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How to Financially Change When You Feel Stuck


"The curious paradox is that when I accept myself just as I am, then I can change."

-Carl Rogers


We're finishing up a late shift and my coworker tells me that he has to work in the morning at his other job. He works two jobs; his other one is at Wal-Mart. He spends a lot of time telling me about how much he dislikes working there. He doesn't like dealing with customers. That's why he works in the kitchen with me.

I do what anybody does when someone complains about their job. I tell him he should quit. He wants to, but he gets good benefits. He has a 401(k) with extra money put in there to match his. He gets stock options and can buy stock at discounted prices.

I'm jealous of him. I've been fascinated by personal finance and investing for a long time now. I don't really understand what stock options are or what a 401(k) is, but I want to learn.

That was 21 years ago, and I am now an expert in investing and personal finance. I wish I could say I started learning about investing that same day, but I didn't. I wanted to invest and make a lot of money. I wanted to find the next Microsoft (because I thought that was possible). I wanted to have a retirement account and take advantage of compound interest.

I wanted all those things, but didn't do anything about it for years. I was pretty ashamed of myself. Why didn't I ever do anything about it? I knew I wanted to, but my actions didn't align with my desires. It wasn't until I decided I was going to be an investor, a saver, and a student that I was able to start saving and investing.

financial change is possible

Continuous Self-Improvement

You want to be better. We all do. We all have a deep desire to better ourselves, meaning, we have a natural instinct to grow. This drive in us isn't the same for everyone, but it's there. We're all moving forward, looking ahead for what will make us better off.

This is true in many areas of our life, including our finances. We all want something that will make our financial lives better. Some of us want a better-paying job. Others want to better communicate with their partner about money. Still others wish they were able to save more. The list is endless, but most of us have some area of our financial life that we wish would improve.

It's easy to beat ourselves up and think we only want to improve our financial lives because there is something we consider "wrong" about them. However, our deep instinct is bigger than simply wanting to correct something we consider bad.

Now, we're not always good at determining what will make our financial lives better off. But that's a topic for a different time.

we have a natural instinct toward self-improvement

Financial Change is Hard

We all want to be better. Why is that? Why don't we simply do things that would get us to where we want to be? Logically, if we want to be better wouldn't we already have done the things that would make our financial lives better?

The problem lies with our primitive brains. The first part of the brain to develop is down near the brainstem and is sometimes called the reptilian brain. This part of the brain doesn't like change - and as a result, it's very hard to change. Even though we know change would be good for us, we still don't do it. That's because even though change is good, it's unfamiliar. Suboptimal behavior and outcomes that are familiar are preferred to ideal behavior and outcomes that are new and scary. Moving to a new neighborhood might be a good thing for you, but then you have to get to know the new neighbors, new routes to our favorite places, and probably new rules.

There are terms for this in the field of behavioral finance - status quo bias, and loss aversion. We (subconsciously) fight to keep things the same, thus preferring the status quo over change. Additionally, we will (subconsciously) fight harder to keep something we already have than to obtain something we don't. That is, we are averse to losses.

By some estimates, we need about five good reasons to change for every reason to stay the same.

Change is an uphill battle against a brain that is pretty lazy.

status quo bias means financial change is hard


The desire to change coupled with the desire to stay the same leaves us feeling ambivalent. In other words, we feel two ways about something. We both want it and don't want it at the same time. Perhaps you know people who want to untangle a bad habit. If there wasn't ambivalence they would have already kicked the habit. This tension between wanting to change but also wanting to stay the same can be uncomfortable, and to ease that discomfort we'll often distract ourselves. We stop thinking about change to avoid the negative feelings we get from ambivalence.

This can look different based on the situation. Sometimes we're torn between two good things. We want to both 1) increase our savings and 2) increase our lifestyle. We might have to choose between two bad things. Neither of these choices is great for us but we have to do one of them. If we're struggling to pay our bills we might have to choose between going without electricity for a while or going without our phone. Other times we both want something and don't want something, and we can't make a decision. You might want to quit your job but you also don't want to lose your income.

Ambivalence involves the discomfort around a choice you could be making, and you already know that avoiding the choice to get rid of the discomfort isn't good Money Health. Instead, I invite you to think about this differently. If there is something that you want to do that will be good for you but you are ambivalent, be grateful for that ambivalence. Without it, you wouldn't even be considering a change. The presence of ambivalence means that you are progressing through the stages of change, meaning, ambivalence is good and you should embrace it.

ambivalence means we both want and don't want financial change

Competing Motivation

Motivation to change our behavior comes from three main sources. It can come from the rewards and punishments that exist around our decisions. It can come from the context or from society.

Rewards and punishments can work, at least in the short run. Unfortunately, it's quite often the case that the reward for good financial behavior, and the associated punishments for bad financial behavior, are way in the future. The rewards for bad financial behavior are right now, good financial behavior feels like a punishment today.

