Mindfulness can help you get in control of your spending

Mindfulness can help you get in control of your spending

Mindfulness can help you get in control of your spending.

Why do we spend money to feel good now, even if it’s obviously going to have negative consequences at some point, such as damaging financial stress.

And why do we seem to make better decisions if those decisions are planned and not impulsive?

The answer is complex, but just so you really get the ideas, first try to imagine yourself under a lot of financial stress. Maybe you are working and studying, and dealing with a worrying, ongoing health issue too – so you’re always flat-out busy, your mind feels ‘full’ and you have a sense of no end in sight.

Imagine how that stress feels in your body. It’s a difficult feeling, right?

Then without thinking, answer which of these options you’d pick:

  • buying two pairs of the same fancy shoes you like because they are in the window at your local mall or ordering them for 25 per cent less but having to wait a month.
  • selling your car today for $500 less than you could probably get because a buyer is ready with the cash and you want a weekend away or waiting for more money.

Many people probably favour the first option in each case because they want the ‘reward’ now.

Why? According to behavioural scientists, “present rewards are weighted more heavily than future ones. Once rewards are very distant in time, they cease to be valuable,” so says behavioraleconomics.com.

This was the finding of landmark research done in 2002 by Shane Frederick, George Loewenstein and Ted O’Donohue, and published in the Journal of Economic Literature.

Interestingly, when it’s not possible to be rewarded immediately, we will often wait longer to receive a greater reward. Research shows if given the choice between $100 in a year or $120 in 13 months, we are more likely to wait.

All this suggests when if we plan for the future, we are likely to make better decisions about money. But it depends what that future event is, and how far off it is.

If it’s a skiing holiday with friends in the Canadian Rockies next Christmas, we will probably start saving. But if it’s retirement at age 70 (as the Federal Government proposes from 2035), that feels somewhat less urgent, even though few would argue it’s more important than a skiing trip.

In a 2014 report on savings, the Reserve Bank of Australia showed “younger households place more weight on saving for large purchases and emergencies to smooth near-term consumption rather than saving for longer-term (retirement) consumption.”

“Some keys to managing decisions like these are to make those far-off outcomes feel closer,” Peter Sokol-Hessner, assistant professor in the department of psychology at University of Denver, The Huffington Post.

He suggested “to imagine how you’ll feel when you can use those retirement funds, how grateful you’ll be that your younger self sent this gift into the future.”

What has all this got to do with mindfulness?

Mindfulness is being fully aware of what’s happening in the present moment. When we can train our minds to be more aware of each moment – either through some kind of mindfulness practice like meditation, or just a deliberate change in mindset – we make better spending and saving decisions.

We can think about what we really need now, versus what we need in the future.

For instance, you may decide to do extra research before selling your car or home, looking more carefully at trends and brainstorming other ways to find ready cash.

A big benefit of becoming more mindful is it creates a buffer against the power of the external pressure to spend. Think about the hype involved around the release of the next stage of a sought-after apartment development: it’s in the interests of a real estate agent to get potential buyers into a feeding frenzy state with other potential buyers, so the stage sells out, the project can go up and the next stage goes into marketing overdrive.

“It’s not just real estate,” says Financial Mindfulness’s founder and CEO, Andrew Fleming.

“A lot of marketing works on the idea of scarcity and urgency, whether there’s only 100 in stock, or it’s a brand new order, or whatever. Think about new phones, new cars, something that is labelled ‘limited edition’.

“Marketing often works on us by getting us to make a decision before we’ve had a chance to think through all of the consequences.”

“Becoming more mindful will help you to buy things rather than be sold to. It’ll allow you to come from an understanding of your real needs, consider the consequences of your actions and respond by making decisions, rather than be manipulated by marketing.”

Mindfulness to remain a key part of what it means to be human in the future

Mindfulness to remain a key part of what it means to be human in the future

Mindfulness to remain a key part of what it means to be human in the future.

While we look in awe at the videos of amazing robots coming out of labs worldwide on ever smarter smartphones, sceptics and academics are meanwhile busy wrestling with the real value of mindfulness.

A leading British expert has made a huge claim linking the two.

