Moneywise24 Personal Finance

I read an utmost interesting article today at the Financial Samurai website, about rational decisions and how it may impact the lives of individuals. Although the story itself is about rational or irrational decision making processes, I find it utmost interesting how in some examples within the article, the subject decides to make a change in his or her lifestyle, whereas in other examples the individual does not.

 This automatically led me to the following thought:

Often we have good intentions and ideas around New Year’s Eve, but we tend to implement only a small part of it, if at all. We usually kick off in the new year following our good intentions, only to find ourself following old habits in February again. Additionally, perhaps we still remember how we definitely and enthousiastically made decisions years ago, only to find today that the idea has never turned into action.

The power of habit

People are very habitual creatures, and generally we don’t like change; whether it is a new job, starting to do sports, quit smoking, or any form of activity which requires some form of effort. Through our habits, which we have trained over years and years, we are conditioned to act and respond in certain ways during certain situations. Not uncommonly, such habits develop during childhood and adolecense. We have grown to become accustomed to them, perhaps even emotionally attached, which makes them even hard to change.

Such habits may include smoking, eating too much, or doing (too little) sports. It can be extremely hard to permanently break through the barrier of bad habit, since in many cases there is some form of physical reaction involved. As an example, take a person eating too much, who would like to change his eating habits in the new year. To those, who are already in the habit of eating not too much and healthy, it might seem as an easy task. However, we tend to neglect the fact that a body has the capability of adapting itself to the conditions it is faced: an overweight person, suddenly reducing the amount of food he/she consumes each day, will start to feel a contunious hungry feeling.

Or take the example of an individual, who spends a lot of money each day for shopping. Shopping temporarily releases endorphines in the body of an individual, causing a bliss of excitement and happiness. Much like smoking, giving up shopping will reduce the daily amount of endorphines in the body and may cause unhappiness or even slight depressions.

The belief system

In addition to habits, people develop a belief system throughout their lives. Usually, beliefs are unconsciously formed through experiences (both pleasant and unpleasant), and generally dictate the unconscious behavior of an individual. Together with a person’s genetical programming, it makes each person unique. It is the reason why one person loves to take risks, whereas another does not; Some people can start conversations with people easily, whereas others are too shy to do so.

Beliefs also have a great impact on how we see things, and the habits we develop. For example, many people are holding on to their own jobs due to insecurity, or perhaps fear of the unknown, and fear of change. Additionally, the ability to build large social networks or the ability to build a business is not uncommonly the result of previous experiences in life.

The cycle of change

Changing old habits or beliefs requires a lot of persistance. Usually, there are four stages of change:

• The unconscious “old” behavior refers to specific behavour or habits which we are unconscious of. We do them without thinking, and we do not realize that changing them may improve the quality of our lives.
• Conscious “old” behavior refers to the stadium where we have identified the behavior or habits which need change, but we still do them.
• In the stadium of  conscious “new” behavior, we have actually changed our behavior and habits to where we want it to be, but we still have to push and remind ourselves to keep it up. We are continuously doing these things consciously, and there is still a huge risk of falling back in our old and unwanted behavior.
• Unconscious “new” behavior is when we unconsciously have adopted our new behavior and habits, and do them without thinking about them.

Planning your initiatives for 2010

If you want to plan your initiatives for 2010, you will need to develop a method in order to be able to do this effectively. Each person is different, so your method will surely be unique. However, the following guidelines are intended to help you plan a bit ahead, and make some change in 2010:

Do not plan too much: many people plan too much for the new year; they want to quit smoking, eat less, do more sports, change jobs, buy a new apartment, buy a new car, get married, and so on. When thinking over your personal changes for the new year, think them over carefully and prioritize them. Do not plan too much, but stick to two, three, perhaps four major changes in the new year. This will let you keep the overview.

Be specific: Be as specific as you can. For example, if you would like to lose weight, plan how much you want to lose within which time span. If you want to do more sports, think about what kind of sports you want to do, where you would do it, how much it would cost, and how often a week you want to do it. Make a plan, and stick to it.

Be realistic: Keep your changes as realistic as possible. It is great if you plan to do sports each day, but if you work two jobs and have a family to take care of, this is simply too ambitious. You may want to reduce it to two or three times a week, which is much more realistic.

What will make the difference?: Last, you may need to think about whether the planned change is indeed going to have the desired effect. For example, you may plan for 2010 to cut down further on necessary expenses. However, are you really spending that much, or are you simply in need for the next step in your career? Or perhaps you are thinking about buying a nice sports car? But then, why haven’t you bought a sports car until now? Or are you rather referring to financially being able to buy youself a sports car? Perhaps in that case it is necessary to focus on cutting down expenses, or advancing your career, in stead of focussing on the car.

Be committed: Being committed is like making a promise to yourself. Stick to you planned changes, and always keep them in mind. Keep to your own promise, and be faithful to yourself.

Whatever people plan for 2010, many of them fail to keep up with them. Usually, changes are not kept up with due to light heartedness or a lack of commitment. Also many people tend to have too many things on their New Year’s wishlist.