3 Keys to Change

Approach each new problem not with a view of finding what you hope will be there, but to get the truth, the realities that must be grappled with. You may not like what you find.  In that case you are entitled to try to change it. But do not deceive yourself as to what you do find to be the facts of the situation.

~ Bernard M. Baruch

As mentioned in the last post, 3 keys to effective change are:

I.   Education

II.   Effort

III.  Perseverence

Education and the Shampoo Cycle

Today, we will address education. For the purposes of this discussion, we’ll focus on the area of personal finance, but you can apply these principles to any area you like. The first aspect of educating yourself is to figure out what the problem is, and then to learn as much as you can to solve it. It doesn’t work if you aren’t honest with yourself about what the real issues might be. It’s hard to look at a problem and realize that we might be, at least partly, causing it ourselves.

Continuous Monitoring  Using the Shampoo Cycle

Identifying and evaluating any problem requires that you repeatedly ask yourself 3 questions:

1.  Where am I?

All change begins with an honest evaluation of our current reality. What are our assets, liabilities, strengths and weaknesses? What are our best and worst habits when it comes to spending, saving and investing our money?

2.  Am I Happy With Where I Am?

How do you feel when you think about your balance sheet? Are you content, proud, ashamed, or uncomfortable? Remember:  discomfort means change is needed.

3.  Where Do I Want to Be?

If you are uncomfortable or you feel out of balance when you think about certain parts or all of your situation, try to identify what would make you feel more balanced. Is it less debt, more savings, starting a retirement or education savings plan, or maybe adding more to existing plans?  Would you feel better if you understood more about your investments or knew enough to make changes to them on your own? We will certainly get into setting goals in greater detail later. Suffice it to say that you must have them, they must be clear, and they must be in writing.

Lather.  Rinse.  Repeat.

Repeatedly asking yourself the 3 questions above (the shampoo cycle) can help get you started and keep you on track if you lose your way. Once you know where you are, whether you’re happy with it, and where you want to be, you can formulate a plan of action for getting there.

Learn More

Educating yourself is the key to achieving your goals. Find a mode that works best for you. Read  books, blogs, magazines and newspapers that deal with subjects you need to learn more about. Attend workshops and seminars. Talk to people you know who are more knowledgeable than you. Be open and gather as much information as you can. Decide which parts apply most to your situation and then plan to act. I don’t know about you, but I am a spectacular serial planner. The problem is, I often get so wrapped up in planning that I lose sight of the original goal and I either take forever to actually do something, or I get bored and give up. That’s where effort and perseverance come in. We’ll talk about effort tomorrow.


Once you’ve decided to make a change and you have a plan, it’s time to act. For many of us (myself included) this can be the most difficult part of changing. Most of us really are pretty busy with work, family and all of the responsibilities that come with being an adult. It’s easy to tell ourselves that we don’t have time to look at our balance sheet, our bills, bank accounts and investment statements. Budgeting? Forget it. I don’t have time. The truth is, we make time for the things that are important to us.

Many of us learned the hard way during the financial crisis that it is important to understand what you are invested in and why. We might have lost a job and realized that we needed to buckle down and track our expenses.  We need an emergency fund. These are personal finance basics that can soften the blow for us when things turn south, as they inevitably do from time to time.  But the truth is that all of these basics do require effort.

If you’re finding it difficult to get started, try the following tips:

  1. Start Small: If the idea of tackling your financial issues all at once is too much for you, start with the smallest unit of action it takes to get yourself to actually do something. Try to do at least one thing, no matter how small, each day. Or plan to complete several tasks on the weekend or a day off. This might mean just getting out some paperwork, or looking up how much you usually spend on utilities each month. Ideally, as you move on, you will become encouraged to keep going as you learn more and more about your financial status and perhaps find some ways to improve it.
  2. Make Time: What activities could you give up in order to accomplish your goals? Would you be willing to forgo an hour or two of television each evening? Could you get up an hour earlier or go to bed an hour later?
  3. Keep Organized: Since you will not be able to accomplish everything in one sitting, make sure you keep your ideas and paperwork organized as you go. Have a file or two where you keep current projects and leave yourself a post-it note about where you left off and what your next tasks were going to be. This way, when you do have a few minutes to work, you won’t spend half your time trying to remember where you were.  You can dive right in.

What have I missed?  How do you get yourself started on a daunting task?


The third key to change is perseverence. Even if we are able to learn a great deal and put some regular effort into our financial life, we can lose focus and temporarily or permanently give up on our quest. A major or minor setback can be very damaging. There’s no doubt about it. Change is hard. If you’ve ever tried to give up any vice, lose weight, or break any habit, you know that. It all comes down to how badly you want it. How much education and effort are you willing to put in? Are you ready and willing to accomplish your goals? If not, are you willing to deal with the consequences of not addressing your financial needs?

Here are some ideas on how to keep your momentum going:

  1. Shampoo Cycle:  If you become paralyzed and forget why you started your change project, revisit your written goals, and go over your shampoo cycle again: Where are you? Are you happy with where you’re at? Where do you want to be? Lather. Rinse. Repeat.
  2. Automate the Process: Set a regular time to accomplish tasks and stick to it as best you can. If something really important comes up, that’s fine. But don’t use it as an excuse to abandon your quest for a better balance altogether. It takes time to replace old habits with new, healthier habits.
  3. Recruit a Partner/Coach: This person will often be your spouse or partner, but it could be anyone you trust. Let them know about your commitment to change and just have them ask you periodically how it’s going. Just knowing someone else is watching can be the impetus we need to act.
  4. Reward Yourself: This is important, but we need to be careful here as well. It doesn’t make sense to reward ourselves with things that undermine our financial goals. Try to make your reward intangible, or at least very inexpensive, depending on your situation. If you are up to your eyeballs in debt and you have managed to pay some of it down and not add to it, don’t reward yourself with a credit card spending spree. Maybe an hour or so doing something you truly enjoy would be a good reward. If you are not in serious financial difficulty, but have accomplished a significant goal, maybe you can afford to reward yourself with a temporary loosening of the purse strings. The intrinsic rewards of achievement are much more satisfying and permanent in the end than any extrinsic rewards, which are usually fleeting.
  5. Review Your Plan: If I’m consistently unable to follow through with my plans, it usually means one of two things: a) my plan is unrealistic and needs some changes or b) I need to look at how important my goal is to me.

Coincidentally, there is a great article over at zenhabits this week on motivation and habits. If you haven’t read it, check it out. There are some great ideas there that can be applied to any area of life, including personal finance.

What are some ways that you have found to reward yourself for a job well done?  Do you find it helps you persevere and achieve your goals?


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