“Mindfulness may come to be seen as the core 21st century capacity, because it concerns our only competitive advantage over the machines: awareness itself,” wrote Jamie Bristow, director of the Mindfulness Initiative in the United Kingdom. The Initiative is an institute that lobbies politicians to include matters “of the heart and mind” in their policy decisions worldwide.

That’s right. We may actually have an edge over machines.

We have known for decades that machines have the potential to outperform humans in almost all areas of life. The World Economic Forum (WEF) concluded in a 2020 report that “a new generation of smart machines, fuelled by rapid advances in artificial intelligence (AI) and robotics, could potentially replace a large proportion of existing human jobs.”

In the next few years, 3% of jobs will be potentially automated by AI, according to PwC’s report “Will robots really steal our jobs?” Increased digitization resulting from COVID-19 may accelerate this trend. By the mid-2030s, as AI advances and becomes more autonomous, 30% of jobs and 44% of workers with low levels of education will be at risk of automation.

“Artificial intelligence and robots are not just challenging blue-collar jobs; they are starting to take over white-collar professions as well. Financial and sports reporters, online marketers, surgeons, anaesthesiologists, and financial analysts are already, wrote Business Insider’s Kathleen Elkins.

The ‘technological singularity’ is the name given usually given to the point at which artificial superintelligence sees machines ‘transcend’ human beings. Some experts in the area believe this will happen before 2045, although Google’s director of engineering, Ray Kurzweil thinks machines will match human intelligence by 2029.

A slightly newer take on the idea is that it’s not black and white, and that we are simply merging intelligence – a process that accelerates the more we rely on it. Think of our use of google maps instead of street map books of just 15 years ago.

So, as we merge with machines, what parts of us survive?

Writing for Mindful.org, Jamie Bristow pointed out that some of the world’s thought leaders are looking past inevitable explosion in AI and to how our innate humanity can solve problems robotics cannot.

One of the key issues put forward at the 2017 World Government Summit in Dubai was that “We need to develop 21st century job skills that cannot be replaced by robots and AI, which means exploring and cultivating what makes us uniquely human.”

Bristow alluded to the fact that plenty of parts of many jobs, such as being listened to by, for instance a GP, carry value beyond anything a machine could do.

In 2021, Bristow was more certain than ever than our innate humanity

‘As the ‘fourth industrial revolution’ advances, bringing with it increasing automation and escalating AI, it will be ever more necessary to retell our stories of purpose and value around qualities that are innately human,” he wrote in a recent paper, Mindfulness: Developing Agency in Urgent Times.

“Indeed, it has been suggested that we are entering the age of humanics rather than robotics: “an age that integrates our human and technological capacities to meet the global challenge of our time.”

A great example of this at play is how Big Tech is paving the way with the global roll-out of the COVID-19 vaccines. “Globally, we will be using everything from AI to machine learning, the Internet of Things, and blockchain to process huge amounts of data about vaccinations happening in real time, says Daniel Newman principal analyst of Futurum Research. And the data isn’t just about “shots in arms.” It’s about cold-chain traceability (proper storage), serial number verification, vehicle routing and geofencing of vaccine delivery, and more. It’s a supply chain problem at a massive scale.

Another key idea proposed at that summit, by Professor Klaus Schwab, founder of the World Economic Forum, was “new, human-centered thinking—considering happiness, wellbeing, purpose and meaning” in policy-making. Human happiness was also consistently near the top of the agenda, especially with mass unemployment a big possibility due to automation.

“It goes without saying that anything that we can do on autopilot, robots and AI will soon do better,” Bristow wrote.

Mindfulness could be a key, partly because it can be much more powerful than simply quieting the mind.

“Mindfulness practice is about more than just attention training. It’s also largely about developing kind curiosity towards inner experience, and provides a framework for deep inquiry into the psychological mechanisms of distress and wellbeing,” Bristow wrote.

In other words, when we observe thoughts without judgement we can see past our own insecurities and find it easier to empathise with others.

“This heightened empathy arises in part through the development of body awareness—as it turns out, the more we are grounded in the body and know stillness, the more we can feel moved,” wrote Bristow.

