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Low-Hanging Financial Fruit And What Comes Next

Low-Hanging Financial Fruit And What Comes Next

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    When it comes to making major changes in your financial situation, you’ll probably get some pretty standard advice for saving money: stop buying coffee every day, brown bag your lunch and start clipping coupons. That’s because these sorts of changes are low-hanging fruit. For most people, making these sorts of changes in their spending is not too difficult — and because they’re everyday habits, it’s possible to save quite a bit of money over the course of a year.

    Finding Low-Hanging Fruit

    Most financial gurus have a few favorite recommendations when it comes to the low-hanging fruit of your finances. Coffee, in particular, gets singled out for attention, over and over again. The fairly common habit of picking up coffee each morning has even been vilified as the ‘Latte Factor.’

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    But what happens after you’ve cut out coffee — or if you don’t drink coffee in the first place? The standard suggestions may not be so useful for you. Instead, it’s worth taking a look around for some low-hanging fruit of your own. There’s no automatic identifier for such an expense, but a simple way to look for savings opportunities is to look at your daily habits. That’s because anything you do day after day can yield more savings because even a small expense can add up quickly over 365 days.

    That’s the real definition of low-hanging fruit: with relatively small amounts of effort, you can get big results. Of course, just how much effort is required for a particular project can differ with something as simple as whether or not you have a coffee pot at home. When you see a financial tip that seems like it would be fairly simple, it’s worthwhile to take a look at the effort and money involved. If the effort isn’t worth the money, it’s okay to keep walking — what is low-hanging fruit for one person is the hardest apple to reach in the tree for another.

    But not all simple changes are the same. Just as there are some relatively simple steps you can take to modify your spending, there are often a few basic options for bringing in more income — such as selling off a few collectibles on eBay. You may even find low-hanging fruit when it comes to saving and investing your money: any time you can automate your savings, you can generally see a better return than if you try to handle the process manually.

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    When You Run Out Of Low-Hanging Fruit

    It can take a little while to change even small habits and work your way through all the suggestions you find from various financial advisers — but sooner or later, you’ll run out of the low-hanging fruit available in your personal situation. That point can be an ideal opportunity to stop and reassess your finances.

    For some people, the easy fixes are enough to move them to where they want to be, financially speaking. Just by cutting down on habitual spending or automating savings, some people will be able to accomplish their financial goals. For other people, though, it can take a little more to move into a financial situation where they feel comfortable. If you find yourself in that second group, it may be time to start looking at some harder steps.

    A starting point is any financial tips you passed by when focusing on simple steps. If you initially considered something not worth the effort it would require — a programmable thermostat might have tripped up one person, while calling a service provider and negotiating a lower rate would be problematic for another one.

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    Another option is aiming for some more significant changes in your lifestyle. A raise would probably make a big difference in your finances, but it may take further education or extra hours at work — it’s the opposite of low-hanging fruit. But it is probably worth working towards if you need to make a bigger difference in your finances in order to meet your goals.

    Small Changes First, Then Big Changes

    Making the easy changes first may seem like a system that won’t pay off as well as chasing a few bigger changes — even if those bigger changes are harder to arrange. But the fact of the matter is that when you’re doing something like changing your morning coffee routine, you’re likely changing an ingrained habit. It’s not going to be the easiest thing to do, but after you’ve changed one or two habits, the rest get a little easier to handle.

    That practice at changing habits can pay off when you start focusing on bigger fish. Something like going back to school to improve your paycheck is going to require a whole new set of habits, in a stressful environment. Having a little practice with the process of changing habits can come in handy in such a situation. The process, as a whole, may take longer, but it will be more likely to pay off.

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    It doesn’t hurt, either that even a couple of the simpler changes you can make to your personal finance can translate into a good amount of cash. If you can stack several smaller steps with a couple of bigger changes, you can wind up with a significant difference in your financial situation. Do the numbers yourself: look at what you can save by changing one small thing in your daily routine and then build from there.

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    Last Updated on July 17, 2019

    The Science of Setting Goals (And How It Affects Your Brain)

    The Science of Setting Goals (And How It Affects Your Brain)

    What happens in our heads when we set goals?

    Apparently a lot more than you’d think.

    Goal setting isn’t quite so simple as deciding on the things you’d like to accomplish and working towards them.

    According to the research of psychologists, neurologists, and other scientists, setting a goal invests ourselves into the target as if we’d already accomplished it. That is, by setting something as a goal, however small or large, however near or far in the future, a part of our brain believes that desired outcome is an essential part of who we are – setting up the conditions that drive us to work towards the goals to fulfill the brain’s self-image.

