Life hacks for coping with change in a new year

The entire science behind change fascinates me.  It’s also one of the critical variables in financial planning – without implementing a sustainable change the entire planning process fails to deliver the outcomes we’re after.

That’s easier to say than do. We get busy, distracted and we procrastinate. Procrastination is a real problem for a lot of people, and it’s a sneaky one. Quite often we don’t even realise it’s sitting on our shoulders making itself very comfy. Its level of comfort will depend on how we respond to change and how ‘change hungry’ we actually are.

Different people have different levels of readiness to change and it needs to be measured and respected. It allows a good coach to use the right approach and develop a framework that maximises the client’s potential.  After all, it’s all about the actual process of planning – taking clients from self-discovery to actioning digestible steps of a workable plan, fundamentally connected to personal values and goals.

It doesn’t just happen automatically though. The whole process is underpinned by changes in thought, attitudes and behaviour. And that’s where the rubber hits the road.

Studies after studies show us that if we address our behaviour, the results we're after are inevitable.

Coached investor behaviour can literally stop you from booting away your fortune. Up to two thirds of investor returns are lost annually, due to expensive mistakes because ‘human nature is simply a failed investor’ (annual Dalbar/Lipper analysis).

People’s improved behaviour can increase their savings by $90,000 after working with a financial planner (Saving Study by KPMG Econtech for the FSC).

Our behaviour and our decision mechanism is the dominant determinant of our financial outcomes. And managing the process of change forms a big part of what a behavioural coach does.

New Year’s Day is the single most popular trigger in our calendars, when we tend to think of change and how we can improve our lives. Without successful implementation, however, change won’t be sustainable.

So what can you do differently this time? The secret to getting ahead is getting started. These three, simple and practical life hacks might be the way to go:

- Don’t think (too much)– we tend to overthink things. Our minds love making excuses about the ‘right time’ and ‘perfect conditions’. These never happen. The best time to start was probably years ago. The second-best time is now. Often, it’s just a matter of starting and working out details later.

- Create external tension – if we tell other people and make our plans ‘official’, we subconsciously create a guilt trip if we stop. Sharing our goals and plans with friends fools our mind and holds it accountable.

- Start for 10 – break down the change into small bites you can introduce daily. Then, every day, practice the new habit for just ten minutes. Once the time is over we tend to continue as we already created a momentum.

Financial coaching can also reduce the anxiety about the irreducible uncertainty we all face. It provides a holding hand and objective point of view, that helps build our confidence when dealing with change.

Michal Bodi

Senior Financial Planner & Financial Coach

mbodi@sydneyfinancialplanning.com.au

My TOP 5 financial predictions for the New Year (and let's face it, every year after)

Predicting future can be difficult and mostly impossible. Especially if one’s trying to predict things which are completely out of their hands. Like, entirely! But guess what, surprisingly (not really that surprising to the scholars of human behaviour), most of predictions are made about exactly those.

We’re in the second week of the New Year and the mainstream media are already saturated with headlines about market predictions, interest rate predictions etc..

So I made my own list. However, the difference is, that these are about the one thing we can all fully control, if we choose to – our own behaviour.

I’m almost certain that my forecast won’t make the headlines because it doesn’t contain the information ‘the people want’. It’s not the sensational news or ‘the secret’ information that will bring them wealth. Well, actually it will, but not in the immediate form as they all expect.

So without further ado, here are my top 5 behavioural predictions for this year (and in fact every year thereafter, since human behaviour just doesn’t change):

1 . We will keep looking for ‘the right’ product that will ‘save’ us

Most corporations spend ridiculous amounts of money to employ top marketing agencies to sell their products. These behaviour wizards understand too well how human brain works and create wonderful campaigns that simply fool us. They play to our basic emotions - fear and desire, but lately also pride, frustration and self-esteem. And vast majority of population will follow and buy whatever they’re selling, not realising, the new product won’t make any difference in their long term well-being - financial or emotional. They will happily keep chasing it, year and year again, with their super fund, insurance company, mortgage provider…

2. We will ignore the behavioural (please read boring) issues that actually make all the difference

After over a decade of my professional practice, I’m yet to see a prospective client who will come to me asking for assistance with their patience, disciplined spending or emotional decision making. They all come asking to check if their super can be ‘’invested better’ (whatever that means) to deliver greater returns, for mortgage with a better rate or a cheaper insurance.

When I start explaining to them that it’s not the product that will deliver the outcomes they’re after and that it’s actually themselves who can do that via better money habits and mindful consideration of how they go about things, they get disappointed. Many don’t believe me. And subsequently leave and they continue pursuing the ‘whatever other crazy issues they’re convinced are important’ as everyone else and which will eventually drive them to the ground.

