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Could a Financial Punishment Induce You to Change Your Habits?

by Miranda Marquit

Many of us are looking for ways to change our bad habits. Since money is so important to a number of us, one way to stick to habits might be to attach a financial cost to the bad habit.

Not too long ago, Jean Chatzky took part in a colloquium at the George Washington University School of Business, and the subsequent report from Filene.org offers insights into how a punishment (a “stick”) can help you change your habits over time.

Monetary fine

Should you self-impose a fine if you don’t meet your goals?

Chatzky took a look at an experiment run by a Yale professor who was required to pay $500 to a charity he didn’t support when he didn’t reach his goal (weight loss). He enlisted the help of a support team who held him accountable for his efforts to reach his goal. Part of his goal was to maintain the changes he made. That way, he not only had a financial incentive to reach his goal, but he also had an incentive to retain the changes that he made.

In order to take the idea to a wider audience, he started a web site that encouraged participants to choose a referee and a financial stake. According to the site, almost 80 percent of the 125,000 contracts included were successful.

Could This Work For You?

Most of us hate the idea of wasting money. I know that I don’t like to see my financial resources go to waste. If you attached your goal to a financial consequence when you slipped up, would you be more likely to achieve it.

I’ve thought about this a bit since I read the Filene.org report. Like the professor Chatzky mentions, I’d like to lose weight. I’d like to lose about five pounds. I’d also like to make more time to practice the piano and guitar. What if I took these self-improvement goals and connected them to a real punishment?

Right now, if I don’t lose half a pound a week (my goal), nothing really happens. I’m bummed that I’m not making any progress, but that feeling of disappointment hasn’t, so far, been strong enough to really motivate me to make true progress. The same is true of my music practice. If I don’t practice as much as I would like, what happens? Nothing.

I find that sometimes it’s easier to just read a book or take a nap or just surf the web. Pretty soon, I’ve wasted time that could have been used for self-improvement, and I’m annoyed at myself. But not annoyed to make substantial changes.

A financial punishment could change that. What if were required to send $50 to a cause I don’t agree with each week that I didn’t lose half a pound? Or, what if I sent $10 to that cause each day I didn’t practice my music? I might find my priorities changed quite quickly. In fact, if I had someone to hold me accountable and make sure I went through with these consequences, I’d probably work a lot harder. I’d want to save the money, and I wouldn’t want to disappoint my referee.

On the flip side, I also wonder if I could boost my desire to make positive changes in my life and improve my time management abilities by taking that money and donating it somewhere I thought it would some good. What if, instead of donating to a cause I disliked, I could donate to something I support each time I do what I should be doing?

That would provide me with a reward for doing as I should on top of avoiding a punishment for doing something I shouldn’t.

What do you think? Would this type of setup encourage you to make changes? Would you try it?


Published or updated October 1, 2013.
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{ 1 comment… read it below or add one }

1 Bryce @ Save and Conquer

Don’t send your penalty money to a charity you don’t support. Send it to me instead.

Seriously, it sounds like part of the carrot or stick reward-punishment system. The carrot is typically successful if it is something we wouldn’t mind doing, anyway. It often takes a stick to get us to do something we don’t really want to do. The thought of having money taken from us and spent on something we don’t like is a very big stick.

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