Part 5 of 5: From Emotionality to Intentionality: Calm in a Costly World
Inspired by Justin Wolfers' Platypus Economics article, A User's Guide to Living With Inflation.
Alas, we come to the end of my five-part series about reacting to inflation in a way that is both intentional and supportive of your mental well-being and your financial life.
In past posts, I’ve explored the psychological barriers to smart spending and saving, from impulsive reactions and discounting our future selves to the struggle of adjusting to inflation, and an analysis of why people resort to sub-optimal liquidity preservation through the hoarding of physical cash.
Now, to wrap up with my final post on managing the emotions and psychological effects of inflation, here is Professor Wolfers’ idea #5 from A User’s Guide to Living With Inflation, followed by my insight from a financial therapist’s lens.
✨ Idea #5: Hedge inflation risk
“If inflation risk worries you, use tools designed to hedge inflation risk. The cleanest example is inflation-indexed government bonds. In the United States, that means instruments like inflation-indexed bonds (called “TIPS”) and I Bonds. Their appeal is simple: the inflation adjustment is written into the contract. If inflation rises, the payoff adjusts. Your purchasing power remains guaranteed, even as inflation rises and falls.”
In the language of finance, a hedge is a tactic to reduce the risk of loss. Because inflation is effectively a constant loss of the value of your money, an investment that adjusts for inflation reduces the loss caused by inflation.
We can also hedge emotional loss. My earlier posts in this series about inflation offered strategies for reducing stress, anxiety, sadness, and frustration caused by money. In this final post, I’ll discuss the research on delayed gratification and willpower, and ways to resist the urge to spend today to help protect your future financial well-being.
Professor Wolfers mentioned in his article that “a hedge should be boring.” While boring can often feel safe for some people, it can also feel very uncomfortable for others and may tempt you to abandon a sound financial strategy in search of something more exciting or immediately rewarding.
Willpower helps you resist temptation, stay disciplined, and focused on your long-term strategy rather than reacting to short-term emotions. But the problem with willpower is that it is notoriously unreliable and of limited supply, especially when trying to change long-term behavior.
Willpower emerges from the prefrontal cortex (PFC) region of the human brain and requires significant mental effort. The PFC is most associated with high-level processing, self-control, decision-making, and overriding impulses.
To deliver willpower, the PFC continuously overrides the brain’s desire for immediate reward, creating a repeated internal conflict that could look something like this:
Temptation: “I really want to buy this now.”
PFC: “Stop. Remember your long-term goal.”
Temptation: “But I deserve this.”
PFC: “But do you actually need it? Stay focused on what is best for your future-self.”
Temptation: “But it’s on sale now!”
PFC: “Don’t. That’s impulse talking. How are you going to feel later when you have to pay your credit card?”
And if you are stressed, hungry, tired, or emotionally exhausted maintaining that control becomes very difficult. Stress encourages us to focus on instant relief and short-term satisfaction.
What Marshmallows Can Teach Us About Delayed Gratification
The Stanford Marshmallow Test (conducted in a series of studies between 1968 and 1974), is a famous psychological experiment by Walter Mischel and colleagues, designed to investigate delayed gratification and self-control.
In these experiments, 550 children, mostly aged 4 to 5, were offered a choice between a small reward right now (one marshmallow) or a larger reward (two marshmallows) if they could wait for about 15 minutes for a researcher to return.
The original research focused on the cognitive and behavioral strategies that children used to resist temptation. Some children ate the one marshmallow immediately, others distracted themselves by covering their eyes, singing, or kicking the desk where they were sitting.
About 1/3 of the children delayed eating the first treat to get the second one.
Years later Mischel and his team followed up with the original participants as teenagers and then as adults to discover that:
Children who waited longer scored on average 210 points higher on their SAT exams.
Children who waited longer were described by their teachers and caregivers as better at managing stress and more self-confident.
Children who waited had a lower Body Mass Index (BMI), lower rates of substance abuse, and higher incomes in adulthood.
Modern psychology, however, has since reframed these findings, suggesting that the children’s performance in the tests actually reflects more about a child’s socio-economic environment and trust rather than willpower alone.
A 2018 study lead by Tyler W. Watts and colleagues, involving over 900 children from diverse backgrounds weakened the simplistic idea that a child’s ability to delay gratification alone dictates future success.
The children from the Stanford experiments came from relatively affluent families within the educated communities associated with Stanford. A family’s stability and wealth turns out to be a contributing factor to a child’s ability to wait. A child growing up in a low-income background experiencing systemic scarcity often learns that taking a reward immediately rather than waiting may be a more rational response given their circumstances.
A 2013 study on environmental reliability further demonstrated that trust is also a significant factor influencing delayed gratification. If one’s environment is unreliable, for instance promises are never kept, securing the available reward in the moment seems to be the more rational choice.
If the child doesn’t trust the researcher to return, waiting is pointless.
Can Willpower Be Trained?
According to the Stanford Medicine News Center article, The Science of Willpower, the brain can be trained for increased willpower.
Health psychologist Kelly McGonigal, PhD, says, “Meditation training improves a wide range of willpower skills, including attention, focus, stress management, impulse control and self-awareness.” McGonigal further explains that meditation changes the brain’s function and structure and that these changes have been observed after only eight weeks of brief daily meditation. Physical exercise was also mentioned as causing similar brain changes, especially in the prefrontal cortex region.
McGonigal also suggests that to be consistent in your pursuit of big goals you’ve set for yourself start with small steps. As those small, manageable steps become habits, gradually build on them to get closer to your larger goal. Scaling up to your bigger goals can increase willpower. As McGonigal explains, “You'll look for opportunities to make progress on your goal and be more likely to see how small choices can help you realize your goal.”
