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Writer's pictureBrian Page

Why Budgets Do NOT Work

Updated: Jul 15

Updated post: 9/5/23; Original post: 11/13/22


Early in my friend’s marriage, his wife insisted they purchase an elliptical machine. Just a cool grand for the promise of staying in shape after college. She wanted to continue to work out after college. So they purchased the machine, and after being used a few times, it became a thousand-dollar temporary hanger for clothes pulled out of the dryer.


They went for it again years later, purchasing a second elliptical machine, then a $600 bike, with the same result. His wife had the time to work out; they made sure of it. So then she tried aerobics classes, jazzercise, and then Orange Theory, and this didn’t stick either, which is not uncommon.


If you’re married this pattern likely sounds familiar to you. Despite our best intentions, it can be hard to do what we know is best for us.


Exercising more, losing weight, and saving more money typically top the New Year's Resolutions list, yet folks continue to fall flat to reach their goals. First-time gym membership enrollments always increase in January. Of those new enrollments, 50% quit the gym within six months, and fad diets are just as unsustainable.


Losing weight, exercising, and saving money can require willpower. This must be why fitness fanatics and the financially healthy are so successful, right?


Willpower works when it's not often needed


The Marshmallow Experiment is one of history's most famous longitudinal studies on willpower. The test measured a young child's ability to delay gratification.


Children were given the option of eating the marshmallow immediately or waiting 15 minutes to eat it and then receiving a second marshmallow as a reward. The children who delayed gratification were "more successful" as adults.


Why budgets do not work

There have been numerous variations of the experiment conducted over the years. However, focusing on willpower alone only works temporarily, and research has shown that, eventually, most people give in. What worked for many of the children from the Marshmallow experiment and works for adults in other experiments is to simply avoid the temptation all together.


Adults are surrounded by metaphorical marshmallows. There is no shortage of spending apps or food delivery services on our phones. Automatic cell phone payments and subscriptions are monthly holes in our pockets that are easy to forget.


3 Behavior-based budgeting strategies that DO work


When you and your partner are building a budget, you are putting together a plan for how to live your life. Here are three behavior-based budgeting strategies that DO work.


1. Change your environment


The outcome of the paper Beneficial habits mediate the relationship between self-control and positive life outcomes found that people who are good at self-control structure their lives to avoid having to make self-control decisions. Here are some example strategies for how you can do this with money:


Why budgets do not work

2. Make it fun


There is strong evidence that the best way to reach your goal is to ensure whatever the process is to reach it is fun for you. People who are better at self-control enjoy whatever activities are necessary to reach their goals. Here are a few ideas you can use with your spouse: 5 Fun Dates for Under $20


3. Change your lifestyle


Do you want to be more active? Have active friends. Do you want to eat well? Only buy healthy food at the grocery. Do you want to avoid overspending? Find ways to hang out with friends without spending a bunch of money.


Have a look at our previous post 8 Frugal Ways to Have Fun with Friends, for some great ideas.


 

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Citations


Mischel W, Ebbesen EB, Zeiss AR. Cognitive and attentional mechanisms in delay of gratification. J Pers Soc Psychol. 1972 Feb;21(2):204-18. doi: 10.1037/h0032198. PMID: 5010404.


Saxler, Patricia Kasak. 2016. The Marshmallow Test: Delay of Gratification and Independent Rule Compliance. Doctoral dissertation, Harvard Graduate School of Education.


Galla BM, Duckworth AL. More than resisting temptation: Beneficial habits mediate the relationship between self-control and positive life outcomes. J Pers Soc Psychol. 2015 Sep;109(3):508-25. doi: 10.1037/pspp0000026. Epub 2015 Feb 2. PMID: 25643222; PMCID: PMC4731333.


The Marshmallow Study Revisited, The University of Rochester, 11 Oct. 2012, https://www.rochester.edu/news/show.php?id=4622.



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