This is the tendency to consciously do things which we genuinely know are not beneficial to us.
A non-financial example includes smoking cigarettes (we know we shouldn’t, but many do anyway), while a financial example includes not living within our means, or saving up for a comfortable retirement (we know we should, but we often don’t).
One test of whether you possess strong willpower (or not) would be to eat only one peanut, or a single popcorn (be it sweet or salty), or to watch only one You-Tube video, at a time.
So, how can we achieve that feat?
Willpower is really about properly directing the spotlight of attention; learning how to strategically allocate our attention, and how to control that short list of thoughts in working memory.
It’s about realizing that if we think about peanuts, we would end up eating them. Which is why we need to look away, or even better, not have any peanuts in the house.
What’s interesting is that this cognitive skill is not just useful to dieters; it also seems to be a core part of success in the world, as numerous psychological experiments have proven. Like the one on delayed gratification—The Marshmallow Test (on kids).
Do be aware, though, that willpower is not renewable: use it, and you lose it. Additionally, self-control could also be so easily depleted that we would be foolish to depend on having it when we need it.
But let’s get back to your comfortable retirement.
One way to eliminate the “stress” of constantly having to direct your spotlight of attention would be to automate it. And a sensible way would be to invest 30 minutes of your time (with your trusted online banking application) to set up a Regular Savings Plan, where a portion of your salary (10 – 20%) would be invested (automatically) every month into a portfolio of broad-based Exchange Traded Funds.
And that’s it. Hands off. Spotlight of attention off. And just relax.
Because investing a little each month would prevent you from acting on the whims of your reflexive brain; thus committing you to building wealth over the long run. Moreover, it puts your money to work on auto-pilot, so that momentary impulses would not dissipate your resolve—an ideal way to “handcuff” yourself.
Additionally, there is no need for a daily check on the stock market’s or your portfolio’s performance. A quarterly review is more than sufficient as oftentimes, doing nothing in the stock market is the best choice. Continue with the Regular Savings Plan for a long time, say, 20 years, and your retirement would be financially sound.
Increasing your monthly contribution when you get a salary raise or bonus is optional; nevertheless, this is highly recommended to keep up with inflation.
In a recent interview, Warren Buffett (the “Oracle of Omaha”) explained the easy path to investing success:
“The most important thing to do is just to do it. Pay no attention to the headlines in the papers, or people on TV. Just put aside a little money every month—put it in a very low-cost index fund.”
Additionally, regardless of how volatile the stock market might be, don’t shy away or chicken out.
“Short-termism is eating portfolio performance.” – Michael J. Mauboussin
“Nothing is impossible to a willing mind.” — Han Dynasty
“Weakness of attitude becomes weakness of character.” — Albert Einstein