Are You Open To Change?  Guest Blog by Sarah Fallaw, PhD.
Are You Open To Change? Guest Blog by Sarah Fallaw, PhD.

If you’ve spent any amount of time contemplating how you might improve the condition of your health, career, finances, family, spirituality, or other important element of your life, you may inevitably reach the conclusion that a change of some kind is required. Many readers of our blog and books share a common conundrum: they acknowledge a change is necessary (either for themselves or for their client), but they also instinctively know that actually making the needed change is going to be tough. Why?

One of the hurdles to making any significant change is being open or receptive to something new. We often refer to this as openness to change, and it’s related to many different personal characteristics. First, it’s related to the personality characteristic from the Big Five known as “Openness to Experience.” In a nutshell, this personality characteristic is associated with those of us who enjoy new sights, sounds, and, well, experiences. It is related to creativity and having a desire to learn different ways of approaching a problem or chore we have at home. It is also related to our values: do we value what’s new and different, or what’s tried and true? Think about how you might feel about being an early adopter of technology, and how you would value experiencing something that’s new and unique. Finally, it’s also related to our past experiences and behaviors: even if we are naturally more open to change, but grew up in an environment that rigidly adhered to tradition and routine while avoiding disruption, we might be less inclined to be open. In other words, our experiences can set limits on our natural personality.

While Openness to Experience is often thought of as positive, there are of course downsides to any characteristic we might possess (see two of those weaknesses in the investing world here). An individual that is high on openness may have a hard time sticking to necessary routines; he or she may be less than predictable to friends and loved ones; and he or she might also have a difficult time choosing a path and staying on it. If you’ve ever worked for a boss that is high on Openness to Experience, it can be a frustrating situation: you might get a request at 5:00 pm for a report due the next morning, work all night, and turn it in by 9:00 am sharp . . . only to learn that your boss has decided (overnight!) to abandon the idea and move on to something else.

Let’s put the idea in a financial context: imagine you and your spouse agree that a budget is a great (and necessary) idea. You both work together to create it, identify goals that sticking to the budget will allow you to reach, shake hands, and go on about your week or month. If one of the spouses is more open to change, open to experience, that spouse might be more inclined to veer away from the budget because he or she sees exciting exceptions or new ways of shopping or new ways of budgeting along the way. Yes, that openness helped create the budget in the first place (being open to having a budget and reaching goals), but the same personality characteristic can also lead someone to be “creative” with regards to money.

The upshot here: being open to making a financial change is important, but so too is having the ability to make that change last. It’s great that you want to try some new method of sticking to a spending plan, but can you implement that change long enough to see an outcome? And long enough that it will become a habit? That’s the tough road that many of us who are open to experience face: we want to make the change because we love change. But then we might get tired of our new path and head towards something else before the new (now old) plan had a chance to be effective. Knowing these characteristics and predispositions before we begin can prepare us for the inevitable future situation when we are inclined to wander off our plan.

An openness to change will likely only be fruitful if you can take steps to ensure that positive change will be lasting. If you’re curious about your own readiness for financial changes, click here to contact us.  We have an assessment for you to take and get a report that helps you understand both your openness to making a change as well as your ability to make that change stick.

 

 

 

 

 

This guest blog was re-purposed with permission by Sarah Fallaw.  Her original blog can be found by clicking here.

 

References & Resources

Cheng, M. (2018, October 4). How Openness Personality Affects Financial Planning And Investment Decision Making. Forbes Online. Retrieved April 17, 2019.

Duckworth, A., & Weir, D. (2011). Personality and response to the financial crisis. Michigan Retirement Research Center Research Paper No. WP260.

McCrae, R. R. (1987). Creativity, divergent thinking, and openness to experience. Journal of personality and social psychology52(6), 1258.

McCrae, R. R., & Costa, P. T. (1987). Validation of the five-factor model of personality across instruments and observers. Journal of personality and social psychology52(1), 81.

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Why Being Honest With Yourself Is Important In Finances.
Why Being Honest With Yourself Is Important In Finances.

Healthy finances have a lot less to do with numbers than most people think or are willing to admit. We all know that you have to spend less than you make in order to save, yet we are generally terrible at it. Why is this so? Because we are not honest with ourselves.

