I think this may be my new mantra: You better have a plan to develop new habits if you are trying to achieve goals that have eluded you for years. Willpower may simply not be enough. 

So, just down the road from our offices, a Stanford professor has focused his research on understanding how we can form habits. He provides a simple three step approach in this article from Quartz:

According to B.J. Fogg, a psychologist and researcher at Stanford University who has studied behavior change for more than 20 years, doing something you don’t enjoy and subsequently failing to make it habitual is actually more detrimental to a mission for change than doing nothing at all. To create a real lifelong habit, the focus should be on training your brain to succeed at a small adjustments, then gaining confidence from that success, he argues. To do that, one needs to design behavior changes that are both easy to do and can be seamlessly slipped into your existing routine. Aim for automaticity.

"Aim for automaticity." Think of all the ways you can apply that simple concept to personal finance. From automatically dividing your paycheck between a savings and checking account, to setting up auto-pay with the regular bills that you pay every month (like rent, mortgage payments or car payments) to participating in a 401(k) that automatically diverts a percentage of your pay into a retirement plan. 

So, what about this three step approach:

• Step 1: "The first is about identifying your specific desired outcome: Do you want to feel less stressed at work? Lose 10% of your bodyweight?"
• Step 2: "Next, identify the easy-win behaviors—he calls them “tiny habits”—that will put you on the path to that goal. (This requires introspection, because the going method for reducing stress may not be the behavior that will work for you, Fogg emphasized in an interview with NPR last year."
• Step 3: "Finally, find a trigger—something that you already do as a habit—and graft the new habit onto it. That might mean putting out an apple on the counter every time you start the coffeemaker in the morning, Fogg explained to NPR. “Notice I didn’t say eat the apple,” he added. Let’s not get crazy."
• One additional step: don't forget to pat yourself on the back: "That said, there’s one other flourish necessary to making this hack work, says Linda Fogg-Phillips, B.J.’s sister, a former health coach who now runs the online program. After carrying through with a tiny step, participants in the online seminar are instructed to give themselves a celebratory pat on the back. That might be by saying, “Yay,” or “Victory,” for example."

With the school year starting, not a bad exercise to have students read the article, identify a desired financial outcome (e.g., save $100), identify a tiny habit (e.g., save $2 from my next babysitting job), find a trigger (e.g., I walk past an ATM on my way daily trip to the coffee shop and can make the deposit then). I know I'm going to try it with my own financial life too! Good luck!

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Thanks to NGPF Fellow, Charles Kafoglis for sharing this inspiring video about how a man's daily habit transformed a landscape. In Charles' words: "Love the way it shows how focusing on habits can result in blowing past the limitations of a goal." 

Here is the video (1:38) that Charles shared. 

Here's the longer form video from National Geographic (18:58) with their description:

Since 1979, Jadav Payeng has been planting hundreds of trees on an Indian island threatened by erosion. In this film, photographer Jitu Kalita traverses Payeng’s home—the largest river island in the world—and reveals the touching story of how this modern-day Johnny Appleseed turned an eroding desert into a wondrous oasis. Funded in part by Kickstarter, "Forest Man" was directed by William Douglas McMaster and won Best Documentary for the American Pavilion Emerging Filmmaker Showcase at the Cannes Film Festival in 2014.

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.