BEHAVIOR - ARE YOU READY FOR FINANCIAL CHANGE?

Are you truly ready for change?

OK you have identified that things are not good. Something needs to change so that you are no longer struggling to pay bills and feeling like you are barely able to keep your head above water. You know there is a problem and what needs to change is “This expense item, this one as well and oh yes of course this one!” You have it figured out! Too much Dunkins, too much in buying those shoes you love so much, too many trips to Home Depot. You have it all solved! OR do you???

In personal finance there is a tremendous amount of social science behavior that needs to be understood in order to initiate, make and maintain tangible changes in how you relate to money. Certainly getting a good grasp of your past experiences with money can highlight some of the reasons why you do or did what you do with money management. For example, maybe growing up you didn’t have much and now you are fearful of having money needs and that is why you feel like hoarding cash so that you have a greater level of protection against the unknown. Or maybe you always had money coming in (parents, grandparents, great job) and saving was not a priority in that it was always there and going without never crossed your mind- until the money faucet shut off. Once you take a real look at your current relationship with money some things may come to light and give you the impetus for change. But a greater question will be - are you truly ready for change?

Prochaska and Di Clemente (1977) developed the Transtheoretical Model of Change with their study of smokers who quit independently compared to those who needed treatment. They came up with this model to help better identify a psychological framework that better explained behavior that can be applied to many areas of life. In our case- change necessary to correct your financial ship and make positive steps towards success. Here are the stages.

Pre-contemplative Stage: This stage is where someone is not yet considering change or even aware that their behavior is problematic. Denial is included with these folks and will either blame others or accept that the issue is unsolvable.

Contemplative Stage: A person recognizes there is an issue and that it needs to change but is still in the thinking mode and has not done anything action wise to change the situation. Ambivalence is common in which there is an internal conflict - a side for both perspectives -change and no change. They are uncommitted one way or the other and thus have not produced any movement towards addressing the issue.

Preparation Stage: A person in preparation commits to taking action and actually begins making specific plans towards a goal. They actively seek information and the skills that will enable the change. There is honest movement in a direction that has them actively engaged in planning and carrying out actions and behaviors that work towards goals- even small actionable steps.

Action Stage: Positive momentum and progress to realize the change at hand. We see results from these actions.

Maintenance Stage: This final stage is found when someone is consistently practicing a new habit or behavior that over time works and allows them to avoid regressing back to old patterns. This stage is monitored for ongoing progress and should be emphasized to the party that it is a lifestyle change and not a single event. This is helpful in avoiding Relapse (going back to old habits and behavior) while working towards Termination in which truly the past behaviors hold no control or temptation over who they are now.

I have worked with clients in all of these stages. My question to you is where are you on your journey? What factors both internal (fear, attitude, knowledge) and external (environmental- friends, family, co-workers) influence you taking preparation or action? What things will challenge you going forward once you have changed your relationship with money that will either help you get to Termination or possibly send you back to a Relapse?

From nearly 40 years of PT experience and seeing this both in the physical and financial world- that answer is … PAIN. Pain will be a wonderful partner to remind you what you don’t want. That emotional pain of not having enough, not being able to pay for the simple things in life, not feeling like you can ever retire- will be a powerful tool in your arsenal to get you to the actionable stage and keep you from regression and relapse- provided that you are honest with yourself

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