Applying The Practice Of Mindfulness To Money Management

Mindfulness is hot right now, maybe even hip. But for most, it still rests somewhere on a continuum between “woo-woo out there” and “yeah, I don’t have time for that,” rather than being utilized as a practical pursuit that can be applied in surprisingly tangible ways. Yet I believe that it is and can, even, if not especially, within the practice of managing your money.

Thankfully, Harvard professor of leadership and business, Arthur Brooks, demystifies mindfulness for us, defining it simply as “noticing new things.” In a fantastic, short, How To Build A Happy Life podcast episode with another Harvard heavyweight (and psychology professor), Ellen Langer, he discusses mindfulness in a refreshingly earthy way, as the space that exists between prospection and retrospection, the two locales where we tend to spend most of our mind space.

In order to be mindful, Brooks says you “need to figure out a way to focus on the present, to be really experiencing your current time frame, as opposed to thinking about the past or thinking about the future.” Easier said than done, right?

Yes, but that’s thanks to the power of the brain, which “makes it possible for us to be in other time periods than in the current moment,” Brooks assures us. “I can imagine that I’m in the future, practicing future scenarios in my life,” for example.

That’s prospection, and it’s even what Hal Hershfield, professor of behavioral decision making at UCLA, suggests we should do in order to increase our chances of successfully saving for retirement—to imagine ourselves in that future state, in order to inspire the action that will be required to materialize that reality.

Brooks and Langer even note that the ability to engage in prospection is a skill especially common among successful people. But we’re all pretty good at retrospection, aren’t we, thinking about the past? Neither of these tendencies are inherently bad, but the problem is, “if you’re excessively prospective and/or retrospective, it can crowd out your ability to be alive right now,” Brooks concludes.

Would you like to me more alive right now? Yes, please.

But how can we be mindful in the present about something like long-term goal planning, a big part of managing our money, which inherently requires a lot of prospection? Can you be good at both the pursuit of future goals and mindfulness?

Yes, Brooks asserts, by using a three-step process:

1. “Use learned optimism to dream up and set long-term goals.” Let yourself go and dream away! Where would you like to be 20, 10, or maybe five years from now? Yes, write down those long-term goals that you’d like to achieve as well—not so you can brood over them every day and try to mold every action in life to their achievement, just to bring a sense of clarity to your prospection and offer some inspiration with intention.

2. “Now break those goals into sub-steps.” If it was a 10-year goal, where do you need to be in five years, one year, one month, and one week? As we rein in our timeline, we’re getting progressively closer to the present, and ultimately that enables us to transform prospection into mindfulness through this final step.

3. “Live in day-tight compartments—that sets a goal for being fully alive over the next 24 hours.” This term, “day-tight compartments” originated with William Osler but was popularized by Dale Carnegie—in the 1930s, way before mindfulness was cool. Yet it’s precisely the way to describe a practical approach to mindfulness. Others go yet another step further to create compartments within their day, blocking time for similar types of activities—like meetings, phone calls, and indeed, like writing this blog post.

Can you see how immediately transferable this simple process is to money management and financial planning? We’ve historically done a pretty good job with step two—breaking down big goals, like retirement or education—into sub steps, but we can still do better by focusing on shorter-term planning that will add more value in our lives sooner.

And unfortunately, we’re particularly light on steps one and three in the practice of financial planning, and they might just be the more important steps when it comes to effectively crafting motivation—and catalyzing action.

What we’re often missing in step one is more space for “dreaming up”; instead, we focus too much on prescribing, especially as financial advisors and personal finance gurus. Various voices want to tell you that your debt pay off or saving for education or investing for retirement are your most important goals. But these should be YOUR goals, not those of the outside voices. In fact, the best work that an advisor can do is to help guide you in finding your own voice.

And guess what? Dreams aren’t numbers. They’re not quantitative, but qualitative. While certain experts within the financial world have been great at creating the space for life planning within the space of financial planning (like George Kinder, Carol Anderson, Rick Kahler, Brad Klontz, Moira Somers, Carl Richards, and Susan Bradley, among others), we’re generally strong in the calculating department and weak in creating the space for dreaming—the first, and arguably most important, step.

As it relates to Step 3, we generally only get down to years, quarters, and maybe months, rarely helping clients and readers find their way to crafting the aforementioned day-tight compartments necessary to live more in the present. But I believe the financial advice industry is missing a big opportunity here.

Two ways we can do just that is by more directly addressing the foremost driver of every financial plan—a client’s career—through more active involvement in career planning, and by offering valuable insight into the client’s management of their most valuable and scarce resource of all, their time.

Through the amplification of qualitative discovery, the shortening of goal timeframes, and the creation of space for “day-tight compartments,” mindful money management isn’t just attainable, it’s the natural outflow of good financial life planning.