Psychologists who utilize mindfulness in their work might well add guilt and healthy shame to empathy on a list of things machines could mimic but would find it very difficult to do as naturally as humans. Could a machine that malfunctioned and injured its owner slow its output and produce extra reporting until it had regained trust?

If you consider financial stress too, it’s hard to imagine how machine learning can cope with the highly complex emotions involved in our dysfunctional and illogical behaviours with money – such as shame and remorse from things like gambling, impulse spending, or comfort-spending.

A mindful approach is inclined to accept the confusing, even contradictory and move forward purely based on empathy not only a focus on outcomes.

“Far from just another fad, perhaps the mindfulness craze is the start of a macro trend towards putting self-awareness and contemplative practice at the centre of human endeavour. Let’s hope so.”

It’s hard to argue with that – unless you are a super smart phone capable of understanding this on your own.

Money doesn’t make you happy, but bad debt makes you sick

Money doesn’t make you happy, but bad debt makes you sick

Money doesn’t make you happy, but bad debt makes you sick.

You can’t buy happiness, goes the old saying. We also know that being in poverty decreases happiness, but instinctively we know having lots of money doesn’t guarantee happiness.

Research backs up the motherhood statement too. In a landmark study, Daniel Kahneman and Angus Deaton, of Princeton University found that after an income of US$75,000, earning more money does not increase happiness.

In 2010, the pair studied the survey responses of 450,000 Americans and found that “high income buys life satisfaction but not happiness”, aka emotional wellbeing.

Then in 2020, three Harvard researchers, Ashley Whillans, Lucía Macchia and Elizabeth Dunn looked at whether prioritising time over money left us happier than focusing on money over time by studying 1000 students graduating from the University of British Columbia.

In short, the students who aimed for money were less happy a year after they graduated than those who made time a priority.

It seems even more obvious that people with lots of debt are not happy, but the extent to which this is true is shocking.

In 2016, Australian investment advice company Acorns Grow Australia surveyed 1000 people and found 70 per cent suffered depression and anxiety because of their money worries, while 76 per cent had trouble sleeping for the same reason. More than half assigned physical health problems to money worries.

In 2013, University of Southampton researchers Thomas Richardson, Ronald Roberts and Peter Elliott found links between severe unsecured debts (such as credit card debt, student and personal loans) and poor health, especially mental health by reviewing 65 previous studies.

Those with unsecured debts were 3.24 times more likely to suffer “mental disorders” than those without unsecured debt and 2.77 times as likely to have depression. They were 2.68 times more likely to be problem drinkers but a scary 8.57 times as likely to be dependent on drugs. Sadly, people with debt are 7.9 times more likely to take their own lives.

Back to the Acorns survey results, a third of Australians aged between 25 and 44 had “abused” alcohol because of financial stress, while 20 per cent coped with money worries by using illegal drugs. It did not say how many turned to prescription drugs to manage.

“The majority of studies found that more severe debt is related to worse health,” the Southampton university team found. Their research was published in the Clinical Psychology Review.

Then there’s the phenomenon of ‘debt-anger’, in which instead of getting fearful about money, people in debt get very angry. By definition, the person affected becomes stressed, and can experience damage to their relationships, feelings of isolation and despair and even weaken one’s immune system.

Australia has world-leading levels of household debt according to most measures. When debt is taken as a percentage of net disposable income, Australia had the fifth highest debt per household out of 35 OECD nations, at nearly 210 per cent of net income, in 2020.

Australia was also the worst in the Asia-Pacific region, in relation to its household debt-to-GDP ratio, according to The Asian Banker website.

Even though most of Australia’s household debt is related to wealth creation or an asset, such as a home loan (the average mortgage debt is $350,000), well over a third of Australians (37 per cent) report they are struggling to repay their debt.

In various research the percentage of Americans struggling with debt is anywhere between 30 per cent and 70 per cent. Even the smaller number is a huge worry.

Citizens of both nations – and people throughout the so-called ‘first-world’ – repeatedly cite money worries as at or near the very top stressors in their lives in surveys and studies.

The Southampton university study didn’t go into which came first – poor mental health or money problems. But the links are clear and so is the message: heavy financial stress will either make you sick, or keep you that way.

