Posts Tagged ‘Autonomy’

The Spending Pyramid: Personal Values and Financial Planning (Part II)

In yesterday’s article, we were able to explore the structure of a spending pyramid a la Robert Pagliarini.

Pyramid_Fig2

Based on Dan Pink’s lecture on motivation (which I embedded in another article), there are three human motivating factors.

  • Autonomy – The urge to direct our own lives
  • Mastery – The desire to be better at something that matters
  • Purpose – The yearning to do what we do in the service of something larger than ourselves

As you begin to think about what motivates you in general, you will be able to rearrange the middle portion of the pyramid (in between basic expenses and miscellaneous expenses) to conjure up a picture that aligns with your own values.

Autonomy: Your Money and Yourself

SPPyramid2_1 Image courtesy of Flickr

If directing your life is what motivates you then debt reduction, financial independence and personal improvement will rank high in your pyramid. The most important thing to you is being in control of what happens in your life and blazing your own path. Therefore, neither owing money to credit card companies nor retiring while being financial dependent sit well with you. As such, most of your spending will be directed at your money going mostly into your pocket prior to anything else.

Purpose: Your Money and Others

SPPyramid2_2Image courtesy of Flickr

For some, being financially fit is the means while the end is the ability to serve others and the community. If the realization that there’s more to life than your own needs, then donations to church and charity will rank high on your list. Those who attend church have a set value at 10% (tithing) and will also donate in others ways. Even if you don’t attend a church, you find that donating towards a cause brings about a certain kind of satisfaction. In addition, these donations can also be used for tax deductions.

Another area not reflected in the pyramid is provision for family (both immediate and extended). I told a story of how my father laid the foundation for my siblings and me to go to college. That couldn’t have happened if he didn’t believe that part of his purpose was leaving a legacy to his children.

Mastery: Your Money, Yourself and Others

SPPyramid2_3Image courtesy of Flickr

Sometimes, motivation lies in being better at something for the sake of just being better (epitome of kaizen). Two of the most popular New Year Resolutions in the U.S.A. are managing debt and saving money. Hence it would appear that most people would fall under this category as most believe that finances matter. This belief combined with the desire to understand finance could be a motivating factor for another set of people. Therefore, Goals and Emergency Reserve would rank higher in your pyramid. Goals motivate towards reaching a pinnacle while mastering personal finances starts with being prepared for emergencies. Personal Improvement would also fall under this category as mastering finances would include studying financial matters and learning from others.

Most of the time, personal motivation will come from a combination of two or all three factors and therefore you will find that your values overlap. In the end, the final picture is letting the things that motivate you in life also motivate shaping your finances. Create your own picture and it will lead to spending habits that are aligned with what you think is important.

Why Always Trumps How To

Yesterday I read this article at Seth Godin’s Blog. Seth Godin is the author of numerous business and management books. Never really knew much about the guy until I started hearing about his 6 month Alternative MBA program. Anyway, in his post he draws out the hierarchy of success: Attitude –> Approach –> Goals –> Strategy –> Tactics –> Execution and how most businesses and people spend time on Execution but not enough time on Attitude and Approach. How can I have have more money? How can I lose 10 pounds? How can I get As? Obviously, these are all great questions to ask. The problem is they cannot sustain our actions. It’s not a surprise that when there’s a great best-selling idea in the market, people try it for 1 – 2 weeks, then give up. When the next next idea comes up, people jump on that bandwagon again. Why? Maybe the method is the problem. Perhaps, yet an even deeper question is even if the method is intact, is it the right thing for me to do?

I remember when I first began working out because my friend would always tell me to work out with him. He was a very muscular guy and loved going to the gym and talked about it all the time. It became contagious so I would tag along with him and try to learn the tricks of the trade. After about 2 weeks of lifting, I would be disillusioned and would go back to being a hermit at the library once more. This would happen once a quarter.  I would be excited to work out again, but my reason for going to the gym was never strong enough to overcome the difficulty of the situation. I had a high metabolism, so I wasn’t doing it for the weight. I didn’t care about bulking up and I hadn’t seen a difference in 2 weeks (naïve I know) so what was the point?

Then it hit me! (“Eureka!” said Archimedes)

WhyHow_Archimedes

No matter how high my metabolism was, it didn’t mean I was healthy. I still couldn’t run hard on the soccer field for more than 3 minutes without getting winded and bent over. I couldn’t do more than 20 pushups at a time. Basically, even though I looked fit, I just wasn’t. So my attitude changed from wanting to look like my friend to I need to improve my overall physical health. It didn’t mean that it made it easier for me to go to the gym often; I still didn’t like running or any cardio activities. The difference was now my reason held up to the rigors of what I was doing. When I felt too tired to exercise, I thought about the idea of not being able to run around with the kids or being sick due to high cholesterol or high blood pressure.

In connection to this same article, Dan Pink (Al Gore’s former speech writer) delivered the talk below on TED (TED is a really great site of entertaining speakers sharing ideas. There’s a lot of amazing stuff there to check out at your own leisure)

Vodpod videos no longer available.

A direct link to the video is here

The relevant point (as far as this post goes) is at the end where he mentions that there are 3 reasons that motivate us to do things

  • Autonomy – The urge to direct our own lives
  • Mastery – The desire to be better at something that matters
  • Purpose – The yearning to do what we do in the service of something larger than ourselves

One or a combination of these is what governs our attitudes and actions towards the physical, spiritual, financial, intellectual and social aspects of our lives. However I am finding that execution only succeeds when the attitude is right and strong enough to hold up to this execution.

Thoughts?

Image courtesy of Physics Department Weber State University