In order to consistently spend less than you make to then save more, we have to discover what is really in control. Are our impulses in control or are we in control. To some degree there will always be a little bit of both. The goal is to not be perfect but to be more in control than not.

So where do we start to find the areas of being out of control? Well, it starts with a willingness to look inside yourself to find things that are not aligned with who you want to be. Your daily financial transactions are a window into who/what is in control. To help you to discover areas of weakness, we have partnered with a firm that creates Financial Behavioral Assessments to help you to find weak areas to begin strengthening. Clients have access to full fledge assessments but we also provide free versions for everyone else.  

If you are willing and open to be honest with yourself, I encourage you to click the link below and take some of the assessments.

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5 Steps to Take Control of Your Finances in 2019
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5 Steps to Take Control of Your Finances in 2019

When it comes to finances, time is your most valuable resource.  The sooner you start the better. Do you want to start the new year off right with your finances?  Maybe you have finally said, “enough is enough” and you are ready to do something about it.  This guide will help you to get started off on the right foot.

Step 1:  Write your eulogy.  This is one of my favorite exercises from Stephen Covey.  The reason is that it helps us to put in perspective what is truly important.  You do not want to wake up one day and realize that you spent your precious time chasing the wrong things.  Your financial goals should be based on what you truly value and not what you just want.  What we want is often times in conflict with what we value.  Use the video below you help you think through it.  This version is based on your 80th birthday, but the premise is the same.

Step 2:  Gather all of your financial facts in one place.  This is where technology can really help.  Wise Pace has a great platform for our clients to gather all of their information into one place along with fantastic budgeting tools.  If you are not a client, don’t worry because there are some great free tools out there such as Mint.  This is very important for multiple reasons.  One of the biggest reasons is highlighted by psychologist Dr. Daniel Kahneman who also won the Nobel Prize in Economics for this work.  Yes, he is that smart.  His research highlights how our brains like to operate 95% of the time in automatic mode and the reason is that our thinking mode takes so much effort.  So you have to do things to help your brain out when not in automatic mode.  Any time you are trying to make a change, it will take lots of effort.  Help your brain by having all the information in one place to make informed decisions.

Step 3:  Find surprising facts about yourself.  Dr. Daniel Kahneman’s says “we are more likely to learn something by surprises in our own behavior than by hearing surprising facts about people in general”.  Basically, you need to find surprises that don’t line up with what you wrote about in your eulogy and then work towards changing them.  Financially speaking this is where the budgeting tools come into play.  You can see what you are spending in each category and there is something in there that will be shocking.  If you do not have a facial expression like the picture of the women below, then you need to repeat the process until you do.

Step 4:  Remove the clutter.  Where to start can become incredibly overwhelming very quickly.  This is why it is important to establish small wins.  It is impossible to eat an extra large pizza in one bite.  But it is possible one bite at a time.  The same is true with your finances.  Pick one thing to remove and knock it out of the park.  Then add something else and knock it out of the park.  As you get stronger, you can then add more things to remove.  The goal is to not take on some much at once that you give up or guilt starts to rear its ugly head.  You must find a pace that is sustainable for you.  Two steps forward and one step back is progress and that is a huge win.  When you struggle to decide if something can be removed, run it through the filter of your eulogy.  If you still are stuck, use the image below to highlight if it is a need or a want.  Wants are great but they might need to be told no for now.  The key is, for now, you can always add it later when your goals are being attained.

Step 5:  Monitor monthly and make necessary changes.  This step is where the rubber meets the road and disciple is introduced.  We often times will do a great job of figuring out a fantastic plan but fail to do it long term.  Research suggests that it takes 66 days to form a new habit.  Said another way, retrain our automatic thinking.  But once the retraining has happened we go into a new coast mode that is actually helping us to accomplish our goals.  So sticking with your plan for 66 days is vital for success.  You have to set up a system that forces you to monitor and make changes.  You could set calendar reminders, find someone you trust to hold you accountable or reach out to a financial professional.  Whatever you chose make sure it is a system that sets you up for success as opposed to tearing you down.  If you know you won’t be able to do it without someone holding you accountable, then don’t pick a system that does not evolve someone else.

Everyone has the ability to make a change, it just comes down to if the will to change is stronger than the one not wanting to change.  Happy new year and make it better than the previous year.

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