Incentivize It!

This morning I had the great fortune of meeting up with a very good friend of mine for a run around Green Lake. We hadn’t seen each other in a few weeks and quickly caught each other up on life events, major and minor. She was telling me about her current bought of unemployment and being a mom to her young daughter. And specifically we talked about her battle with homework every night.

“So now I’ve got this new thing. If she does homework every week and it’s not a problem, we go to Family Fun Center on Friday.”

She is employing an age-old economic strategy of incentivizing something. And what’s interesting is that she’s using it for one of most hotly debated uses: schoolwork. A study was recently put out by the Harvard Education Innovation Laboratory to see if paying kids for good grades would improve their GPA. The result?

Nothing. Students improved their GPAs by .1, which was not statistically significant in this case. Showing that paying students didn’t help them improve their grades.

But what does help? Creating good habits early on that make learning and studying automatic. And one of the quickest ways to build a new habit is to incentivize it.

If you want to lose weight by avoiding chocolate during the day (I have no idea where this example is coming from), then give yourself an incentive that at the end of the week you get frozen yogurt. And ignore that crap about not using food rewards. Use whatever rewards will help you.

My buddy is helping her daughter see that by doing the hard work she gets a payoff in the end. And one could argue she won’t do this on her own, but how many of us made bargains that if we just finished this chapter we could roam Facebook for 15 minutes? Or whatever the generational equivalent is.

If it turns out you have awful habits and skip to the end, be sure to place yourself in an environment that sets you up for success. For example, when I study, I have a program on my computer that doesn’t allow me access to Facebook but once every hour. And it’s because I know I’ll be tempted otherwise. It’s the same reason why Andy has to hide the chocolate chips in the house so I don’t put in a central line.

Relating to your finances, this is easy. Want an awesome vacation? Skip eating out to save up, but keep a picture up of your destination on your phone or computer. Or whatever your financial vice is. And watch the money start to add up.

I tell this to my clients with big debt to repay. At the end of repaying debt we have no reward since theoretically the debt rewarded us along the way with new toys or trips or just living in some cases. So give yourself an incentive. Once you pay off your debt treat yourself to a fancier dinner, a day hiking in your favorite location or all day on the couch with a book (the last one would be mine if I had a ton of debt).

Anyone got any habits their trying to break through incentives?

PS I’m reading The Power of Habit right now and will have many, many more tips about how to form new habits in the coming weeks.

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3 Responses to Incentivize It!

  1. You just triggered a thought when you said to put a picture on your phone or computer. Anytime I have a huge financial goal, I put a picture on my cards: debit, credit, whatever! I also put a picture next to my cash or folded over my cash. Whenever I go to purchase an item, I see that picture and automatically weigh what I'm getting against what my very real, very visual goal is. Most of the time I end up reconsidering a few items and feeling very accomplished for having made a conscious choice! 🙂 Big (vacation, house) or small (book, fancy dinner out), if I have a goal and that visual is there, I accomplish it much faster!

  2. Unknown says:

    Is that the Duhigg book? I want to get my hands on that book! My sister is reading a batch of books about irrational / rational decision-making — I'll get titles for you if you're interested.P.S. "Bout" not "bought." Of unemployment.

  3. Verhanika says:

    Yes it is! And it's awesome.And if I had a comment for every misspelling in my posts…

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