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Changing Your Financial Life


"People do not resist change; they resist being changed."

-Peter Senge


I'm a teenager biking through the local college campus, pretending I'm really cool because I can ride up a ramp and "jump" down the four stairs on the other side. This is as close as I'll come to going to college; people in my neighborhood don't go. It's not even an option. 

A few years later I'm working as a cook, and this is what I plan on doing for my life. It's good money compared to what I'm used to. One day, after a particularly stressful, under-staffed, supper rush, I realize that I need to do something different. I believe things would be better if I could sit at a desk and think for a living instead of doing manual work. I don't like it anymore. 

I think about going to technical school so I can be an architectural drafter. I like this idea, so I want to do it. By taking this path, though, I have to realize that I'm going to have to get by on smaller paychecks, even change jobs while I'm in school. I'm not sure I'm ready for that. 

I finally realize I am ready to go to school and deal with the lifestyle changes that are coming, so I start researching my options. I can't go to school for architectural drafting so I go for mechanical drafting instead. This led to a job drawing toilet stalls, which led to a degree in economics, which led to a job at an investment firm. 

I couldn't have changed myself from a cook to a financial planner if I didn't first recognize the need to go to school and actually want to do it. It wouldn't have happened if I couldn't get myself ready for that change and I had to do some work to make sure I was able to do it.

creating change in your life

What It Means to Change

Change quite simply means we want something to be different from how it is now. Unfortunately, this is quite difficult for us. In behavioral finance there is a concept called status quo bias, which just means that if given a choice, we tend to want to stay the same. That means we have to have a strong sense that change will be good for us; so much so that it counters our deep desire to not change. 

I should mention that our desires to stay the same are so strong that we even keep doing bad things even though we know change would be positive. Think of all the people you know who smoke, have unhealthy diets, or don't exercise. If information and data were enough, these wouldn't be issues. 

Similarly, in personal finance, many people under save, overspend, financially support people who should be able to support themselves, ignore their finances, become dependent on others for support, gamble too much, waste their money, mindlessly spend, keep money secrets, involve their children in money-related conversations, among many others. 

People resist change because for many reasons, and any kink in the change-train makes it more difficult. First, you have know that you need change. Then you have to want to change. After you know you need to change and you want to change, then you have to be ready for change. Finally, after all that, you have to be confident that you are able to change. 

Let's explore these steps in more detail. 

The Need to Change

Knowing you need to change isn't always as simple as it sounds. It's true that most of us know that we need to save more (although that's not necessarily true for everyone), but fewer people know the benefits of consciously spending in areas that engage them and that they value. Many people may not know the negative effects of regularly giving money to those who shouldn't need support. Others may know that keeping money secrets is bad, but think they are doing the right thing. 

In some circles, not knowing you need to change can be seen as denial, where people pretend they don't have a problem and/or blame others for the problem. That's only partially true. We might simply be completely unaware of our problematic behaviors.

things that are outside your awareness

The Desire to Change

Once you know you need to change, you have to want it. Knowing that you need to change but not wanting to change is a form of denial, although you're not technically denying the problem. It's like someone who knows they need to exercise more, but hates exercise so they don't do it. 

This motivation to change has to come from the inside. In the professional space we call this intrinsic motivation. The opposite of intrinsic motivation is extrinsic motivation, and we're all familiar with it. This is when someone we know tells us about how we should change. "I know you hate the types of exercise you've tried, but you just haven't found one that worked for you," they'll say. The folks trying to give us extrinsic motivation can range from encouraging, like the example above, to shaming. An example of this might be, "You know you're going to get heart disease and die young, right?!" If someone pushes us to change, we're likely to push back, fall off balance, move away, and/or resent the person who pushed us. We don't like to be told what to do; it goes against our basic need for autonomy. 

If we can figure out for ourselves that we want to change, nothing can get in the way. Once we put our mind to it, we got it. But it has to come from within us.


happiness meter

The Readiness to Change

You know you need to change, and you even want to change, but are you ready for it? Successfully making change in your life, financially or otherwise, means that things are going to be different. You have to be ready for that. Sometimes the thought of the change causes too much anxiety or fear. In that case you aren't ready yet. An idea to try to get ready is to visualize yourself in the end state. Feel what it's like and try to get used to that feeling. Think of it as a trial run. 

change versus status quo

The Ability to Change

You've gotten far, now. You recognize the need to change, you want to do it and you're ready. Now you have to be able to do it. This could mean knowing how - do you know what you're supposed to do? Sometimes you know what you're supposed to do, but you need some guidance or someone to provide accountability. 

If you find yourself here and can't get over the hump, don't give up; you're close. Do some more research. Find friends who can help give you the accountability you need. Seek out someone who can offer guidance. 

change map

Change Is Difficult

The moral of the story is that change is difficult. We tend to jump around in our readiness to change. Some days we're all about change, and next week we're back to our old ways. Jumping around is normal. Sometimes we've even implemented the change, but we find ourselves back in our old ways - we relapse. This happens regularly and if it happens to you, it's perfectly normal and not a sign that you can't do it. Sometimes you just need a little nudge, a couple at bats, or maybe a daily process you can follow to make the change part of your routine. 

Change can be hard, but we are wired to want to change for the better. Harness that instinct.

Read Next:


Daniel Kahneman: Thinking Fast and Slow

Brad Klontz, Rick Kahler, Ted Klontz: Facilitating Financial Health

Bradley Klontz, Sonya Britt, Kristy Archuleta (eds.): Financial Therapy

William Miller, Stephen Rollnick: Motivational Interviewing


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© 2019 Money Health Solutions, LLC



About the Author

Derek Hagen, CFA, CFP, FBS, CFT-I, CIPM is a speaker, writer, and coach specializing in financial psychology, meaning and valued living, resilience, and mindfulness.


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