What really motivates us in life– why we do what we do? Are we making money decisions based on what we truly want in life or are we being governed by external rewards? Recently, I finished the book Drive by Daniel Pink. In his book, Pink states that our modern economy depends more on creativity and the heuristic, right-brain work of people. He argues the motivations for this type of right brain work are intrinsic, yet our model for motivating behavior supports the belief that people are driven by outside factors such as rewards, wealth, and status. Pink proposes that we need to shift our thinking and create a whole new system focusing on and supporting people’s intrinsic motivations in life.
A perfect example of how intrinsic motivation works was given in the book, highlighting a study done on children. Kids were broken out into three groups and told to draw for 1 hour. The 1st group was given no direction and at the end of the hour they were given a reward. The 2nd group was told that if they drew for an hour they would be given a reward and finally the 3rd group was given no direction and no reward. After conducting this study several times with the same children for the next few weeks, they discovered that the group given no direction and no reward continued to draw for the full hour week after week while the other groups would stop drawing after a few minutes. The kids who continued to draw did so because they wanted to, not because of the external reward.
I believe Pink’s theories are very applicable to our financial lives. Most of us know what we need to do in our money lives (spend less than we earn, save for the future, get enough life insurance, etc.), and yet so many of us find it difficult to actually implement these principles and strategies over the long haul. Money motivations based on external factors are often fleeting, while intrinsic motivations are essential toward sustained financial success.
For example, if you were given a $1,000 bonus for saving $17,000 into your 401k for the year, would you do it? Probably, but it’s possible that eventually the reward might not be enough. In order to keep the motivation, there may need to be an increase in the reward or a new reward offered altogether. But what if the motivation to save came from within you? What if you wanted to save $17,000 per year into your 401k because you knew once you reached financial independence, you could have complete autonomy and peace of mind? I’m guessing you might be a lot more motivated to save and keep saving every year if you focused on this intrinsic motivator versus an external reward.
I challenge you to take time this month to really think about what motivates you when it comes to money. Whatever the end goal is, knowing what drives you when it comes to money can help you make more financial decisions in alignment with what is truly important to you. And please feel free to share your money motivations with me, I would love to hear them!