3. We will continue focusing on (out)performance

The ‘timing and selection’ culture we live in is obsessed with being better than average. We were told by our parents we can be the best so we expect nothing less from the results of financial products we buy. Not realising that the consistently best performance can’t be delivered year in, year out, we allow ourselves participate in the rat race we can never win.

Most of us will not want to see that it doesn’t have to be that way. That the best product performance (or the outperformance) isn’t required to pay off our debts fast, educate our kids or retire early (whatever that means).

Most of us will not accept that the only real outperformance is the one we can deliver ourselves via long term and disciplined plan, with a help of third party coach, keeping an eye on our vulnerable money behaviour.

4. We’ll keep buying things we don’t need

A decent number of books, movies and pieces of research has been done on how buying stuff does not make us happy (in the long term). Most of us just don’t want to (?) get the memo. It’s actually getting worse and more pathetic, with big companies now skipping parents and market directly to our children. And oh boy, do we all know what a kid shit behaviour does to a parent who is tired, lacking sleep and just wants to have a quiet moment or just wants to pop in the grocery store to only buy milk. So what do we do? We give in. To our kids, to fashion, to our marketing and social media driven culture. … but it’s so hard to save money these days, isn’t it…?

5. We won’t listen to financial advice professionals

Less than 5% of population has a dedicated financial coach who overlooks their family’s finances and long term interest. How can we expect to get ahead, to live lives on our own terms, to get financially independent, to retire early or whatever the headlines we buy into says, if we choose not to have hard conversations about the way we spend money?

Well, because it’s easier and so much more exciting, to look up stuff online or chat to our friends or read an article about the latest products and hottest suburbs to buy in right now.

Therefore, we will continue to choose to not engage a financial advice pro because we’ll continue to justify it to ourselves – don’t you read the paper or watch a TV report about them? It makes us feel better to say that and we won’t have to look for anyone (and use our brain). So we’ll just continue to Google…

Well, there you go. My top five (although the list goes on). I’ll be delighted to check in again in December to see if they came true. But I’m pretty bloody confident... Because they do every year.

All the best.

Michal 'Misho' Bodi

I've dedicated my career to educating people about what really matters about money, what they need to know and what is just noise. I believe that having practical understanding of what can appear to be a very complex issue and having a clear plan empowers people to achieve greatness.

I make money issues look simple, elegant, easy to digest and practical. I'm convinced it’s the only way to accomplish anything in the busy and dynamic environment we live in. You only need to know what's relevant to you. Everything else is commentary…

My specialty is helping people to open up and have an honest conversation about where they are financially and why. Then inspiring them to get proactively involved in the process of planning their lives by providing practical guidance and ongoing money coaching.

mbodi@sydneyfinancialplanning.com.au

Spoilt for choice, or choices spoilt?

I was buying an audio book the other day.  

And I was in the mood for a good book – there wasn't something in particular I was looking for.  I just wanted something on leadership.  

After 40 minutes (!!!), I ended up with five books in the shopping trolley and no idea what to do next.  I was completely stuck – it was like my mind was paralysed by the options I had available to me.

There was a book written by an author I've read (and enjoyed) before.

Two books had names that I found really intriguing.

Then there was a book recommended to me by a friend.

And with the last one, it was the summary blurb I what I found interesting and it made me press the ‘buy now’ button.

They were all fascinating in their own right and they all were what I was looking for.  

But there I was, sitting at my desk, completely frozen with no idea which one to choose.  

It was all going so well – I narrowed down the 25 search results to a shortlist of five, but I couldn’t get any further.

Did the muse leave me there at the crucial moment?

I wanted to pick the best one – the best of the best!!!  With work and kids, I don’t get a lot of time to relax and enjoy a really good, stimulating book, and so that time one-on-one with a good book is too precious for me to waste on the wrong book.

Unable to move any further, I ended up getting distracted by my kids, I turned off the laptop and didn't make a purchase...

It took me a good few weeks before I was able to go back and buy something. 

And guess what, I ended up buying one of the ones looked at previously.  I didn't bother with shortlists this time around – I just went in and bought the one that was recommended by someone I trust.

Because of that, I've got a good read waiting for me at the end of the day.  I’m really enjoying the book, and I'm so glad I went back and bought it.

It seems like everywhere you look these days, there’s yet another choice that has to be made.  Big choices, small choices, important choices, insignificant choices - they all seem to weigh us down and put pressure on us to get it right - to make the best choice.

The concept of the best is clouding our vision. 

It doesn't have to be that way. Once we allow ourselves to have the freedom to trust and be guided by an objective point of view, the weight is lifted. 

A choice made will always be better than the one you plan to make (one day).

by Michal Bodi

Have you had a similar experience? I'd love you to share with me.