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How to successfully create & implement financial change

June 1, 2020  |  #Money Management

We all have dreams and goals and the good intentions of one day achieving them. However, the steps towards reaching your goals take time, sacrifice and a plan that can work around unexpected changes in your circumstances. This is where many get derailed.

There are many reasons you may decide now is the time to make a positive financial change in your life. You may want to find financial security and eliminate financial stress, or perhaps you want to start planning your retirement options seriously. However, people will resist change for just as many reasons as they want to create it. The main cause of resistance for financial advice comes down to fear; fear of trust, judgment, commitment, asking for help and change in its entirety.

No matter what area of your life you wish to create change in there will always be obstacles in the way whether they be mental, environmental, or physical. Statistics show 80% of people will not achieve their new year’s resolution and most will be derailed in the first two weeks, you may pass one, two or three obstacles and decide it’s all too hard.

Tal Ben-Sharhar, a psychology professor from Harvard claims there are three main behaviours in creating lasting change: reminders, repetition, rituals.

 

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So, how can we apply these 3 behaviours to creating successful financial change and what needs to be considered to successfully implement it?

Fundamentals of creating change

 

Be clear on your why

Our advisers learn as much as they possibly can about their clients, with a particular focus on your dreams and goals. Goals and dreams make up our WHY and will not only determine your entire financial plan but will also keep you on track and will act as a constant reminder as to why you created change in the first place.  Reminding yourself of your dreams and goals regularly will help you stay committed to achieving them.

If you are unsure of your dreams and goals it might be a worthwhile task reviewing every aspect of your life including family, health, career, wealth, lifestyle. This will help you to discover what is most important to you, whether it being able to afford a nice holiday once a year or perhaps pay off your mortgage in the next 10 years.

 

You may find our fact sheet understanding goals useful.

 

Reflect on the past before moving forward

What is holding you back from achieving your goals now? By reflecting on your past habits and behaviours, you will be in a better position to honestly review your current position, identify obstacles and work on these areas to create effective changes in the future. By reflecting on your past spending habits, you may notice areas where you’re spending a lot more than you thought or have money leaks such as unused memberships.

“You must be able to reflect honestly on your past behaviours to move forward and change them”. 

 

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Understand how a financial adviser can support you with your need for financial security. Get in touch.

 

Change is a long-term game

We are a society that has become uncustomed to instant gratification; we want to see the results instantly without putting in the hard work. It’s the same instant gratification that can derail any budget, when the satisfaction of an impulse purchase is too much to resist. To successfully create change, you must be prepared to make some sacrifices to reach your long-term goals and be dedicated to sticking these changes out for the long hall.

Change won’t happen overnight, in fact, according to psychology researcher Phillippa Lally it takes 66 days for a new habit to become automatic and the end result of these changes can take years in making. You can compare investing time into creating financial change with investing in the share market. Overtime your asset will grow and compound in interest but if you never made the initial investment the value would remain the same and you would be in the same position now as you were in the past.

“You don’t have to be great to start, but you have to start to be great”

 

How to successfully implement change

 

Have a clear tailored plan 

Whether, your plan includes investments strategies, savings goals, or a retirement plan, your strategy will be tailored to your unique situation to help you reach your goals and dreams.

The benefit of seeing an adviser is that they will consider every area of your life including spending habits, lifestyle and expenses, and may notice things you will overlook or have swept under the rug for a later date. They will give an honest perspective of what you can realistically achieve and help you implement the changes necessary to successfully achieve your goals without any judgement on your current position.

Although your adviser will do most the leg work in creating a financial plan, there may be tasks that fall on to you such as sticking to your budget, changing spending habits or making some smaller sacrifices to enable you to reach a larger goal. These changes to your habits will become your new “rituals”. You can read our full article on implementing financial advice here.

A good financial plan will also leave room for movement and unexpected changes in your life. If you fail to leave room for movement – for example making a budget too tight – it can quickly become unachievable to maintain. By not allowing room for unexpected changes in your life your plan can also easily become derailed. For example, you experience an unforeseen mortgage increase, a job loss, illness, a baby or decide to transition into retirement. Strategies such as insurance, emergency funds or easily accessible investment funds are all areas that should be considered in your plan to successfully ride out any financial impacts from these events.

 

Review

By reviewing your situation, you are creating repetition, giving yourself the room to make small adjustments and the opportunity to acknowledge the results of your hard work. Ongoing advice with an adviser is one of the most successful ways to create positive financial change, monitor your progress and stick to it because they are on the journey with you. Once your plan is implemented, you will have regular meetings to make any necessary adjustments, review your progress and have someone hold you accountable.

Creating lasting change, much like any investment strategy, must be long term. It must also be realistic and maintainable. If you are serious about making a difference to your financial position, seeing a financial adviser will ensure you are on the right path to reaching your dreams and goals and can help you create the positive financial change you’ve looking for. You may find once-off advice is enough to put your plan in place, or you may need extra support and accountability that comes with ongoing advice.

You may be interested in reading some of our clients’ stories in our financial advice in action article.

 

Speak with one of our advisers today to find out how we can help you create a positive financial change

What you need to know

This information is provided by Invest Blue Pty Ltd (ABN 91 100 874 744). The information contained in this article is of general nature only and does not take into account the objectives, financial situation or needs of any particular person. Therefore, before making any decision, you should consider the appropriateness of the advice with regards to those matters and seek personal financial, tax and/or legal advice prior to acting on this information. Read our Financial Services Guide for information about our services, including the fees and other benefits that AMP companies and their representatives may receive in relations to products and services provided to you.