    Apparently, the brain cannot distinguish between things we want and things we have. Neurologically, then, our brains treat the failure to achieve our goal the same way as it treats the loss of a valued possession. And up until the moment, the goal is achieved, we have failed to achieve it, setting up a constant tension that the brain seeks to resolve.

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    Ideally, this tension is resolved by driving us towards accomplishment. In many cases, though, the brain simply responds to the loss, causing us to feel fear, anxiety, even anguish, depending on the value of the as-yet-unattained goal.

    Love, Loss, Dopamine, and Our Dreams

    The brains functions are carried out by a stew of chemicals called neurotransmitters. You’ve probably heard of serotonin, which plays a key role in our emotional life – most of the effective anti-depressant medications on the market are serotonin reuptake inhibitors, meaning they regulate serotonin levels in the brain leading to more stable moods.

    Somewhat less well-known is another neurotransmitter, dopamine. Among other things, dopamine acts as a motivator, creating a sensation of pleasure when the brain is stimulated by achievement. Dopamine is also involved in maintaining attention – some forms of ADHD are linked to irregular responses to dopamine.[1]

    So dopamine plays a key role in keeping us focused on our goals and motivating us to attain them, rewarding our attention and achievement by elevating our mood. That is, we feel good when we work towards our goals.

    Dopamine is related to wanting – to desire. The attainment of the object of our desire releases dopamine into our brains and we feel good. Conversely, the frustration of our desires starves us of dopamine, causing anxiety and fear.

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    One of the greatest desires is romantic love – the long-lasting, “till death do us part” kind. It’s no surprise, then, that romantic love is sustained, at least in part, through the constant flow of dopamine released in the presence – real or imagined – of our true love. Loss of romantic love cuts off that supply of dopamine, which is why it feels like you’re dying – your brain responds by triggering all sorts of anxiety-related responses.

    Herein lies obsession, as we go to ever-increasing lengths in search of that dopamine reward. Stalking specialists warn against any kind of contact with a stalker, positive or negative, because any response at all triggers that reward mechanism. If you let the phone ring 50 times and finally pick up on the 51st ring to tell your stalker off, your stalker gets his or her reward, and learns that all s/he has to do is wait for the phone to ring 51 times.

    Romantic love isn’t the only kind of desire that can create this kind of dopamine addiction, though – as Captain Ahab (from Moby Dick) knew well, any suitably important goal can become an obsession once the mind has established ownership.

    The Neurology of Ownership

    Ownership turns out to be about a lot more than just legal rights. When we own something, we invest a part of ourselves into it – it becomes an extension of ourselves.

    In a famous experiment at Cornell University, researchers gave students school logo coffee mugs, and then offered to trade them chocolate bars for the mugs. Very few were willing to make the trade, no matter how much they professed to like chocolate. Big deal, right? Maybe they just really liked those mugs![2]

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    But when they reversed the experiment, handing out chocolate and then offering to trade mugs for the candy, they found that now, few students were all that interested in the mugs. Apparently the key thing about the mugs or the chocolate wasn’t whether students valued whatever they had in their possession, but simply that they had it in their possession.

    This phenomenon is called the “endowment effect”. In a nutshell, the endowment effect occurs when we take ownership of an object (or idea, or person); in becoming “ours” it becomes integrated with our sense of identity, making us reluctant to part with it (losing it is seen as a loss, which triggers that dopamine shut-off I discussed above).

    Interestingly, researchers have found that the endowment effect doesn’t require actual ownership or even possession to come into play. In fact, it’s enough to have a reasonable expectation of future possession for us to start thinking of something as a part of us – as jilted lovers, gambling losers, and 7-year olds denied a toy at the store have all experienced.

    The Upshot for Goal-Setters

    So what does all this mean for would-be achievers?

    On one hand, it’s a warning against setting unreasonable goals. The bigger the potential for positive growth a goal has, the more anxiety and stress your brain is going to create around it’s non-achievement.

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    It also suggests that the common wisdom to limit your goals to a small number of reasonable, attainable objectives is good advice. The more goals you have, the more ends your brain thinks it “owns” and therefore the more grief and fear the absence of those ends is going to cause you.

    On a more positive note, the fact that the brain rewards our attentiveness by releasing dopamine means that our brain is working with us to direct us to achievement. Paying attention to your goals feels good, encouraging us to spend more time doing it. This may be why outcome visualization — a favorite technique of self-help gurus involving imagining yourself having completed your objectives — has such a poor track record in clinical studies. It effectively tricks our brain into rewarding us for achieving our goals even though we haven’t done it yet!

    But ultimately, our brain wants us to achieve our goals, so that it’s a sense of who we are that can be fulfilled. And that’s pretty good news!

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    Featured photo credit: Alexa Williams via unsplash.com

    Reference

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