Love your future self Develop your wealth plan Try a Ulysses contract
himself into the sea, and drown.
But Ulysses really, really wanted to hear them, and not die.
So he ordered his crew to tie him to the mast, and not to release him, under any circumstances.
They then put wax in their ears, and rowed up to the Sirens.
In binding himself to the mast, Ulysses’ present self was doing something great for his future self.
Unlike Ulysses, people are often pretty bad at doing the things that are good for their future selves.
It’s why so many of us eat so badly, don’t exercise, and save a pittance.
But the Yale economists know people are more likely to do the good things, if they bind themselves with a Ulysses contract, especially if they have a ‘‘referee’’ watching their progress, before whom they will be shamed, if they fail.
Through StickK, people can even set financial penalties to incentive themselves not to fail, by pledging to give money to someone, or thing they hate if they fail.
A cat lover might give money to Gareth Morgan for instance. A commuter might give money to Wilson Parking.
I learnt about Ulysses contracts from TV pyschologist Nigel Latta’s Mind Over Money show, but then I realised how many of us use two Ulysses-type contracts to get ahead and don’t even realise.
The first is KiwiSaver.
Instead of spending all your money on yummy and shiny things, present you sticks some into KiwiSaver for the benefit of future you.
The penalty for not doing so is losing the employer/government contributions, which are the closest thing to free money anyone gets.
The other Ulysses contract is the mortgage. Present you takes on debt to enrich future you.
The penalty for non-payment is a mortgagee sale.
But an increasing number of people don’t just make the minimum repayments the banks ask for.
They set their mortgage payments higher in a superUlysses contract which will leave their future selves far richer.
BNZ says in the past year alone, customers opting for higher voluntary repayments wiped 20,000 years of their combined mortgages.
That’s something their future selves will one day thank them for.
Painter Herbert James Draper showed Ulysses tied to his mast, beset by Sirens.