Behaviour / Early Retirement / Saving

Can the Procrastination Equation be applied to our Retirement Plan?

I believe only the most serious of us think on each expense that we incur – what is the net present value of the reward we get for saving (earlier retirement) versus the immediate reward of buying (say eating dinner out). Some of us have already incorporated this decision into our budgets to control temptation and also as motivation.

A couple of weeks back I watched a video from CrashCourse on Youtube. This particular video was on how to overcome procrastination by improving our motivation to do a particular task. I found the theory behind this very interesting and believe these principles can be applied to our financial life too.

The Procrastination Equation

The procrastination equation is based on the Temporal Motivation Theory – which itself combines multiple other theories into one unified theory. The equation goes like this

Motivation = (Expectancy * Value) / (Impulsiveness * Delay)


Our perceived ability to complete a task successfully. If the level of difficulty is low, we will have a high confidence that we can complete it on time. If the level of difficulty is high we will have an increased resistance to start it since we do not want to fail. For example, investing in index funds is a very easy task since no heavy research is required. But choosing one individual stock requires more research and we perceive it as more difficult.


This defines the expected reward. The reward in a task is not just in its completion. Sometime we also derive pleasure while actual doing it. Some of us have de-cluttered our lives as part of improving our lifestyles towards financial independence. While achieving financial independence is the end rewards, we are more happy right now after the change. This serves as a short-term reward while retirement is the pot of gold at the end of the rainbow.


This defines how focused we are on the task based on our susceptibility to distractions and impulsive behaviour. Our eating out habits are a good example for this. As I have mentioned elsewhere on the blog, we are not big fans of budgeting. We are ok as long as we meet our savings target across the year. And eating out is one of the reasons for this, even though we do not eat out frequently (about twice a month). We like to go out and eat when we want – could be dinner on a weekday or lunch on a weekend or something else – and generally tends to be an impulsive decision. When we make this decision, our focus is not on the task of saving for retirement.


This defines the delay between completing the task and receiving the end reward(s). This factor is different from the others in the sense it is not under our direct circle of control. Once we decide our retirement date, we can only influence it with a different savings/investment plan or a different lifestyle. The Stanford marshmallow experiment is one good example to illustrate the influence delayed rewards can have on our decisions. The video link I have shared has other good examples too.

You might well say, I understand all this, but how do I go about increasing my motivation and take better decisions. Hold you breath for now and read on. Understanding the underlying theory always helps me in using it. Hopefully it will be the same for you too.

At the risk of preaching to the choir… Most of the external financial information in our lives is geared towards instant rewards. Financial institutions want us to believe that credit is readily available for all needs – even overdraft. All advertisements are geared towards how we can achieve neighbour’s envy, pride or attention. The message is that happiness has many forms and spending money is the answer to most if not all of them. These advertisements are geared towards short-term temporary happiness and try to influence our behaviour and habits towards this. The importance of long-term happiness is diminished or not considered at all. All of us on the FI/RE journey know this.

How can we improve our motivation towards saving?

It is a fight against the tide to pursue early retirement – especially in countries like India where wealth is more respected sometimes than following and even achieving your dreams. You have to be mentally strong to protect yourself from peer influence and judgement. Those who need to be in your life will accept you for who you are! The principles in the new ads (in Hindi) by Dhoni and Mithali Raj can be of great use here too.

That said, we need to trick our brains that the task in hand is easier than it actually is. How do we go about doing this?

Increase Expectancy

Split the task into multiple smaller tasks. This is one thing that anyone who has prepared a project plan is very familiar with. But our purpose in splitting the task it not to have a completion date or milestones. It is so that the brain is tricked into thinking the task is significantly more easier. Say you need to bring down your monthly expense by 10%. Break it up into smaller tasks like reducing your grocery bills, eating out expenses, travel and so on. Pick one at a time and the whole exercise becomes that much easier. You can apply this to investing too – pick one asset class and complete your investment plan and automation within that before moving to the next one.

This helps increase our confidence and expectancy resulting in increased motivation to both start and finish the task. It also helps in increasing the value, since completing the smaller tasks is itself a reward – you will see your savings growing or your investment plan taking shape as you move through the plan.

Increasing Value

This can be done in a multiple of ways. We know that the end rewards of the FI/RE journey cannot be changed. We all aim for a life where we can pursue our interests without money influencing our decisions.

But we can add more rewards! Yay! We can increase the pleasure of doing a task – a partner/friend accompanying you on the walk/ bike ride (versus using the car) to the grocery store makes it more pleasant. Another could be visiting the grocery store when it is not crowded – may make it easier to not buy the temptations you want to cut out. Planning your budget or working on which expense to reduce next would be more pleasant (when is it ever?), if you sit in an environment where you can concentrate more. One way all of us already derive pleasure in our looong journey is by networking (meeting/sharing) with others in the FI/RE community. I believe this is one reason for financial challenges (like these on Rockstar Finance) have caught on big time. It gives us a bit of motivation as we see more people going through the process and completing the challenge is by itself an extra reward.

Reducing Impulsiveness

This for me is more of a habit than any task specific behaviour. And in this sense it is more difficult to change ourselves. But on the other hand, once you bring about the change it will impact all your tasks.

That said, how tired or interested you are when you undertake a task dictates your impulsiveness. When we do something that completely captivates our attention we can go on for a long time. But the same task has lower interest when we are tired. So the trick here is to complete difficult tasks when you are fresh. Maybe you can have a run or exercise just before to bring your energy levels up.

As Mark Twain said, if you have to save for early retirement paying yourself first is the way to go! Just kidding, but he had this to say about eating frogs.

Mark Twain on Frogs
Do your hardest task first

If it’s your job to eat a frog, it’s best to do it first thing in the morning.

And If it’s your job to eat two frogs, it’s best to eat the biggest one first.

Reducing Delay

Delay is one piece of the retirement puzzle that we cannot reshape, since it is not actually independent of the other factors. It is dependent on our lifestyle, our saving rate and how well we invest. We just have to put our chin up and focus on the items within our circle of control. As numerous others have shown us, all it takes is to know what you want and patience.

I found this theory very interesting. There have been many items in our retirement plan that I have just not been thinking on (health insurance for one), and I aim to use some of these principles to get these completed. Hope you gain at least 1 new thought from this post. Please do watch the CrashCourse video too. Sometimes it is easier listening to someone explain than reading a blog!

I would love to hear your thoughts on this equation. Is it complete BS? Can we use some of its principles to help improve our saving rate?

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