What Britain’s “Nudge Unit” Can Teach Us About Achieving Goals

May 12, 2017

In a recent episode of the Freakonomics podcast called “Big Returns from Thinking Small,” two members of “The Nudge Unit” (an arm of the British government designed to help save money) talk about the process they use to help improve processes and save money. They also dive into how they take that process home with them and make progress on their personal goals. It’s a 7 step process that could very easily be replicated by anyone to make progress on their own personal financial goals.

Step 1: Set a goal!

What is it that you’re trying to improve? Some examples are reduce your debt, increasing your retirement savings, buying a house, and building an emergency fund. These goals can be very simply stated and right to the heart of the matter.

Step 2: Make a plan.

This is where the goal becomes actionable. Using some of the above examples: Pay an extra $100 per month on your credit cards. Sign up for the rate escalator and increase your 401(k) contribution by 2%/year.

Step 3: Make a commitment (a public one).

I’ve done this with exercise goals. I have used the website stickK.com as well as their phone app to commit to a goal and have a “referee” to hold me accountable. I haven’t used my kids or my girlfriend as a ref because they’d likely be too lenient and let me off the hook. Instead, I’ve used friends and former teammates who will have no trouble telling me I fell short. Whatever your goal is, ask a couple friends to be your “accountability partner.”

Step 4: Have a reward or punishment in place.

For many people, it helps to have a reward or punishment system. Allow yourself to buy a few books or running shoes or something small but fun AFTER you pay off a credit card. Take a nice vacation AFTER you pay off your student loans.

Donate $50 to a charity that goes against every fiber in your being or wear the jersey of your most hated sports team if you don’t reach your financial goal. (If you’re a Game of Thrones fan, you could always ask a friend to get a bell and walk behind you, loudly saying “shame” if you fall short of the goal.) Knowing the consequences – good and bad – of your actions can help you stay focused on the task at hand.

Step 5: Share the goal.

Post your goal to Facebook, Twitter, Instagram, etc. so that you are publicly declaring your commitment to the goal. Ask your friends for support or see if anyone wants to join you in your quest to help make progress in their lives too. When I’m hiking, going uphill always seems easier when I’ve got someone with me to talk to. The same concept applies when trying to reach the top of the hill financially.

Step 6: Get feedback.

Measure your progress. If you have $10,000 of credit card debt and want it gone in 3 years (36 months), do an end of each month measure to see if you’re reducing $277.78 or more of debt. Tracking your progress and knowing exactly where you stand toward your goal can be massively motivating.

Step 7: Stick!

Practice progress. Celebrate it. Course correct when needed. Learn from the process.

Keep doing what’s working and do more of it if possible. Stop doing things that take you further from the goal. Be resolute and gritty on your way to reaching your goals.

This is the process that a unit of the UK government used to improve their processes and save money and helped the members of that unit replicate that success in their personal lives. It works. If you use this rough framework, you can nudge yourself ever so gently into reaching just about any goal that matters to you.

What Do You Owe You?

March 24, 2017

As someone who loves a good “pregame speech” and has heard and given fiery speeches before and during games, the field of motivational speaking is one that I enjoy. It turns out that one of our newest planners, Vekevia, shares a love of a good fiery speech. We talked about this recently and she shared this with me:

I love listening to motivational/inspirational speakers. They remind me of why I’m working towards a particular goal, which is what helps keep me going when things are tough or just not running as smoothly as I’d like. They drive me to keep pushing forward when what I am seeing doesn’t necessarily look as promising as I envisioned.

That helps in life goals and is especially true with financial goals. I heard one motivational speaker, Eric Thomas, ask the crowd a series of questions to get them to self-reflect. His message was “You Owe You” and I want to share the questions he asked:

“Know ‘what do you want’. What do you want in your marriage? What do you want with your son and your daughter? What do you want in your health? What do you want financially? How much money do you want to make a year?

What do you want to drive? How do you want to live? Stop just waking up like an accident. What do you want? And then, once you find out what you want, spend the rest of your natural life waking up and going after it.”

