We’ve all been there. The New Year arrives and suddenly we’re struck with heightened motivation to set goals and optimize every area of our lives: Lose 10 lbs.! Make Organic Lunches for the Kids! Get a Promotion!
Many of us vow that this will also be the year we’ll turn our finances around once and for all: You’ll finally get around to organizing your files, so you’ll never miss a bill or misplace a document. You’ll teach your kids about budgeting and communicate better with your spouse about money. Or perhaps, this year you’ll finally make the time to consolidate all your investment accounts, so you’ll feel more confident about your ability to retire, start a business, travel, or achieve whatever other personal financial goals you may have.
As a CFP® professional and Certified Life Coach, I’ve worked with many clients over the years on money matters and it’s interesting to see what tends to work and what doesn’t when it comes to goal-setting. Like other New Year’s resolutions, the financial promises we make to ourselves in January are well-intentioned, but often short-lived once the excitement wears off and we actually have to create behavioral change.
While there are many reasons for this, the primary one is that our brains do not like change. We are generally wired to want to maintain our natural habit patterns – even when those patterns work against us -- because it’s simply more efficient. Our logical, rational brain – the pre-frontal cortex – is the part that we access to create resolutions; but it often fights against more primitive areas of our brain – the amygdala and other areas – that want to keep us “safe” and follow the status quo.
If this is the case, are our resolutions bound to fail? Or is it possible that we can build on the excitement and motivation we feel every New Year’s and actually take sustained action to achieve our financial goals?
Here are a few tips that may help to make your well-meaning resolutions more achievable this year:
1) Find Your (Emotional) Why:
For every financial goal you set, make sure you associate it with how you imagine it will make you feel. The reason this step can be so effective is because we are more likely to change a behavioral pattern based on emotion versus logic. In fact, it is said that emotions drive 80% of the choices that Americans make, while practicality and objectivity represent about 20%. So, the more we are able to associate our financial goals with an emotion, the better.
For example, let’s say one of your financial goals this year is to save more for retirement. By doing so, you believe you will feel more in control and secure. Tapping into these future feelings as part of your goal-setting process can make it more likely that you’ll take the necessary next steps and achieve your goal, as they can overcome the short-term resistance you may experience in the present.
2) Visualize Strategically:
Sports performance coaches often advise athletes to visualize; however, what’s important is that they visualize not just the achievement of their goal, but also all the training and steps they need to accomplish prior to their victory. For example, marathon runners do not just picture themselves crossing the finish line; they also imagine how they will feel at mile 17 when their legs begin to cramp or experience intense dehydration.
Similarly, for financial goals to be more achievable, it may help to practice how you’ll stay calm and invested when markets fluctuate and your account balances drop; or, how you will track your spending at the end of a long day, instead of putting it off and turning on Netflix. Spending time picturing the not-so-easy aspects of your goal, and not just the victory lap, is essential.
3) Prep Your Environment:
New habits are more likely to be achieved if your environment is set up to make them easier. Remember, our brains like to be efficient, so if there’s a way to alter our external environments and essentially “trick” our brains into thinking our new behavior is actually easier, we are more likely to implement it.
This is often referred to as creating “triggers”. A common example with fitness is to put your exercise clothes out the night before, making it more likely that you will take the next action of going to the gym.
You can also alter your environment by making the less desirable behavior harder. For example, if your financial goal is to spend less, try deleting spending apps like Uber/Eats off your phone or removing pre-filled auto-pay options off sites where you frequently shop, such as Amazon.
4) Seek Accountability:
Finally, another way to make your financial goals easier to achieve this year is to seek accountability. Humans are social creatures, so having another person or group to rely on will make the achievement of our goals and implementing new behaviors more likely.
Enlist a spouse or partner to join you in your savings goals, join a women’s investment or financial group similar to a book club; or seek the counsel of a collaborative financial advisor like Modera Wealth Management to help you clarify what exactly you want to achieve financially in 2020 and, more importantly, keep you on track.
New Year’s Resolutions are a long-time tradition, but unfortunately, so is abandoning your resolutions by February. If you want to make 2020 the year (and decade) that you finally achieve your money goals, try these tips and reach out to firstname.lastname@example.org with any questions.
For further reading, also consider Atomic Habits by James Clear or Finish by John Acuff.
Jennifer Faherty, CFP® is currently the Chief Client Experience Officer at Modera Wealth Management. Jennifer works with the financial planning, client service, and marketing areas to help design and implement an enhanced experience for Modera clients. She is responsible for corporate communications, events, and developing solutions to optimize all aspects of the client journey. Jennifer is a Certified Financial Planner™ as well as a Certified Coach through The Life Coach School. She earned a B.A. from Dartmouth College and an M.A. from Columbia University. Jennifer volunteers for Dress for Success and the Friends of the Ridgewood Library Board, Author Luncheon Committee. She mentors new female financial planners for the CFP® Board and is an active participant of Women of Dartmouth NYC.
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