If you one of those who has actually established financial goals for yourself, then you are on the right track. In fact you are already one up on many who are not clear about their financial goals and continue to flounder about making them. This is despite their enthusiasm and keenness to achieve financial freedom at the earliest.
Coming back to your own goal setting and achievement agenda, it is more than likely that you have also drawn plans to stick to a budget, settle your credit card debt on time, build up an emergency corpus and the like.
There’s simply one small trouble: You desire the incentive, but do not wish to do the job it takes to get there. So you postpone as well as just continue to spend and find that you are only getting deeper into debt. You find that you are inevitably spending more than you said you will and that is keeping you away from your target of financial freedom. You are not the only one facing this problem. There are many others like you and the only way to solve this is through a strategy called the “Commitment Device”.
What then is this concept of commitment device?
“Commitment device” is a term created by Stephen J. Dubner and also Steven Levitt, the financial experts that authored the bestselling manual “Freakonomics” and currently make a popular blog and also podcast of the same label. They define a commitment device as “a way with which to lock yourself in to a course of action that you might not otherwise think can produce the results you may desire”.
The earliest recognized example of such a commitment device was found in “The Odyssey.” The hero in this story, Odysseus, recognizes there is no way that he can easily withstand the Sirens, the vintage femme fatales that entice seafarers to their doom. He therefore has himself tied to his ship’s mast, making it physically inconceivable for him to leap over the top and therefore succumb to their trap.
It’s undoubtedly not a great idea to thus bind yourself to your recliner to keep away from the supermarket but you might attempt more modern methods to remain on track and meet your financial goals.
The commitment devices you can take help from
1. Make a public revelation
Put down your financial goals in writing so that you become accountable for them. You can then even post them on Face book so that you know if you do not follow them you know you have suffered in your accountability and would be open to questions from your friends and others close to you.
2. Make a payment for a cause you do not believe in
Put the check in an envelope and hand it over to your friend with instructions that if you fail in your resolutions, he can drop the check. This way you are ensuring that you are placing your pride and also moral sense on the line and would therefore do everything possible to stick to your commitments.