Can Expectations Deter Your Financial Success?


Do you ever spend money before you have it? Say you have an annual bonus coming and you’ve already calculated how much it’s going to be. So you go ahead and use that money ahead of time, planning to replenish the funds when the check comes.

It doesn’t even have to be literal. I know on the rare occasion when I’m getting a tax return, as soon as it’s confirmed I start “spending” in my head. “That would make a nice dent in my student loans,” I think. Or, “maybe now I can finally give my wardrobe a little boost…with only a small percentage of the refund…

There’s nothing wrong with a little fantasizing, right? The only problem is, the line between fantasy and expectations starts to blur before you know it. And that totally changes your relationship with what should have been a financial boost.

The Danger of Expectations

In a recent article in The New York Times, financial planner and author Carl Richards lays out the downward spiral of expectations:

“Expectations are funny things. When we start to expect something, we also start to count on it. Once we start counting on something to happen, we start to make plans. Then, if we aren’t careful, we even start to act as if it’s already a reality. In our minds it becomes something that’s guaranteed to happen.”

When does this downward spiral start to get dangerous? There are a few scenarios:

When Expectations and Reality Don’t Meet
As Richards mentions in the aforementioned article, expectations don’t always meet with reality. Maybe you don’t end up getting your bonus after all. Or the bonus is less than (or later than) you expect.

When expectations fall short of reality, you are guaranteed to be disappointed. You’ve now gained, spent, and lost money that you never had in the first place. What could be more demotivating than that? This can feel like a huge financial loss when the extra funds were supposed to be a financial boost – all because expectations were placed on them.

Motivation is one of the most important principles of reaching financial goals – especially if your financial goal is to pay off debt. It’s not easy to pick yourself back up after a setback. Creating expectations just isn’t worth the emotional dive if they don’t meet up with reality.

When Expectations Drive an Emotional Impulse
When extra money comes into our lives, the initial response is almost guaranteed to be emotional. It’s perfectly natural for our imaginations to run wild with how we’re going to spend the windfall. The problem is, by the time logic tries to come into play, our emotions have already taken the money and run.

Allowing this to happen would do a serious disservice to your financial plan. Take my example above – I may want new clothes, but what I really need is to apply that money to my student loan debt. And not just because it sounds like the right thing to do! The interest saved by paying my student loans off earlier than planned could buy me far more outfits than the tax refund… you know, if that’s what I’d plan on doing with the money saved.

Logically deciding how to handle our money is important – because our logical needs can actually give us more of what we want emotionally if we’re willing to delay gratification just a little bit. Expectations, however, make delaying gratification pretty hard to do.

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Creating a Healthy Balance Between Realism and Expectations

So if it’s perfectly natural to create these expectations, how can we make sure they don’t derail our financial plans? By striking a balance. Here’s how you can do it:

Recognize the Cycle
The first thing to do is understand that finances are cyclical. As much as it feels like our immediate decisions have a short term impact, they just don’t. Everything we do – from buying a cup of coffee to spending a windfall before we get it – will have an effect that ripples through our finances for months to come.

Recognize the cycle. Don’t tell yourself it’s okay to be impulsive with any expectations or spending. And in reality, giving it a moment’s thought could show you that your impulse actually doesn’t play to your desires the way it seems it might.

Remain Vigilantly Mindful
That moment’s thought I referred to? That’s mindfulness. Mindfulness is the single most powerful financial tool there is. And it’s something we can all practice!

Mindfulness is the practice of being aware, conscious of every decision you make and it’s long term impact. The reason it’s so powerful is because mindfulness calms down your emotions and allows logic to seep in. In turn, mindfulness allows you to put your money to work.

The concept of putting money to work is one that took me forever to learn in life. I used to think that any extra money should be spent freely for fun because I was working so hard and never got to see any financial enjoyment out of it! But once I started reaching some of my financial goals, I realized that I didn’t want to spend my money emotionally – I always regretted it in the end. Mindfully choosing how I’d spend each dollar – expected or not – allowed me to give my money a job to fill and empowered me to reach for even greater financial goals.

Final Word

Creating expectations can do more than deter our finances – it can actually cause unhappiness. Richards explains how:

“We’re particularly good at building up our expectations around our future goals, too. In many cases, we’ve worked toward a particular goal for a really long time. Then, if it doesn’t happen, often because of something outside our control, we feel shortchanged. I’ve had several conversations recently with people who feel like their lives just don’t match their expectations. As a result, they’re incredibly unhappy, even though from the outside looking in, they appear to have great lives.”

This is an important reminder to dilute grand expectations with a small dose of reality. Yes, make big plans. Set your debt payoff date and follow your plan diligently! Go ahead and daydream a little about a windfall – but make sure you’re mindful about what you actually do if it comes. And remember, the only thing guaranteed in life is that surprises will happen. Be ready for them! Keep a fully funded emergency fund, don’t plan ahead on any money until it’s in your bank account, and keep your plans flexible and adaptable. Then you can be ready for anything and happy with your current state of financial affairs.

Image Credit: protographer23

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  • Ruben Omega

    Great insight! I used to have this terrible habit of pre-spending bonuses, so much so that when the actual bonus came, sometimes I’d have already spent more than my bonus. Nowadays, I’ll estimate any windfalls and spend them on paper first. As a result, bonuses actually feel like “bonuses” and it’s a lot more gratifying.

    • Shannon_ReadyForZero

      Thanks Ruben! That’s a great idea – writing it down may give you the good feeling that you know it’s coming without actually going out and spending the money yet. I might have to try that next time I’m in that sort of situation!

  • “Mindfulness is the single most powerful financial tool there is.” Totally agree, Shannon. Great stuff, as always.

    • Shannon_ReadyForZero

      Thanks, Kristin! 🙂