, that as we exercise sound, long-term focused principles, we will reap positive benefits in the long haul.
As a household, how are you doing with I wanna?
This post is linked to Homestead Barn Hop at The Prairie Homestead, Welcome Home Link Up at Raising Arrows, The Homesteader Blog Carnival at The Morris Tribe, Seasonal Celebrations at Natural Mother’s Network, Frugal Days Sustainable Ways at Frugally Sustainable, WLWW at Women Living Well, Simple Lives Thursday at Gnowfglins, Frugal Fridays at Life as Mom