Just do it.

I was speaking to someone today and was interested in what had suddenly made her take action after many months of inaction.  I have found that knowledge is simply not enough to make people to act.  We all know we need to spend less than we earn, put a little aside every month and invest wisely.  Likewise, we all know we need to eat a little less and exercise a little more to stay healthy.  If knowing was enough we would all be rich and no one would be overweight. So what is it?  What is it that causes us to finally act?  For some it’s an event that changes one’s perspective or priorities – having kids, a health scare, the death of a loved one.  For some it’s hitting a particular age – 40 or 50 perhaps.  A sudden feeling of uncertainty can spur someone into action – a marriage is on rocky ground, or the sudden realisation that retirement is around the corner and you have no idea how you are going to fund it.

If none of those things happen, many of us continue with the procrastination.  “I’ll do it later” becomes the mantra.  Jason Zweig, a behavioural finance master explains the danger in a recent blog:

"Procrastination, in its stealthy way, is a silent wealth killer, doing more financial damage, day in and day out, than skyrocketing interest rates or the cruelest stock market crash. For when you postpone a decision to act on a financial goal, you’ve actually made a decision — to save less or stay in debt — even though none of us thinks about it quite that way. Then inertia takes over, making it harder and harder to change course as time passes."

take action
take action

Zweig asks the question ‘why do we procrastinate on the very things that are best for us’?  The problem is that many of the decisions we make today reward us in the future.  Take exercise for example.  A hard work-out doesn’t reward us immediately with a wonderful lean body and a strong heart.  It takes time.  Sure, later in the day we might feel good, but in that moment, being turned into a red faced, slightly smelly mess (at least that’s what I turn into) isn’t really a reward.

And with money, Zweig points out that it’s really similar.  Saving a little of your paycheck every month will enable you to live a comfortable, independent and stress-free retirement, but in the moment it feels like a hassle and you have to live with a little less money every month.

So what is the practical advice?  Zweig has some tips to help a procrastinator ‘just do it’ because saying ‘just do it’ won’t work.

  • Get to yes. Ask yourself a question that you can clearly say yes to.  Rather than wondering how on earth you go about investing your money, ask yourself ‘do I want to reach the point where money no longer causes me stress because I know my lifestyle is secure?’.  Who would say no to that!
  • Break it up. Sometimes it all just seems overwhelming.  But all we can do is take things one step at a time.  I used to run marathons, and I never thought about the 26.2 miles.  I broke it down into sections in my mind.  Five miles is easy (when you’re running marathons).  Five miles in and you’re almost 20% there.  Just do that a few more times and you’re done.  We need to do the same with our money.  Set a goal and break it up.  Perhaps the goal is to save 10% of your income (we should all be doing that at the very least), but you are not sure if you can get there today.  Start at 2%, and increase it every three months.
  • Bond with a buddy. Sometimes all we need is to be held accountable.  So tell a friend what it is you want to do.  Whether it is to set up automatic payments for all of your bills, or to invest the cash sitting in the bank, give yourself a timeframe – by 5pm next Friday – and say to your friend ‘if I haven’t done it by then, I owe you a blah blah blah’.  Set reminders on your (and your friend’s) calendars.  Even better, join forces with a friend who shares the same goal.

What we need is to be nudged into action.  Taking control of your money isn’t as scary as you would think, and it can even be fun if you find the right person to help you.  Consider this your ‘nudge’.