How can you make good financial decisions that are obvious, easy, and satisfying? When it comes to living a successful and fulfilling financial life, most of the outcomes are related to sound decisions. So how do you set yourself up for success?
Make Habits Obvious
Make your habits obvious, easy, and satisfying so that your decisions are almost automatic.
As habits form, they become part of your automatic and unconscious mind. It’s very easy to develop and then fall into patterns before you know what’s happening.
Let’s say you bring your phone into bed to scroll through social media before turning in for the night. Sometimes you can go down the rabbit hole for quite some time. There have been many studies done about the effect of smartphone use right before bedtime, so I’ll leave that to the experts. Let’s just say there aren’t too many positives to doing this.
Remember that habits are not helpful or hindering. There are only effective habits. All habits impact you in some way.
Easy Does It
A great way to further enforce habits is to write them down. For example, I will do X at Y time in Z location. These are important for good financial decisions.
Something more realistic is, “I will fund my Roth IRA on January 5th on my finance app.”
Creating an environment where you reduce friction by doing this habit is also important. It can be as simple as setting a calendar reminder every January 5th to fund your Roth IRA. Or go one step further and have automatic funding set up through the app on that date.
You Can Get Satisfaction and Good Financial Decisions
Contrary to what Mick Jagger sang about many moons ago, you can get some satisfaction. Use positive reinforcement when you complete your habit. Give yourself a reward – something you really like – a hot chocolate, a run in the park, or whatever blows your hair back.
It’s also important to track your habits and see how you progress. It’s wonderful to look back after several months, weeks, and years to see how far you’ve come.
If you’d like to chat about habits, making good financial decisions, and how to get the most out of them, give me a call.