The 20-Minute Delay Technique
Implementing a 20-minute delay is a highly effective impulse-control technique. When your brain demands instant gratification, delaying the decision and redirecting your attention to a task or changing your environment can weaken the habit loop that leads to impulsive behavior. By creating space between the urge to give into temptation and the action, you allow time for the impulse to fade.
The Self-Fulfilling Prophecy Trap
The article, Ego depletion-is it all in your head? Implicit theories about willpower affect self-regulation, describes how if you believe your willpower is a limited resource, it becomes a self-fulfilling prophecy. Yet, those who practice a more abundance mindset around willpower experience a boost in endurance.
Replacing Excitement With Automation
The Marshmallow Test taught us that waiting can be valuable. Later research taught us that our willingness to wait depends partly on whether we trust the future reward and the environment around us.
Investing is no different. The challenge of holding a boring asset like TIPS isn’t just about teaching investors to exercise more willpower; it’s finding ways to make delayed financial rewards feel credible, visible, and emotionally satisfying.
So, let’s make boring investing (and saving) emotionally easier.
Training your willpower is useful and important but conserving it can be even more effective. First, identify what tends to challenge your willpower, and then build financial systems that allow you to overcome those challenges.
Curiosity helps reveal the hidden reasons behind your actions in a non-judgmental way. Try just noticing without attaching a value judgement to what comes up.
To get curious about how temptation tends to sneak in and challenge your willpower, ask yourself these questions:
What temptations usually derail my progress?
At what time of day do I find my self-control drops the most?
What specific emotional state (boredom, stress, or anxiety about money) drives me to seek “quick wins”?
What specific financial news headline activates my fear of missing out (FOMO), making me want to act immediately?
What common excuses does my brain make to justify a small, speculative financial decision?
After answering these questions you can begin to devise supportive strategies that are automatic, removing the need to make active, daily financial decisions.
Paying Yourself First:
Automatic Mini-Savings: Enable the “round-up” feature on your banking apps to round everyday transactions to the nearest dollar. Then allocate the spare change into a separate account.
Payroll Split: Have your employer automatically put a set percentage of each paycheck into a separate (savings) account instead of your main checking account and spend only from your checking account.
Recurring Transfers: Set up automatic monthly transfers from your bank account to your retirement or brokerage accounts.
Employer-Sponsored Retirement Plans: Automatically contribute part of each paycheck to a 401(k) or 403(b) so the money never reaches your spending account.
Automate Fixed Expenses:
Autopay Monthly Obligations: Enroll in automatic bill pay allowing your service providers to automatically charge your bank account or card for fixed expenses like rent, mortgage, car loan, and utilities.
Bill-Pay System: Schedule fixed payments through your bank to go out automatically on specific dates.
Credit Card Full Balance Autopay: Set your credit card accounts to automatically pay the full statement balance from your checking account on the due date to ensure you never incur interest or late fees.
Annual Expense Fund: Automatically save a fixed amount each month for yearly bills such as insurance, property taxes, or memberships.
To reduce the need for ongoing investment decisions, you can try:
Automatic Escalation: Automatically increase your retirement contribution by a small percentage each year.
Target-Date Funds: Use a fund that automatically adjusts its investment mix as you approach your target retirement date.
Let’s not forget that some things are great when they are boring!
Boring doesn’t have to always be associated with negative feelings or thoughts. You want a boring flight with zero turbulence, unexciting test results at a doctor appointment, a smooth elevator ride, or an uneventful commute to work. There are many things worth celebrating as “boring,” including investing.
Investing should be an uneventful process that builds wealth over time. Even though it lacks excitement, we can begin to view it as desirable and reassuring. Remember your long-term goal of providing your future-self long-term financial security.
In the words of Warren Buffett, “The stock market is a device for transferring money from the impatient to the patient.”
If you’ve made it this far, thank you for reading!!!
I hope today you’re met with kindness, especially from yourself.
💚💚💚
References
Hathaway, W. R., & Newton, B. W. (2023, May 29). Neuroanatomy, prefrontal cortex. StatPearls - NCBI Bookshelf. https://www.ncbi.nlm.nih.gov/books/NBK499919/
Job, V., Dweck, C. S., & Walton, G. M. (2010). Ego Depletion—Is it all in your head? Psychological Science, 21(11), 1686–1693. https://doi.org/10.1177/0956797610384745
Kidd, C., Palmeri, H., & Aslin, R. N. (2012). Rational snacking: Young children’s decision-making on the marshmallow task is moderated by beliefs about environmental reliability. Cognition, 126(1), 109–114. https://doi.org/10.1016/j.cognition.2012.08.004
Mischel, W., Shoda, Y., & Rodriguez, M. L. (1989). Delay of gratification in children. Science, 244(4907), 933–938. https://depts.washington.edu/shodalab/wordpress/wp-content/uploads/2015/05/1990.DelayChildren_Shoda.pdf
Steakley, L. (2011, December 29). The science of willpower. Stanford Medicine News Center. https://med.stanford.edu/news/insights/2011/12/a-conversation-about-the-science-of-willpower.html
Watts, T. W., Duncan, G. J., & Quan, H. (2018). Revisiting the Marshmallow Test: a conceptual replication investigating links between early delay of gratification and later outcomes. Psychological Science, 29(7), 1159–1177. https://doi.org/10.1177/0956797618761661
Wolfers, J. (2026, July 1). A user’s guide to living with inflation. Platypus Economics. https://newsletter.platypuseconomics.com/p/a-users-guide-to-living-with-inflation
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