Have you made any financial resolutions for 2021 yet?
I hope not!
Resolutions are promises we make to ourselves that have the following characteristics:
- A dismal track record of success
- They typically don’t come with a success plan or any realistic specifics
- There is little or no behavioral back-up to help change entrenched habits
- The result is usually blame, shame, and self-recrimination until the next year, when we promise to do better. Then the cycle starts all over again.
Can you relate?
As much as they initially make us feel better and inspire us, resolutions are like junk food: the high doesn’t last very long and when it fades, you’re left worse off.
What if you were to try something much more effective this year?
Lessons from 2020
The pandemic dealt a cruel financial blow to many people, but despite the difficulties, some people managed to thrive.
Two of my private coaching clients made significant progress in the last year even though they both endured major downturns in their incomes and professional options.
One woman saw her industry grind down to nearly zero after the lockdown in March of 2020, and it’s not likely to get back to normal for at least another year, assuming it recovers at all.
Still, she grew her income (in other areas) and paid off tens of thousands of dollars’ worth of debt. In a crappy year.
What was the secret to their success?
There were several factors, but chief among them were a relentless focus on financial habits and mindset.
That’s not what some people want to hear, though. They want me to tell them that if I teach the numbers side of the financial literacy skill set, they’ll be fine.
The reality is that even when you understand how interest works and you get your spending under control and you hone your negotiating skills, those factors alone will not guarantee your success.
Nor will increasing your income.
The less sexy reality is that it’s what you do on a daily basis – your actions, what you do with your money on the daily, the way you talk to yourself, the way you think about your abilities, and the way you approach your situation – that will have the greatest impact of all.
Years of failure
I used to think that the way to fix a financial challenge, or the way to get ahead once you’d got your finances in line, was to understand your numbers. Become financially literate. That’s what it takes, right?
Track your spending. Spend less than you earn. Save money. Learn to invest. Build a nest egg. Rinse and repeat.
These were the key to financial success. So that’s what I taught people to do for years.
And you know what?
As long as I was working with them, people would kind of, sort of succeed in moving forward.
But the minute I let go of their hand, telling them they were good to go, they would fall back into their old patterns of behavior.
Not all of them, of course. There’s a minority who just needed the info boost and the short-term guidance, then were off to the races.
But the majority froze or regressed.
It took me years of digging, reflecting, and experimenting to finally figure out the missing elements.
More than numbers and goals
Let’s agree right out of the gate that core financial literacy is essential.
You need to understand how bank accounts, loans, credit cards, mortgages, investments, compound interest, and credit scores work to achieve financial security and eventually, if you choose, financial freedom.
But that’s not sufficient.
Knowing is not enough.
You probably already know how to get to your ideal weight if you’re carrying around a few extra pounds.
You probably already know how to quit smoking or reduce the amount you drink.
And you probably know how to get more sleep if you feel like a member of the walking dead most days.
The problem isn’t what you know; it’s what you’re not doing.
That is all about mindset (i.e. emotions, baggage from the past, beliefs, etc) and habits.
Different this year
If you haven’t yet made financial plans for the year, good! This is the perfect opportunity to approach the new year differently.
Instead of focusing on goals first and creating the usual list of suspects, take a moment to reflect on the following:
–> When December 31st, 2021 rolls around, how do you want to feel?
–> What do you want to be able to look back and say?
–> What is it about the year that made it so good?
–> What did you enjoy?
–> What have you achieved?
–> Which of your core values have you focused on?
–> What challenges have you overcome?
–> Which habit did you choose to change to get better results?
–> How did you change the way you talk to yourself?
–> What support structure did you put in place to help you stay on track?
Develop a cheer team
I have just sent an email to the members of my Women’s Money Group to announce a new weekly system I’ve put in place to help them develop a success mindset and effective habits in 2021.
We are going to plan, track, practice, pivot, and ensure continual movement toward our respective goals, one step at a time, using research from behavioral science and ongoing accountability.
I have built a community of support and guidance for women in my Women’s Money Group. The proof of the power of the group is in the results the women are getting. This year, we are going to be stronger than ever with an unwavering focus on habits and mindset.
Here’s what I suggest for you to help you make 2021 a great year:
1. Grow your financial literacy skills.
The more you know about how money works, the better you can put it to work for you.
2. Surround yourself with like-minded people who will be your cheer team.
Join my Women’s Money Group or create your own cheer team. Accountability and support aren’t just nice-to-have elements. They are essential to success, as one of the six-figure women I interviewed in December noted.
3. Focus relentlessly on your habits and your mindset.
For help building strong habits, read James Clear’s book Atomic Habits. If you’re facing mindset blocks or you’re dealing with scarcity issues, my Master Your Money Mindset course will help. I’ll be opening it up for registrations once again in a couple of weeks.
Whatever you do, don’t accept the same patterns of behavior and goal-setting if they failed to get you the results you wanted in the past.
Better is not only possible, it’s doable.
Write out your “It’s December 31st, 2021, and here’s where I’m at” story and let’s go!
