January tends to be an interesting month. The hangover of drinking, eating, and spending too much wears off, and we start to try to make changes that we would like to see happen throughout the year. Whether it’s a new years resolution, or the realisation that another year has come and gone and not much has changed, there are 2 major goals that people tend to focus on in the new year: health, and wealth.
There are a number of similarities between these 2 types of goals, and also a number of reasons as to why it’s so hard to make a lasting, positive change in these areas. Let’s have a look at these.
Problem 1. We don’t know exactly what we are trying to achieve, and whether we are on track. In most cases, our plans to make changes in these areas are phrased as fairly vague wishes, instead of concrete goals. For example, we might say we want to ‘lose weight’, ‘get healthy’, ‘get organised for retirement’. The more vague this goal is, the harder it is to determine if a decision we make is going to help us achieve this, and/or if the decisions we have made so far are pointing us in the right direction. Without the immediate feedback, it’s hard to maintain motivation to keep going.
Problem 2. We don’t know what we should be doing to achieve our goals. One of the reasons our health and our finances are so dizzying is that there are so many different inputs and outcomes that are involved in each of these. Once we know what we are trying to achieve, how can we make sure that the things we are doing will help us get there? There are 2 types of people that can help provide the information we need; someone who has already achieved that goal previously, or someone who is an expert in that particular area. E.g. If you want to run a marathon, don’t ask the biggest guy in the gym how you should train.
Problem 3. There are things we know we should or shouldn’t do, but we can’t find the motivation to do them. There are 2 main ways to make sure this doesn’t derail us. The first one is to change your environment, to make it as easy as possible to do the right thing. The obvious example of this when it comes to health is not having junk food in your house. While there’s nothing stopping us getting in the car to drive to the shop, we’re much less likely to do so than if we’re sitting on the couch with a bag of M&M’s calling our name from the cupboard 5 metres away. Similarly, we find the simplest way to make sure our clients stick to their retirement planning is to set up any transfers to happen automatically e.g. via salary sacrifice or as an additional repayment of their home loan. Making sure this happens automatically reduces the amount of willpower required, as it’s easier to make the right decision once instead of making it every fortnight as you get paid.
Another way to make sure we stick to the plan we have in mind is to have someone else to stay accountable. For your health, this might mean exercising with someone else, so that you know you will be letting them down if you don’t get out of bed and go to the gym. With your money, this could mean a husband and wife making a regular time to meet with their financial adviser to check that they are both sticking to the budget and plan they have set.
To recap, the 3 parts to successfully making a change in the new year:
Step 1. Set the right goals.
Step 2. Gather the information you need to make a plan.
Step 3. Make it as easy as possible to stick to the plan.
If you want to run a marathon, lose 10 kg, or gain some muscle, we probably can’t help. But if you are focused on getting your retirement planning sorted, feel free to give us a call!
Written by Dallas Davison.
Dallas Davison, Michael Hogue and Ali Hogue.