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
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.
Any other perpetual planners out there? How do you get over it?
I could probably benefit from a little MORE planning, so I don’t have much input on the perpetual planning part except to maybe try setting a time limit for your planning. (“If I’m not done planning by X date I’ll start anyway.)
I did want to say though that it can be helpful to ask someone else how they see you during the education phase. It’s often easier for others to identify our problems.
You’ve made two great points Jackie. Some people don’t plan enough and some plan too much or too long. It’s all about balance.
Your point about getting an extra set of eyes to help you out fits in here as well. (I actually think I have something on that in a post for tomorrow or the next day.) If you have a partner that compliments your strengths rather than matching them, that can work out really well. My spouse is a person of action and often helps me get out of my planning rut. At the same time, I can help him out by reminding him to take some time to slow down and think things through before he jumps right in.
[...] far in our Balance Basics series, we have covered 2 of the 3 shampoo cycle questions. Today, we ask the third: Where do you want to be? Yesterday, we looked at our balance [...]
[...] In fact, I recommend you take in as much information as you can that is relevant and useful to you. Education is one way to effect positive changes. Still, just as when we are confronted by unlimited food at [...]