Managing your finances/financial planning is a life-long process. You don’t get to just plan today and then that’s it. You’re done.

For some, that can sound like a daunting task, especially if you don’t enjoy the process. I think that’s what makes it even more important to know why we have the financial goals that we have. Here are some tips to figuring that out.

Identify the ROOT of your goal. Know your big picture.

How to do it:

Go beyond your need to save to send your kids to college, pay off your student loans or buy a house. Do you want to give your kids a life full of better opportunities than you had when you were growing up? Do you want to be debt free and create or continue growing wealth in your family or simply gain a sense of freedom? Do you want to move into another neighborhood to surround yourself and/or your family with better opportunities? Do you want to live more comfortably?

Determine WHAT has to happen for you to get to that goal.

What to consider:

Do you have to stop spending as much on eating at restaurants or other forms of entertainment? Do you need to get a handle on how much you swipe your credit card? Do you need to sit down with your spouse and get on the same page about your finances?

Tools:

Easy Spending Plan

Expense Tracker

Debt Inventory

Create a clear plan of HOW you’re going to make it happen.

How to do it:

Get Smart About Your Financial Goals

Include some goals that are short-term so you have small wins and give yourself some “atta boys” along the way. Include long-term goals as well so you are always planning for consistent progress. Take advantage of resources you have through your financial wellness program at work. Find out what assistance is available through your employee assistance program (EAP) at work.

Do something daily and make it a HABIT.

How to do it:

List small steps you can take every day or every week to get you to your long-term goal. I live by my calendar. Work tasks are included. Workouts are included…everything. If it’s in my calendar, it’s getting done.

Self-reflect.

What does that mean?

At times, taking a minute to “stop and smell the roses” makes sense. It allows us to reflect on where we are, where we’ve come from and where we’re going. Pausing for a moment to experience the “now” and be grateful for all that we have provides a meaningful context for pushing forward.

Alter your plan if it’s not working.

What to consider:

Why isn’t it working? Do you need to make a simpler goal? Were the steps unrealistic or too ambitious? Do you need an accountability partner? Make changes to your plan accordingly so that your next steps take you closer to your goals.

Reward yourself.

Really?

I’ve found that people who are always pushing toward a goal without acknowledging their own success have a tendency to backslide or mentally break after a period of time. Reach a goal and congratulate yourself in some small way. One of my coworkers is working toward some fitness goals and is watching his food intake and his exercise routine. When he hits a milestone, he allows himself a “go crazy day” without working out and eating a gigantic plate of nachos, knowing that the next day, it’s back to the grind. Knowing that a small reward is ahead allows him to stay focused in between milestones.

It’s up to us to live up to our full potential. We have goals and we have to find a way to make them happen. We have to find a way to work around what we can’t control and do everything in our power to find a way to win. You owe it to you to become financially secure. If this blog post isn’t enough to motivate you toward your goals, watch Dr. Eric Thomas and he’ll light a fire that will help you get started toward your goals.

Getting Smiles Into Your Days

March 03, 2017

As I sat down to write a blog post, my phone’s text message alert went off. One of my friends sent a message that he was watching the Baltimore Orioles first spring training baseball game of the year. He sent that to a group of us who get together periodically to go to baseball games and that message made me smile. When pitchers and catchers report to spring training, it tells me that warm weather is right around the corner. The first day of spring training games is almost a holiday in my mind.

Opening Day is one of my favorite days of the year. As a kid, my uncle took me to a lot of Opening Day games in Baltimore and that feeling of being a kid taking the day off from school to watch baseball still hits me as an adult. Baseball, to me, means the end of winter and the start of spring and summer which are my favorite seasons. It’s all about renewal and hope (for a winning season). On Opening Day, everyone believes that their team has a shot at winning the World Series.

I’ve seen the spirit of hope and optimism hit employees of our client companies when we have had a few conversations and their debt level starts to come down. A large percentage of people I talk to are coming to me for help with reducing or eliminating their debt load. In those cases, the first meeting is usually one where they come in looking very tense and full of stress. Being overwhelmed with debt, from my observations, is bad for a person’s posture, mood and stress level.

