Thoughts for 2018
We are now almost two weeks into January, the month for a new start, resolutions, and goal-setting. Science has shown though that we might be doing it all wrong. Studies have shown that only 8% of people are still going with their resolution after the first 90 days of the year. So why is it so hard? Well, human nature is a complicated beast. Shane Parrish of the FarnamStreetBlog (my new favourite blog) points to a few reasons why goals are so hard. One, they have an endpoint, and once people achieve a certain goal, they often revert to their previous state or behaviour. For example, people run marathons and then stop exercising altogether afterwards. I did this! It's totally ridiculous when I look back. I ran the London marathon (in a pretty good time!) and then stopped running. The next year I ran it again, but had to start training from scratch. It took me three marathons before I actually established a consistent exercise routine.
Another reason is that goals rely on will-power and self-discipline. That complicated beast (human nature) finds those two things really tough.
So, what's the answer? The answer is to focus on new habits and not goals per se. There is a difference. Shane Parrish writes:
Goals and habits are very different animals. Habits are the processes operating in the background that power your life. If you want to make change that lasts, identify habits that are related to the goal you’d like to achieve.
This really resonates with me and the work that I do because I often talk to people about money habits - in order to manage our money well we have to introduce new behaviours around our money. Our brains are incredible machines - once we form a habit they literally rewire (it's called neural plasticity) in order to make the behaviour easier to complete.
Here are some ideas for some money habits to introduce into your life this year.
- Make the first thing you do on a Monday morning to log-on to your bank account and check your transactions.
- Set up an automatic transfer into your savings on the day you get paid. Start small and increase it every quarter.
- Keep a money journal - jot down what you spend each day and the emotions you experience around that spending.
- Start paying your credit card bill weekly instead of monthly.
- Automate all your bill payments so that you never get stung with late fees.
- Schedule money dates with your other half every month to go over your household finances.
- Change your mortgage payments from monthly to every two weeks (this means you make one more payment each year) and cut years off your debt.
- Save (or even better invest), don't spend, any windfalls.
- Take out cash at the beginning of the week and live only on that.
As with all new behaviours, it can feel really uncomfortable at the start as you flex your new money muscles. It's just like starting a new exercise regime - it hurts. But keep going and the habit becomes and new behaviour and then you find yourself achieving your goal.
Let me know how you get on!