It’s the time of year when many of us make finance-related goals. We say things like: “I want to get out of debt,” or “I am going to live on a budget this year,” or “I am going to start using coupons.” Sorry to say, but very few of us actually stick with those first of the year ambitions and bring real, lasting change to our lives. This year, it can be different.
Michael Beer, a Harvard Professor and author of Organizational Change and Development, developed a formula for change. Understanding, then applying the three key steps in this formula, will ensure that you keep your New Year’s Resolutions. His change formula is:
Change =(Dissatisfaction with present situation * Vision of how things could be different * 1st step to bring change) > perceived cost of staying in present situation
The three steps to change outlines in that formula are:
This is usually pretty easy. We make goals in areas where we desire change because we want something to be different. However, we need to be honest. Go deeper than the surface and ask yourself, how dissatisfied are you with the way things currently are?
Make a Vision
Goals like living on a budget, using coupons and even a goal of getting out of debt are hard to keep. One reason is that they lack the vision that creates a stick-to-itiveness.
Instead, ask yourself why do you want to implement a budget? Why do you want to use coupons and spend less? Why do you want to get out of debt? For my family, we knew that to accomplish some of our life dreams (to move to Brazil one day) we would need to be debt-free. Our vision of moving to Brazil where my in-laws are fueled us during the three years we paid off more than $50,000 in debt.
Dream. Maybe your vision is to sleep at night without anxiety of bill collectors. Maybe you want to put your child through college. Maybe you want to become a stay-at-home mom. Or maybe you want to be positioned to start your own business. Whatever it is, imagine this new future state with enough clarity that you can taste it. Keep that vision and lofty dream in front of you, because it is the quintessential key to making change.
Take a First Step
Do you hear that? You simply need one concrete step. You are already dissatisfied with your current situation and have a vision that is fueling you. Now, you have to get started.
Don’t overwhelm yourself with 18 to-do items. Pick one step. One thing that you can do right now to make progress toward your vision. Do something, lest you do nothing.
If your dream is to sleep well at night because you are free from financial pressure and you’ve got $100,000 in debt today, your feel step might feel small and insignificant against that mountain. Who cares? Take the first step anyway.
For you, maybe you need to put distance between you and your credit card. Give it to a friend to hold on to or freeze it in a block of ice, but take a first step to keep yourself from using it. At the same time it might feel small, it also feels manageable. It’s easy to do one thing. Anyone can do it and without excuse.
Why only one step? Because a journey of a thousand miles begins with a single step. It did for me and my family, as we got out of $50,000 in debt in less than three years without getting a second job. You can do it too this new year, just keep these three simple steps in mind.
Your turn: What are your vision and your first step to financial change in 2010?