- Understanding the importance of emotion, structure and behavior is key to financial success.
- The older we get, the harder it becomes to change our ways–and that includes our money habits.
- In money, as with so many things in life, you need to combine motivation with the right direction and a clear path in order to make new habits stick.
In our last two posts we talked about the importance of emotion and structure in our financial lives. Today we’ll look closer at behavior. This is the most difficult of the three topics by far, because changing your behavior is very hard unless you’re a little kid. It’s especially difficult for adults, as we tend to get set in our ways, including the way in which we deal with money. The older we get, the harder it becomes to adopt healthy money habits. But it’s never too late to do so.
In Chip and Dan Heath’s 2010 best-seller, Switch: How to Change Things When Change Is Hard, the authors use a little analogy about finding success by riding elephants. It applies to money as well:
1. The elephant. First, you have an elephant. The elephant is all heart. It’s all about what motivates you and allows you to plow ahead and make things happen.
2. The rider. Next, you have a rider, who does the thinking and directing on the hard-charging elephant. That’s very important from a cognitive standpoint.
3. The environment. Finally, you have the environment–where you live and how you operate at work, at home and in other important places in your life. The environment can be difficult because of all the influences around you.
For instance, you can get really motivated by something, perhaps even by this video, and start running hard in a hundred directions at once. You’re really excited, but without having any clear direction, your energy just fizzles away. Even if you’re very clear about what you want to do and you think about it for a long time, if you don’t have the motivation, you’re not going to get any traction. You’ll just end up procrastinating.
So you need a path through your environment, because even if you have the energy to ride your elephant all day long through the jungle, with snakes threatening to bite you at you and tigers trying to knock you off your perch, if you don’t have a clear idea where you’re going, you’ll have a hard time reaching your ultimate goal.
When you put the three together–motivation on your elephant, with the rider directing it, and having a very clear path–then you have better than an 80 percent chance that the change you’re trying to make will actually stick.
It’s really important. As you’re going through life and trying to make positive changes to your money habits, it’s very important to recognize that having motivation, direction and a clear path in place will give you a much higher probability of success.
Until next time, enjoy.