How to achieve your new year financial goals through turning them into daily habits.

Welcome to the Finance and Fury and the new year, 2021.

Hope the start to the year has been good for you all – as in this episode we will be looking at how to work on your financial goals through the year through turning these into daily habits Last episode - Stared off with a question; looking back on the year, are you in a better or worse financial position? We also went through some foundations on setting goals – but importantly – narrowing these down to 3 major goals that are of your top priority The reason for narrowing this down is due to the topic of todays episode – that is actioning them You can set all the goals in the world – but to be in a better financial position this time next year – you need to be able to implement these – through taking some action based around the plans that you set – to make sure you’re always moving forward.

 

Time can be broken down into the following:

Past – What has gone on – All of your life events to this point Dictates a few things – Behaviours and habits We all have habits creep in over time – Positive feedbacks Positive feedbacks can be a negative outcome for us long term – if you take heroin – that is a positive feedback based on your neurochemistry – but the more you do the more your life may not end up in a positive place But like any addiction – you can form good habits as well – through doing a few small positive things that form feedbacks as a reward system over time Present – The now – What are you doing? Most people financial security comes from income from employment What happens if this was to go today? Is there enough to survive? This is where setting goals and having actions are what you do in the present – But undoing some bad habits may be needed in the now All in an effort to get a better future Future – This is where you want to be – which is why you need goals to know want to achieve, as this needs to be defined Plans and Goals Start With the one goal – breaking it down SMART – or What, How and why? Implement it and adjust along the way – Over time (30 – 90 days depending) it will become a habit Then implement the next goal on the list Your future is determined by your actions from now up until that point All three time phases are important – understanding your past behaviours – as these determine your current position – then planning for the future and taking action now

 

The long term can be negotiated with But if you hit the future are aren’t where you want to be, where does that leave you? That is where further self doubt kicks in – Unrealised expectations

 

Not many people stick to new year goals – Why? there can be too many, normally people thing this is good, to have a lot of goals But if these are similar to last year and you didn’t make it, why might that be? Hard to go from 0 to 100 overnight – Inertia – something continues in its existing state (rest or in motion) unless it is changed by external force Hard to start a train and get it to top speed – takes a while Same for us – once we get set in our ways – very hard to change them If you have been in an investing mindset – or a mindset to So from your top 3 goals – select just one – the most important to you now and set a timeline to be on the road to achieving this over the next 30-90 days – Be it cutting back on spending, monthly saving or investing, etc. Then once the habits for this goal are in place – move on to the next

 

But if you are Looking to start – even with the first goal – Finding Motivation is not a good concept to look towards -

What people search for is a moment of inspiration to get the ball rolling It rarely if ever comes – Why? Motivation comes from a positive feedback loop – do something good, dopamine is released in the brain, you then want to do this again We are creatures of habit – and we form habits from feedback loops of receiving dopamine – every addict has this feedback loop – heroin, alcohol – but you can use this to harness motivation as well Think about it, you don’t need to find motivation to indulge in anything – Because your brain is wired to give positive feedback when you do these things you already like. If someone is an alcoholic then they may go out of their way to get a drink – there can be justifications made behind actions – but at the end of the day they will beg, scape or steal to get a drink - Part of the problem - bad things compound as well So as how do you motivate yourself to invest or achieve a goal, be it financial or not? Finding a spark of motivation probably wont work If you wait for moment of inspiration to get the ball rolling you may be waiting a long time. It’s because motivation comes from a positive feedback loop – you work towards something that is meaningful to you – then dopamine is released in the brain, you then want to do this again Small action = dopamine = want to do larger actions All about starting small – if your goal is to save $2k per month, but you are currently spending more than you earn and are in CC debt from buying lots of things or going out all the time – The first step would be to look at this behaviour pattern – why are you spending? A lot of the time it has come from that same habitual behaviour to get a good feeling – You have to examine this and then turn it around – aim to save $100 per week at first – set up a new account and start the process of rewiring your brain – an addict has a very hard time going cold turkey – you need to wire your brain to get good feelings of hitting your goals consistently Keep a list – or a journal to track your progress – each month – tick off accomplishments in the right direction Motivation to just say you will save $2k p.m. from the get go could be lying to yourself, as in the here and now there will always be something better to spend your money on than your future security and financial independence. Like things that achieve instant gratification This comes back to goals – having each of the goals set in stone – allows you to break these down into achievable chunks If you have a goal to save $100k for a home deposit in 4 years’ time – that is great – but start breaking each goal down into achievable bit size pieces - $100k in 4 years seems a lot bigger than $480 per week for 208 weeks Saying you want to have $100k of passive income by the time you are 60 seems like a big goal – but if it just takes an additional $200 per week to be SS into super to get you these (on top of your existing super funds) – then these things start to become more achievable – Which is the whole point of reaching any goal – making it seem achievable to you

What you can do to get ahead now - How to start?

Sometimes there can be too many things to change at once Start small – Pick one thing What is one financial behaviour you would change?

Small action = dopamine = larger actions.

The best way to get over Slumps – little momentum to start and it takes off. Once you get enough of a craving for the feeling of saving/investing, it is hard to stop Remember: Almost impossible to go from 0 to 100 - Train – Starts off slowly, but then don’t get in its way once going. Implement it and adjust along the way. Over time (30 – 90 days depending on the goal) it will become a habit. Then implement the next goal on the list

That is the process to improvement – one small things at a time.

Financial habits are built through the positive feedback of cue, action, reward. These decisions years ago have improved my position now. That is the relationship with good habits – Keep improving slowly over time Pareto distribution – 80/20 rule. 20% who have 80%, they have been able to grow good habits, compounding effects It is as simple as investing and waiting - $20k today would be $80k in 14 years at 10% p.a.

 

 

What is one thing that you can do to better the future self?

Starting sooner rather than later – There wont be much joy in starting initially – starting is the hardest part – but know that it gets easier as your goals turn into habits that give you a positive feedback over time -

‘all good things comes to those who wait’ – means that if you wait it out and just start at one thing, keep at it, you will start getting the motivation to keep going, and increase speed.

Thanks for listening everyone! I hope you all can make a small change.

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