Get rich with Jedi mind tricks
Every child brought up watching the Star Wars movies dreamed of becoming a Jedi Knight.
If census results are anything to go by, many of them actually grew up to don the robes and lightsaber of the galaxy's peacekeepers.
In 2001, more than 50,000 New Zealanders claimed to follow the Jedi religion although that had dropped to 20,000 by the next census five years later. A couple of years ago we even had one run for office.
Blessed with supernatural wisdom and combat skills, the ancient order of warrior monks also has the ability to influence the minds of the weak-willed.
While the Jedi would never use their powers to increase their own wealth, we have no such qualms.
Personal finance has a strong psychological component. We usually know what we need to do in order to get ahead, but the hard part is actually doing it.
Our brains are a mess of hard-wired animal instincts and emotions, which can sometimes work against us.
Luckily, we can identify those flaws and sculpt our gray matter to change our own behaviour.
Here are five Jedi mind tricks that will set you on the path to financial success.
1. Pay Cash
There is no difference between a $100 note in your wallet and the $100 balance of your bank account - but your brain thinks otherwise.
Exploit this quirk by using hard cash as much as possible. Do you really want to break that note?
Spicers financial adviser Jeff Matthews once had a client who started buying expensive luxury items after her husband died.
One day she phoned up to ask him to arrange payment on a new $100,000 Mercedes.
No problem, he told her:
"I said I'll take $25,000 out of the portfolio and I'll bring it around in cash- and then I'll put it on the front lawn and set fire to it.
"She said, are you crazy? I said no - because that's what happens the moment that car leaves the showroom."
Needless to say, she didn't buy the car.
In the digital age there's a growing disconnect between people and their "money" - which is usually just a bunch of zeroes and ones stored on a computer server.
"It's non-money - it's just floating out there somewhere," says Matthews.
"It's so easy just to push a card across, and they swipe it, and you get what you want. If you actually physically paid the folding stuff out, I wonder if you'd actually end up buying some of this stuff."
2. Set Goals
Matthews says many people are directionless when it comes to money, drifting through life on a sort of conveyor belt.
We're programmed to live in the here and now. But as soon as you articulate clear goals, that changes.
To take it to an extreme, look at an Olympic athlete.
"Every time Mahe Drysdale goes out, he's going to be thinking I'm standing on the dais, the music playing, the medal's hanging around my neck," says Matthews.
With that goal burnt into the back of his mind, coming second just won't be good enough.
"That's what keeps you on target when in the middle of winter it's freezing cold and pouring with rain, and you're the only one out on the lake rowing," says Matthews.
It's hugely motivating to have something to work towards. The end goal could be something general, like paying off your mortgage, but you also need shorter-term milestones along the way.
3. Think Positive
Jedi Knights use the Force - an energy that permeates the whole universe - to achieve the impossible. While we can't lift 10-tonne X-Wing fighter jets or levitate, we do have the power of positive thought.
Most people set goals in a fit of enthusiasm, usually around January 1st, and then proceed to completely forget about them.
Try writing down or repeating aloud a specific goal that you are determined to reach, several times a day.
The idea behind "positive affirmations" is that they create a self-fulfilling prophecy - if you think you can do something, it will happen.
Dozens of successful advocates include Oprah, Jim Carrey, and Scott Adams, the creator of perhaps the world's most cynical comic strip.
"Prior to my Dilbert success, I used affirmations on a string of hugely unlikely goals that all materialized in ways that seemed miraculous,'' he writes.
It sounds like new age hippy nonsense, but there's no magic involved.
Constant positive repetition means your mind is always open and attuned to any actions that might move you towards your goals.
4. Treat Yourself
As you hit each money milestone along the way, be sure to reward yourself.
"Otherwise it becomes a grind," says Matthews.
"You achieve a goal, you reward yourself, and then you get back to the next goal."
If humans were perfectly rational beings, there'd be no need for self-congratulation.
Why on earth would you treat yourself for doing something that's benefitting you anyway?
But that's not the way we work. Living without any luxuries can sap your motivation and send your progress backwards.
It's better to maintain little indulgences here and there. So take your loved one out for dinner, and then keep on truckin'.
5. Forget About It
The final Jedi mind trick takes another one of our inherent weaknesses-procrastination - and turns it into a strength.
"Set up your savings to be automatic, as if you don't have the money," says Ben Brinkerhoff, head of adviser services at New Zealand Wealth.
"With set and forget, you decide once and then it's on autopilot. You soon learn to live within your budget and after a while you've accomplished your financial goal without even trying."
It only works because we're inherently lazy, says Brinkerhoff.
"Doing nothing is almost always the default choice. So you want to make it so that 'doing nothing' is doing something positive."
He points to research by a Chicago economist, where workers were given the choice to sign up to a scheme which automatically saved part of their future raises.
The other options were to either see or not see a financial adviser.
Over four years, those that signed up to the scheme almost quadrupled their saving rates.
By the fourth pay rise they were saving 13.6 per cent of their pay, well ahead of those who took advice (8.8 per cent) and double those not taking advice (6.2 per cent).
This strategy is as simple as setting up routine payments to a savings account, signing up to KiwiSaver or joining another investment fund with automatic payment plans.
You do your homework once, fill out a form, and then forget about it.
When we're trying to change our money behaviour, psychology counts just as much as the hard figures.
The journey to financial freedom lies ahead. May the Force be with you.
- © Fairfax NZ News