The study also didn’t go into what to do about severe financial stress – but there’s plenty of advice out there. The traditional options include consolidating debt, budgeting and financial planning, or studying or working longer hours to try and land a more lucrative role. The latter approaches can come with their own problems: the stress that results from overwork and social disconnection.

One widely praised and usually inexpensive option is to be mindful about money. Mindfulness, defined by some as moment-by-moment awareness, helps to still the mind and improve messy and negative thinking. A huge amount of research worldwide has shown mindfulness positively affects a range of mental health issues including depression, anxiety, memory loss and sleeplessness.

If you are experiencing distress in your life and live in Australia call: Lifeline 131114, Mensline 1300 789 978 or Beyond Blue 1300 224 636; regarding debt problems, the National Debt Helpline may be of use on 1800 007 007.

Financial stress a perennial reason couples split

In a sea of couple conflict, find stability

Financial stress a perennial reason couples split.

It’s February already and in a lot of relationships that means money worries will be to the fore.

It’s well known amongst lawyers that returning to work after the holidays brings up dissatisfaction amongst couples.

The pressure of being forced together more often, especially with the added burden of home-schooling during the pandemic, has only increased tension for many couples.

The first working Monday of the year is even known as “Divorce Day” by some lawyers because of the increase in enquiries about separation after the stress of Christmas and the New Year.

Dig a little deeper and you’ll see a correlation between that stress and the bills coming in following holiday spending. A lot of it is financial stress.

Money stress has long been a source of relationship pressure.

“Arguments about money is by far the top predictor of divorce,’ said Kansas City associate professor Sonya Britt, from the university’s family studies and human services program, in 2013.

“It’s not children, sex, in-laws or anything else. It’s money – for both men and women,”

Britt, who specialises in “financial conflict within relationships” ran a study of 4500 couples as part of America’s National Survey of Families and Households.

It was published in Family Relations, a journal of applied family studies. The study accounted for income, net worth and debt and found “it didn’t matter how much you made or how much you were worth.

“Arguments about money are the top predictor for divorce because it happens at all levels.”

Britt also found arguments about money took longer to resolve and recover from than other disagreements and used harsher language.

Her research seems to be backed up by people who sought information on relationship therapy in Australia.

An online survey of 2050 people who visited Relationships Australia’s website in late 2015 found nearly 85 per cent thought “financial problems were likely to push couples apart”. More than three quarters of the respondents were women.

This was a big increase on the last time the counselling provider surveyed web visitors on money issues, in 2011. Back then 71 per cent thought money dramas could split couples.

The survey drilled further into why money worries might lead to separation – and the answers were varied. But several of the main causes related to stress; 25 per cent thought financial problems caused “too much stress”, while another 15 per cent answered: “a lot of people can’t cope with the stress”.

Nineteen per cent said money troubles “caused fights” and 12 per cent said such issues “caused blame”.

But the biggest single reason cited in the survey was the more diplomatic “people have different priorities/expectations”, which is another way of saying people disagree about money – presumably how much is enough, as well as how to spend and /or save it.

One finding in particular from the survey showed how mixed up couples are about money: around three quarters of female respondents reported that their male partner managed finances, exactly the reverse of how male respondents answered the question.

In other words, while everybody seems to think they are in charge of the money, nobody seems to be communicating well about finances.

This was backed up by a different set of questions Relationships Australia asked respondents in 2019 – the degree to which couples discussed finances.

Prior to making a commitment to their current of most recent partner, 56% of survey respondents reported they had not discussed how they would manage their couple finances if one of them no longer had an income.

A significant majority of women (74%) and men (69%) reported they had not discussed how they would divide their finances if their relationship ended.

“A mindful approach to money is without doubt a more successful one and a key to living mindfully is being able to accept reality for what it is – good, bad or neutral,” said Andrew Fleming, CEO/Founder of Financial Mindfulness.

It’s not a great leap to see that this can stretch to couples keeping secrets from each other about their finances.

“When we can accept reality, we can admit where we are at with money, not be so intimidated by it and we can discuss financial problems within relationships too.”

“That takes a lot of stress out of relationships, and everyone benefits from that.”