January 2020
Barbara O’Neill, Ph.D., CFP®
Distinguished Professor and Extension Financial Management Specialist Emeritus
Rutgers Cooperative Extension
At the start of each year, some people set New Year's resolutions and there is a lot of media coverage about them. Common resolutions are healthier eating, increased physical activity, saving money, decreased debt, improved personal relationships, quitting smoking, learning a new hobby or skill, and reading more. Other people avoid making resolutions completely because they never produce the desired results. Statements like “I always break my resolutions” and “I always give up by mid-January” are commonplace.
One reason that New Year's resolutions are so difficult to keep is that they require a change in behavior. Examples are eating less or doing more exercise to lose weight and decreased spending to reduce debt or save money. Change is hard and people tend to resist it because it requires a lot of mental energy, willpower, and motivation to do things differently. It is much easier to stick with the status quo, especially if you do not have a clearly defined action plan with detailed steps for how to go about changing.
Whether you call your personal goals New Year's resolutions or not, there is a better way to achieve them: create good habits. When an action becomes a habit, you do not have to remember when, where, why, or how to do it. It gets done because it becomes part of your daily routine. Below is some useful information about habits summarized from the book Transform Your Habits by James Clear:
- Personal habits- good or bad- are the result of many small decisions that people make over time
- Our lives today (e.g., finances, health, career achievements) are a reflection of our past habits
- To make personal changes, focus on habits and routines rather than events or success metrics
- There are three steps to effective habit change called the 3 R's: reminder, routine, and reward
- Reminders are “triggers” that can initiate behaviors (e.g., walking laps when you arrive at work)
- Routines are behaviors; i.e., the actions that people take (e.g., setting up payroll savings deductions)
- Rewards are the benefits gained from changed behaviors (e.g., positive self talk about achievements)
- Decide who you want to be and prove it to yourself every day (e.g., lose 30 pounds by walking more)
- Set schedules- not deadlines (e.g., designated times for physical activity and financial check-up activities)
Another strategy for successfully achieving goals is “habit stacking,” i.e., incorporating a desired behavior into something that you already do. Health-related examples are going to a gym on the way to work and flossing your teeth after brushing them. Financial examples are dropping loose change into a jar when you walk in the door from work or doing errands and depositing the tallied up loose change into a savings account.
Do you want to improve some aspect of your life in 2020? Create good habits. Best wishes for a happy, healthy, and financially secure year in 2020.