How To Leverage Constraints

Our first impulse to a word like “constraint” is to resist. We love freedom, autonomy, abundance! Likewise, we abhor ideas like constraint, limitation, and restriction.

But while our natural impulse is to push against constraints, we absolutely need them.

And we can even rely on limits to help us succeed.

In constraint theory, systems engineers focus on identifying the bottleneck in a process to efficiently target redesign efforts to that specific rate-limiting step. Their goal is to clear the way for a process to continue and speed up by focusing on exactly the right thing.

In personal finance, we can flip the logic and look for some rate-limiting opportunities to put in place on purpose – some intentional bottlenecks – to slow cash outflow.

Sometimes called “forcing functions” by productivity and psychology gurus, we can utilize constraints to purposely align our short-term behavior with our long-term goals.

For example, if you no longer had internet access, that would force you to spend less at Amazon, yes? Perhaps living without internet isn’t an option, but what about a router that shuts down Wi-Fi at 9pm and a phone that blocked the Amazon app from 9pm to 9am. Wouldn’t those also force lower Amazon (or social media feed, etc) spending?

James Clear, author of Atomic Habits, used a similar approach to reduce his time spent on social media by having his assistant change all his social passwords every day. So he couldn’t use the apps without getting the new password – enough friction to slow the scroll considerably.

When managing spending, we can also deploy structural constraints like ordering a needed item from a store that comes with a high risk of impulse shopping (Target, HomeGoods) instead of visiting the store in person and rambling through the aisles. You might also build in governing rules like “no takeout except on weekends” or other specifically designed constraints to reduce your highest cost habits. Perhaps you can only buy something over $100 after you and your spouse review the bank account together. Maybe you remove apps from your phone that are for shopping so you’re forced to use a computer.

The trick is to simply identify a place you want to make a change and brainstorm structural constraints for that process.

Evaluate the whole system, the steps that lead you into spending choices that aren’t aligned with your long-term goals, and engineer a few simple layers of constraint.

Add friction, add limitations.

Eventually such limits become habits. You wind up being someone who handles their spending well, because you didn’t give yourself much space to make any other choice or become any other kind of person.

And ultimately that’s what strategies to manage money should do – help you become the person you want to become, the one who achieves the financial goals you have for yourself and your family.