When motivation comes from society or from our culture, we can call that social pressure or peer pressure. You may have noticed in your own life that when people tell you that you're doing something wrong or you ought to be doing something different, it's not likely to change your mind. You may have noticed that it makes you want to continue doing what you've been doing.

When motivation comes from others, we call that extrinsic motivation - which is just a fancy way of saying the motivation comes from outside of us. Extrinsic motivation can work...for a little while...but anything will get us to change back.

extrinsic motivation is when the reasons for financial change come outside us

The third source of motivation comes from us. Can you remember a time when you felt a fire burning inside you and you made a change that seemed easy? That's the result of finding intrinsic motivation - that is, motivation that comes from inside of us. Unlike extrinsic motivation where anything will stop us, with intrinsic motivation, nothing can stop us.

We love autonomy. We're going to do what we want to do. The trick, then, is to change the "what we want to do" part of that statement.

intrinsic motivation is when we want financial change for our own reasons

Setting Up for Financial Change

In order for financial change to happen, or finding your intrinsic motivation, three things need to happen. First, you have to think that change is needed. If you don't believe change is needed you aren't going to think it's important enough to do anything about. Second, you have to have confidence in your ability to change. We don't usually try things when we think we'll fail. Third, you need to be ready to change. Even if you know it's important and think you can do it, if you're not ready it won't happen.

Step one, then, is to acknowledge that if you don't think you need to change, you aren't confident about your ability to change, or you aren't ready to change, then you aren't likely to be successful. If this describes you, instead of thinking about how you might change, this is the time to think about how you can recognize the need for change, increase your confidence, or get ready for change. Focus on finding motivation before trying to make a change.

Often when we're struggling with ambivalence we give up because we've tried before and didn't find success. If this is the case, it's likely that you tried too much too quickly, or you were bored. The brain loves to be challenged, but it can't be too challenged. We don't want to set ourselves up for failure. On the other hand, there actually has to be a challenge. We are very good at getting bored.

Increase your intrinsic motivation before trying to change, and find the sweet spot of making a change that isn't too boring nor too challenging.

financial change means not trying to do too much but also challenging ourselves

Financial Change Ideas

If you want to make a change in your financial life, or in any area of your life for that matter, consider identifying with a new persona. I know what you're thinking - this sounds hippy-dippy, but hear me out. Using smoking as an example, saying that you are trying to quit or that you don't want a cigarette is not the same as saying you're not a smoker. Forcing yourself to save more money or trying to follow a checklist isn't the same as saying you're a saver.

Think about who you want to be, and ask yourself how someone like that would act. Funny as it may sound, this is a powerful way to change behavior because you're not simply changing behavior - you're changing your persona to reflect your aspirations.

Once you've identified who you want to be, write down what you think you'll do. You can call this an implementation intention. Write down your intentions. I like to call these "rules" but you can think of them however you like. For example, you might say "I have a rule that if I want to buy something that costs more than $100, I'll wait three days to buy it." These implementation intentions or rules can be whatever works for you - or rather, whatever works for the person you want to be!

financial change is easier if we focus on aspirations

Questions to Ask Yourself

Here are some questions to ask yourself about change. 1) Why would you want to make this change in your financial life? 2) If you choose to change, how might you go about it? 3) What are your three best reasons to do it? 4) How important is it to make this change? 5) What do you think you will do?

Intrinsic motivation is the ticket to financial change and is composed of how important the change is to you, how ready you are to change, and how confident you are in your ability.

Where are you in terms of these areas? On a scale of 0-10, where would you rate yourself?

Got your numbers?

Think about why you picked those numbers. Why did you pick that number and not a lower one? What would it take to get you half a step higher?

gauging financial change helps move forward

Change is hard. I know it's uncomfortable feeling ambivalence, but recognize that ambivalence is actually good for you. It means you are at least considering making a change somewhere in your financial life, and that's a step in the right direction.

To get further down the path of change, consider the type of person you want to be and think about what that kind of person does. Take small steps; don't overdo it. Author James Clear says to strive to get 1% better every day. That doesn't seem like much, but it adds up over time.

You only have one life. Live intentionally.

How to Financially Change When You Feel
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Related Money Health® Reading
References and Influences

James Clear: Atomic Habits

B.J. Fogg: Tiny Habits

Daniel Kahneman: Thinking Fast and Slow

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

Brad Klontz, Ted Klontz: Mind Over Money

Karen McCall: Financial Recovery

William Miller, Stephen Rollnick: Motivational Interviewing

Note: Above is a list of references that I intentionally looked at or thought about while writing this article. It is not meant to be a definitive list of everything that influenced my thinking and writing. It's very likely that I left something out. If you notice something that you think I left out, please let me know; I will be happy to update the list.


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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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