As leaders, this is a question we must think about on both a personal level and on behalf of those who work for us. For now, we focus on the personal and there could not be a more succinct or relevant guide than the School of Life’s How to Find Fulfilling Work. The book does not necessarily recommend that you leave your current occupation but discusses how to find freedom, flow and meaning in the work you do, the three components that the writer identifies as being essential to a rewarding career.
This will be familiar territory to anyone who has encountered Daniel Pink’s thoughts on autonomy, mastery and purpose. Pink and his book Drive focus on how we make the work we set for others more rewarding, and we recommend this in the Leading Others section of the course.
What you do with your money is your business and no one can tell you how to spend it. That being said, saving for the future is unequivocally a good idea. Research shows that our financial attitudes are formed largely in childhood and based on observed behaviours, usually by our parents. However, this does not mean that we are powerless in the face of these unconscious assumptions and habits. Thanks to insights from behavioural psychology and the democratising power of the internet is easier than ever to write our own financial destiny.
The reality is that finance is intimidating for many of us. It is a field littered with jargon and can seem almost designed to be inaccessible to the public. In the past the two routes around this problem were to dedicate a significant portion of your time to research and education, or, if you were able, to hire a financial advisor. Thanks to the internet this is no longer the case. There is an abundance of free personal finance blogs and resources making financial literacy something we can all achieve.
Money to the Masses
Money for the Rest of Us
Saving for the future/retirement
Saving enough for retirement is one of the cornerstones of good financial health. And yet putting money away now that we would enjoy spending today in order to save for an ill-defined future need is something many of us struggle with, 1 in 6 over 55s in the UK have no retirement savings other than the state pension. This is because of a combination of factors but behavioural economists have identified two primary drivers of our resistance to saving: present bias preferences and loss aversion.
Rather than provide a full definition here it is sufficient to say that the two refer respectively to the higher value we place on our current happiness over our future happiness and that we experience a greater pain giving something up than we experience pleasure receiving it. Below are two possible solutions.
Connecting to our Future Selves
Brain scan studies have shown that some of us who have trouble making decisions that benefit us in the future do so for a remarkably interesting reason. Scientists placed two groups of people into an MRI machine, one group that saved adequately for retirement and one that did not. When the group that saved for retirement were asked to think about their future selves the area of the brain connected to the “self” lit up. Conversely, when the group who did not save were asked the same question, the area of the brain connected to others lit up. The group of non-savers related to their future selves as if they were literally a different person.
Related studies went on to show those participants who were helped to identify with their future selves by being shown a mocked-up picture of what they would look like when they reached 65 subsequently saved more in their pension schemes. We recommend the next time you sit down to plan your finances, which should be regularly, you download the linked app and spend a few minutes considering your possible future self as a reminder to save more (and wear sunscreen).
Save more tomorrow
Simply being reminded that age comes for us all is unlikely to be enough alone to improve retirement savings for most. A more practical solution is also required. Enter Save More Tomorrow. Your organisation may already be engaged in such a scheme either as a default option or an opt-in. In brief, the scheme links any pay or salary increases you receive (up to an agreed limit) with pension contributions. In this way you do not experience the pain of losing money incorporated into your budget to retirement savings, your standard of living in the present remains unchanged but your future self benefits.
TEDNY2011 | Schlomo Benartzi
It's easy to imagine saving money next week, but how about right now? Generally, we want to spend it. Economist Shlomo Benartzi says this is one of the biggest obstacles to saving enough for retirement, and asks: How do we turn this behavioral challenge into a behavioral solution?.
We have all experienced the emotional turmoil of the new year’s resolution. The initial period of giddy optimism followed by familiar feelings of defeat when we run out of steam and find ourselves repeating old habits. And yet if we want to continue to increase our value as a leader over the course of our careers, continual improvement is necessary.
Rather than trying to enact this change through short periods of radical overhaul, a more gentle and almost certainly sustainable approach is to focus on micro improvements each day, striving to only be incrementally better than you were yesterday but to sustain this momentum over time. This is the approach arrived at by Owain Service and Rory Gallagher, the directors of the UK’s behavioural insights team (or “nudge unit”), in their book Think Small.
In the book the pair outline what they call the “nudge toolkit” a series of small interventions you can apply to various areas of your life to achieve big goals gradually.
If the above sounds a little dry for your taste, the Japanese also have a name for this concept (as they usually do): Kaizen