(Last Updated On: 02/06/2016)

One explanation for why we make plans but don’t take action has to do with a behavioral economics term called “time inconsistency.” Time inconsistency refers to the tendency of the human brain to value immediate rewards more highly than future rewards. 2 common words synonymous with this is ‘instant gratification’ and ‘procrastination’ in personal financial planning.

When you make plans — like setting a goal to save enough money for retirement or exercise 3 times a week to build six pack abs— you are actually making plans for your future self. You are envisioning what you want your life to be like in the future and when you think about the future it is easy for your brain to see the value in taking actions with long-term benefits.

When the time comes to make a decision, however, you are no longer making a choice for your future self. Now you are live in the moment and your brain shifts to thinking about the present self. And researchers have discovered that the present self really likes instant gratification, not long-term payoff. This is one reason why you might go to bed feeling motivated to make a change in your life, but when you wake up you find yourself falling into old patterns. Your brain values long-term benefits when they are in the future, but it values immediate gratification when it comes to the present moment.

This is one reason why the ability to delay gratification is such a great predictor of whether we can eventually achieve what we set to do in life. Understanding how to resist the pull of instant gratification—at least occasionally, if not consistently—can help you bridge the gap between where we are and where we want to be.

The background of this ancient phenomenon

The problem is so timeless, in fact, that ancient Greek philosophers like Socrates and Aristotle developed a word to describe this type of behavior: Akrasia.

It happens even to the best of us.

Some history…

akrasia effect

By the summer of 1830, Victor Hugo was facing an impossible deadline. Twelve months earlier, the famous French author had made an agreement with his publisher that he would write a new book titled, The Hunchback of Notre Dame.

Instead of writing the book, Hugo spent the next year pursuing other projects, entertaining guests, and delaying his work on the text. Hugo’s publisher had become frustrated by his repeated procrastination and responded by setting a formidable deadline. The publisher demanded that Hugo finish the book by February of 1831—less than 6 months away.

Hugo developed a plan to beat his procrastination. He collected all of his clothes, removed them from his chambers, and locked them away. He was left with nothing to wear except a large shawl. Lacking any suitable clothing to go outdoors, Hugo was no longer tempted to leave the house and get distracted. Staying inside and writing was his only option.

The strategy worked. Hugo remained in his study each day and wrote furiously during the fall and winter of 1830. The Hunchback of Notre Dame was published two weeks early on January 14, 1831.

Human beings have been procrastinating for centuries. We see that even prolific artists like Victor Hugo are not immune to the distractions of daily life.

Akrasia is the state of acting against your better judgment. It is when you do one thing even though you know you should do something else. Loosely translated, you could say that akrasia is procrastination or a lack of self-control.

The Akrasia Cure: 3 Ways to resolve this

Here are three ways to overcome akrasia, beat procrastination & instant gratification, and follow through on what we set out to do.

Strategy 1: Design our future actions.

When Victor Hugo locked his clothes away so he could focus on writing, he was creating what psychologists refer to as a “commitment device.” Commitment devices are strategies that help improve your behavior by either increasing the obstacles or costs of bad behaviors or reducing the effort required for good behaviors.

For example, you can stop wasting time on your phone by deleting games or social media apps. You can reduce the likelihood of mindless channel surfing by unplugging your TV. You can build an emergency fund by setting up an automatic transfer of funds to your savings account. These are commitment devices.

The circumstances differ, but the message is the same: commitment devices can help you design your future actions. Find ways to automate your behavior beforehand rather than relying on willpower in the moment. Be the architect of your future actions, not the victim of them.

Strategy 2: Reduce the friction of starting.

The guilt and frustration of procrastinating is usually worse than the pain of doing the work. In the words of Eliezer Yudkowsky, “On a moment-to-moment basis, being in the middle of doing the work is usually less painful than being in the middle of procrastinating.”

So why do we still procrastinate? Because it’s not being in the work that is hard, it’s starting the work. The friction that prevents us from taking action is usually centered around starting the behavior. Once you begin, it’s often less painful to do the work. This is why it is often more important to build the habit of getting started when you’re beginning a new behavior than it is to worry about whether or not you are successful at the new habit.

You have to constantly reduce the size of your habits. Put all of your effort and energy into building a ritual and make it as easy as possible to get started. Once you execute a ritual for at least 21 days, it becomes a habit – I tried it for weekly exercise, and I actually feel guilty when I don’t do it. And don’t worry about the results until you’ve mastered the art of showing up.

Strategy 3: Use implementation intentions.

An implementation intention is when you state your intention to implement a particular behavior at a specific time in the future. For example, “I will exercise for at least 30 minutes on [DATE] in [PLACE] at [TIME].”

There are hundreds of successful studies showing how implementation intentions positively impact everything from exercise habits to flu shots. In the flu shot study, researchers looked at a group of 3,272 employees at a Midwestern company and found that employees who wrote down the specific date and time they planned to get their flu shot were significantly more likely to follow through weeks later.

It seems simple to say that scheduling things ahead of time can make a difference, but as I have covered previously, implementation intentions can make you 2x to 3x more likely to perform an action in the future.

Fighting Akrasia
Our brains prefers instant rewards to long-term payoffs. It’s simply a consequence of how our minds are wired to operate. Given this tendency, we often have to resort to crazy strategies to get things done—like Victor Hugo locking up all of his clothes so he could write a book. Nonetheless, it might worth it to spend time using the 3 strategies if your life goals are important to you.

From JamesClear.com

Your say?

    3 replies to "Akrasia: Why We Fail in Achieving our Financial Goals"

    • […] Also read – Akrasia – Why we fail in achieving our financial goals […]

    • Yhang

      Last year 2015 about sept 26, I set to buy house worth rm60k nearby. But now is all ready jan 21 2016, I still can find the flat that offer me that same kind of price in the area there.so Lieu what action plan I must have in preparation mental,knowledge, money?

      help needed.

      my salary is rm1.5k,can I buy the flat? I did not have any commintment, car i buy secondhand.

      • ChingFoo Lieu

        Hi Yhang, first of all, pls print your CCRIS report for a start to gauge your credit rating. You can approach for 1-1 consultation by a nominal payment of RM 49. cheers

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