After the initial conversation, we put together a personalized plan of attack for their debt and we check in periodically (the time line depends on the person and the severity of the debt load) for what I like to call “brag sessions.” In a brag session, they come in and tell me how much of their debt they’ve been able to pay down since our last meeting. We celebrate the progress and acknowledge that there is still room to go. The important part is that these sessions are enjoyable and we are always looking for ways to make more progress.

In many cases, after a couple years of check-ins and brag sessions, the debt level is close to zero and you can see their eyes light up when talking about what life will be like when they get to $0 debt. I’ve had a number of people come in to the office and pull up their final credit card balance on their laptop to show me that they just paid their last little bit of debt off. When they show me that or bring in the checkbook and write the last check in the office, their level of excitement about what comes next reminds me of the first days of baseball season when excitement and optimism reign.

Are you’re looking for a way to generate some smiles and some enthusiasm into your days? Check out some spring training baseball or..get one of your debts to $0. Either way, it’s a great idea.

How Our History Can Help Us Shape Our Future

September 19, 2014

200 years ago, Francis Scott Key wrote the Star Spangled Banner in the Baltimore harbor near Fort McHenry.As a Baltimore guy, this past weekend was glorious. There were thousands of people celebrating the bicentennial of the Star Spangled Banner in the Baltimore area, tall ships from all over the world were in the harbor, the Blue Angels were doing aerial shows, there were fireworks and the Orioles were beating the Yankees in an important series. (That has no bearing on the bicentennial, but it makes being in Baltimore a lot more fun.) It was a great weekend to look back at our country’s history and reflect upon where we’ve been as a country and where we’re headed. Continue reading “How Our History Can Help Us Shape Our Future”

The Right Ingredients for Overcoming Debt

June 06, 2012

Although there are some that say the recession is behind us, there are still others that are continuing to deal with its effects. I recently had an opportunity to speak with a gentleman who finds himself behind the 8 ball when it comes to debt. This is not the first time I’ve received a call like this, nor will it be the last, but what makes this particular call stand out is the way this person has decided to approach the situation. His attitude and determination should be a lesson to us all. Here is his story: Continue reading “The Right Ingredients for Overcoming Debt”

The Curious Similarities Between Golf and Managing Personal Finances

April 11, 2012

Greg is on vacation this week so this blog contribution is provided by Scott M. Spann, CFP®, EA, one of our Resident Financial Planners at Financial Finesse.

Living in the coastal region of South Carolina (affectionately referred to as the “low country”) provides residents like me and our frequent visitors with an abundance of recreational, entertainment and cultural opportunities. I guess that is why our coastal communities like Hilton Head, Charleston, and Myrtle Beach remain popular retirement and vacation destinations for those seeking changes in “latitude” later in life. Walks on the beach, arts festivals, historic tours, boating, kayaking, fishing, and reading a book while lying in a hammock are just a few of the leisure options that I try to take advantage of as much as possible whenever there is downtime. But when the azaleas and dogwood trees start to bloom and the sports world shifts its attention just up the road to Augusta, Georgia for the Masters Tournament like it did last week – golf occupies a significant portion of the leisure section of my brain. Continue reading “The Curious Similarities Between Golf and Managing Personal Finances”

Financial Planning: It Starts with a Simple Goal

April 15, 2011

When I read the article, Sumo Wrestler becomes Heaviest Man to Ever Finish Marathon, about a Sumo wrestler who ran and finished the Los Angeles marathon and in doing so became the world’s heaviest man to ever finish a marathon (~400 lbs.), I felt inspired. If you look at most marathon runners, the LAST THING you think of is sumo wrestling. When you look at sumo wrestlers, the last thing you think of is long distance aerobic exercise. That’s what makes this story so interesting to me. This guy (Kelly Gneiting), not only did something that most people would think he had no shot at doing, he has set the bar even higher. He wants to swim the English Channel. He knows how to set goals and not only achieve them but set them higher again after reaching the 1st goal. Many people could learn a thing or two from him. Continue reading “Financial Planning: It Starts with a Simple Goal”