Discover why building lasting habits is more effective than setting New Year’s resolutions. Learn practical strategies to create positive changes in your life. File photo.
By: Debra Slabber and Praleena Mudley
We all kick off a new year with certain resolutions and goals, whether health, career, family, travel, or financially orientated. Having goals in place is a great way to keep human beings focused, and motivated and it provides a sense of purpose. However, it's also incredibly difficult to stick to these new resolutions, because as they say “life happens”. Numerous studies have shown that most New Year’s resolutions don’t stick. This year I want to challenge you to ditch making a list of all the things you promise yourself you will start doing, just to throw in the towel a month or two later. Instead, I want to challenge you to focus on building better habits.
What is the difference?
Resolutions are conscious and meaningful decisions or goals that shape our actions and give direction to our lives. They serve as a roadmap for personal growth and self-improvement and promote positive change in various areas of our lives.
Habits on the other hand are the small decisions you make and actions you perform every day, consciously or unconsciously. The impact of a habit on our lives can be either positive or negative, depending on whether it is a good or bad habit. Establishing habits makes performing certain actions easier as they become woven into our daily lives. Examples of habits include exercising in the morning before work, brushing our teeth before going to bed, making a cup of coffee first thing when you wake up, or grocery shopping on Saturday mornings.
To recap:
Resolutions are conscious commitments or decisions made to achieve specific goals or bring positive change while habits are regular and often unconscious behaviours that shape our daily routines and lives.
Resolutions are usually made at a specific point in time (such as at the start of the year), on the other hand, habits are built through consistent repetition over time.
If you think about this, essentially your life is the sum of your habits. Your financial situation, your physical health, your happiness, etc. What you repeatedly do, think, and who you spend time with ultimately forms the person you are and the things you believe. There are many books written about habits, and I can certainly recommend a few. James Clear in his best-selling book “Atomic Habits” delves into the art of forming habits and I have highlighted his framework on how to do this.
The Four Laws
James talks about four very simple “laws” that influence human behaviour.
How can I make it obvious?
How can I make it attractive?
How can I make it easy?
How can I make it satisfying?
When the levers are in the right positions, creating good habits is effortless. If you have ever wondered, “Why can’t I lose weight, stop smoking, or save for retirement?” The answers can most likely be found somewhere in these four laws.
Let’s make it practical.
1. Make it obvious
Make it visible by telling your spouse or financial adviser or writing it down.
Example, I will start contributing every month to a Retirement Annuity Fund.
2. Make it attractive
Set up a reward system. Make it interesting. Make it fun.
Example: For every R contributed to my retirement annuity, I will donate x % to my holiday account and use that money to travel at the end of the year.
3. Make it easy
Reduce friction, decrease the number of steps between you and good habits, and automate it.
Example: Set up a debit order that automatically deducts from your bank account monthly.
4. Make it satisfying
Track your progress; use positive reinforcement. Make sure you celebrate your successes, no matter how small they may seem.
Example: Have an annual review with your financial adviser to see your progress towards your retirement contribution. After a couple of years, you will notice a remarkable difference in your retirement account, giving you peace of mind that you are taking care of your financial health.
* Slabber is a director: portfolio specialist and Mudley is an associate portfolio specialist at Morningstar South Africa.
PERSONAL FINANCE