GOLDEN RULES

Auckland City Harbour News - - FRONT PAGE -

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.

SUP­PLIED

Pain­ter Her­bert James Draper showed Ulysses tied to his mast, be­set by Sirens.

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