Try a new approach to your goal setting this January, read this book; Atomic Habits, An Easy & Proven Way to Build Good Habits & Break Bad Ones by James Clear.
New year’s resolutions are good, but often lose their stickiness as life gets busy. Many have a difficult time recalling what their resolutions are by the time St. Patrick’s Day arrives. Much of this is due to accountability and the lack of repeatable habits that reinforce the good we want to accomplish. It’s habits, the small daily decisions you make, that over a long period of time add up to good (or bad) choices. To have better choices, you must have repeatable habits.
This is a great book to read at a great time in the year. To set yourself up for success, you must define what success looks like to you. From a financial planning perspective, January is a great time to consider what you want to accomplish over the next 6 to 12 months. Dollar goals vary, but travel, home improvements, and big-ticket purchases are often at the top of the list. These near-term expenses often require cash to make things possible. The best way to accomplish this is by reviewing cash reserves so monies can be set aside in advance based on your priorities and timing.
Pre-paying these “fun” expenses begins by simply talking out loud about their possibilities. This proactive step shifts your perspective and may engage your significant other in a conversation. What are they thinking about? How do your financial goals complement one another and what might you accomplish together?
I’ve written extensively on the value of bank and investment accounts serving a single purpose. Lumping all your goals and dollars into a single account is problematic on many levels. Our brain craves simplicity and an easier path in making decisions. Segmenting your dollars helps you take control of your money as opposed to being controlled by it. Having the correct money in the right account before it’s necessary changes the way financial decisions are made.
Our firm encourages utilizing automation to the greatest extent possible. Why? When you automate your financial decisions, it’s possible to save more to cash reserves and invest more in diverse portfolios. The key habit is updating your financial plan once a year to determine what goes where. Your plan should address fun spending alongside essential expenses and act as a guide to directing your dollars. Overtime, decisions become easier when you have a financial plan to reflect on. Setting aside time to consider what you save to cash reserves, spend, and invest for tomorrow is a habit worth repeating.
Not all habits must be financially focused. Personal goals allow you to accomplish what you want via daily habits. Being mobile and tracking your steps is a great place to start when working on your fitness. Studies shows a 20-minute walk increases your ability to be present and think creatively on your next task. Tracking sleep quality and resting heartrate have been two of my favorite metrics this past year. Getting to the pool each morning and swimming has been made easier with the habit of packing my swim bag the night before. Small acts to get ready and prepare for the next day help ensure the workout takes place. I’d like to read more books this year so setting aside time on my calendar will make this a reality. It’s not about reading x books a month as much as it is reading more consistently.
Whatever your goals are, personal or financial, consider beginning with the end in mind and working backwards to establish daily habits. Then, you can slowly adapt new behaviors into your schedule each day or week and see what works (and what doesn’t). It’s not about perfection, it’s about small adjustment in your time. Then, reassess your progress after three to four weeks. What’s working well for you and what needs to be adjusted? How can you expand the impact of your recently developed habits?
You don’t have to go it alone. If you’d like to see what’s possible by following a process with ongoing planning, reach out to us for an introductory chat.
Advisory services through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Cambridge and Flowerstone Financial are not affiliated.