Picture Courtesy – Carolina Grabowska

What makes us wake up early in the morning to go for a walk or to the gym or for a run? Why do we plan shopping sprees in sale season, despite the large crowds? Or stand in unending lines outside Disney world? Or change multiple jobs in a span of a decade? Or try to look for the next high return investmentAn investment is made to give you a return. You make an investment if you use your money to buy either physical assets like property or financial assets like bonds and equity with an aim to receive income or gains... option? 

There is emotion and there is incentive driving the way we behave. The desire for more stuff, the desire for less weight, the desire to make someone happy, the desire to be rich and so on. Those are the incentives and how we feel before or after, are the emotions driving the decision to act. Usually, the incentive works well if you can visualise not just physical outcome but also the emotional outcome. Build a mental picture around what being richer or fitter looks and feels like and it’s easy to take that one small step. If you are a procrastinator, then you probably lack the right incentives or are consumed by negative emotions. 

How emotions drive our behaviour is something I have addressed earlier as well. Human beings are emotional creatures and there is no running away from those emotions. If however, your emotions and beliefs are leading to negative behavioural outcomes, you need to start thinking about how you can change them. This is where understanding incentives becomes critical.  

In case of repeated poor money behaviour, you need to start curbing your emotional responses and consciously building incentives that can influence you positively. Poor money behaviour can show up in various ways. You may find yourself spending impulsively too often without really needing or even wanting what you have bought. You may be over due on your credit card payment once too often. You may not be able to say no to lending money even though you don’t have much yourself. You may simply struggle to save for your future.  

Whatever the negative money behaviour is, which you are struggling with, the good news is that you can work on building positive incentives to transform this behaviour in your favour.  

How can you do that? Here is a sampler of how to build incentives for positive money behaviours, watch this entire video to get some ideas and take your first steps. 

The important thing here is to begin by acknowledging what is not working – ie, your harmful money behaviours. Write them down. Then acknowledge how those behaviours make you feel, not immediately but rather after some time has passed. The immediate feeling is usually good as negative behaviours have a way of being instantly gratifying. You must test whether the feeling of instant gratification sustains or does it lead to a low that you would rather avoid? If the latter is true, you must identify and write down that feeling which you want to avoid. Now think of the opposite feeling and the positive action which can possibly lead you there. Lastly, the trick is to create a temptation around this positive action. A temptation which you will not be able to ignore the next time a negative behaviour is getting incentivised.  

True. This is easier said than done and like most behaviours, for positive change to sustain, it needs to become a habit. This means you must repeat the positive behaviour several times, till it overshadows your previous negative money behaviours.  

Watch the video and see whether the examples of incentivising positive money behaviours can work for you and then try to build your own incentives too.  

How you behave with your money leads to the outcome of what your money delivers for you. Starting this May, be sure to think about what incentivises your money behaviour. 

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