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Monday, May 4, 2009

Keep Your Money - Use Flow to Make it Fun

Goal setting for building your savings cushion can be almost as much fun as quitting your job with a million in the bank. I did say almost. But, managing your money to fund your fabulous life can be a game that consumes your attention so fully that you forget the mundane boring details of life. It's called Flow and it can apply to your personal budgets, household management, savings plans, you name it.

Michael Csikszentmihalyi (pronounced chick-sent-me-high) writes about the psychology of Flow in his book "Psychology of Optimal Experience. " It's that moment when time stands still and you forget to check your watch, you don't notice the temperature, you don't care if you are hungry, you are completely immersed in life. Athletes know about flow, it's the sweet spot on the tennis racket and the pure meditation on the golf course when you hit a perfect shot.

Flow comes when we have goals -- goals that are attainable. They help you concentate and crowd out petty distractions of the mind. It's not in the achievement of goals, but it's because lack of goals can lead to difficulty concentrating and avoiding distractions. Goals are structure, structure is good when the fears threaten to overwhelm you with negativity.

One vivid example in the book Flow is of prisoners of war who achieved flow by reciting stanzas in epic poems memorized in school. If that process can led to flow, then I know that we can achieve flow by reaching for financial independence and catching it...

I attended a lecture given by Csikszentmihalyi and took copious notes because Flow is WAY FUN. The key to setting your goals so that they engage your psyche is to setting them so high that they are a stretch, but not so high that you can't reach them (which produces frustration instead).

EXAMPLE: My goal is to say "bye-bye" to the corner office and to be my own boss, to employ family members, create more complex experiences in the every day world. The dream we all have -- to become my own family CEO, chart my own course, make my own decisions, hit that "cross over" point to financial freedom -- but that will take a cool $1,000,000 in conservative savings. I've got the equivalent of about half that in pension funds and retirement funds that can't be touched.

I've got 8 more years to do it all in. But just thinking about saving half-a-million is so depressing and overwhelming. Thinking about saving $50,000 a year is kind of overwhelming. But if I live on $2,500 a month, I can bank a good $40,000 a year. Wow...

So the goal is to make it on $2,500 or less THIS MONTH is a challenge.

1) I'm going to hit the dollar store instead of the mall.

2) Bring my lunch to work 3 days this week.

3) Stock up on the staples when they are on sale.

4) Read a personal finance blog tip every day.

5) Put some energy into a sideline business that will fund the fun extras like trips and dinners out(www.wineshopathome/ is my current experiment). Do it with a friend so that we can enjoy the activity together and grow the relationship.

6) Dry my clothes on an indoor clothes line.

7) Investigate rental property

8) Turn off the lights when I'm not in the room.

9) Make coffee at home 3 times this week.

What's your goal for this month? This week? Is it doable? Is it a stretch?

Check out Bargaineering's personal finance blog for more psychological money games in a quick and easy video format.

Remember, Flow IS FUN...and making your money work FOR you, instead of you working for it, is a whole new kind of psychological high.

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