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Spend, Don't SaveHow to Improve Your Financial and Physical Health by PowerSpending
By Frederick W. James
Trafford PublishingCopyright © 2011 PENTIME PUBLISHING LLC.
All right reserved.
Chapter OneBehaviors and PowerSpending: The Science of Habit Transformation
Getting your financial health in order begins with changing your consistent behaviors regarding your financial and physical health. These consistent behaviors are known as your habits. Whether your goal is to get out of debt, to build wealth or to develop a positive cash flow, the bottom line is, if what you want is something different than what you currently have, you must adopt new habits in order to obtain it.
In his book "The Speed of Trust," Steven MR Covey said that every family and organization is perfectly aligned to get the results that they are already getting. The same is true with your organism. This is because organizations and organisms function the same way. Both of them are controlled by a collection of individual processes which work together in order to achieve a common goal.
Just as there are organizations which are better aligned than others, so there are organisms (people) which are better aligned than others. You've probably known at least one person in your life who worked to create a good life for themselves while at the same time engaging in behaviors which were sabotaging their success. At the same time, you've probably known people who managed all the areas of their lives well and whose habits were all aligned to send their life in a positive direction.
Either way, each of these individuals was getting results in their lives which were consistent with their habits. The same is true with you and me and every other person on the planet. Your current behaviors are not capable of getting you anything different than your current results. This means that if you want to have something you don't have, your current habits must change.
That said, the focus of this chapter is going to be discussing how habits are formed, how they create circumstances and how you can replace old habits with new and empowering habits. While we are discussing this, I will be using terms which are commonly used to describe the dynamics of behavior transformation: attitude, emotions, perceptions, paradigms, thoughts, etc.
It's important to remember that these terms are often used interchangeably by the authors who are teaching this material. Although most of these authors are saying the same thing, many of them will use different terms to describe the same concepts.
Be careful not to get too hung up on the specific definition of each term, but seek to understand the underlying meaning. For example, some authors claim that attitude is a part of behavior while others claim that attitude controls behavior. Others claim that thoughts create emotional states while some will completely separate the two and even claim that emotional states control thoughts.
Again, focusing on the underlying meaning will eliminate any confusion which might come from overanalyzing the syntax. Behavior is perhaps the most general of these terms and usually refers to the aggregate of responses or characteristics people reveal in their actions, whether visibly or invisibly in muscular movement or in glandular secretion. Behavior, in its most technical sense, refers to all activities of people, singularly or collectively, which control the circumstances of their lives.
But the bottom line is that any consistent behavior can become habit and when it does, the net results become the circumstances of our lives. No matter what approach one takes in understanding the process, any individual can take deliberate control of their behaviors and form new habits in order to create new results in their life.
Of course, there are some things in our lives we can't control. However, the greater responsibility we take for our behaviors, the easier it will be to deal with the things which we cannot control and the less influence they will have over us.
We'll begin with taking a look at the process of habit development as it is illustrated in Table 1.1. As we discuss the formation of the habits involved in PowerSpending, we will be referring to these stages of behavior transformation:
If you are targeting a change in your behavior, you first must assess where you are along the continuum of change. If you develop an approach which is appropriate for your stage of change, your chances of success will increase.
This model has been applied across disciplines, including the field of healthcare. It is also reasonable that success can be achieved in the area of personal finance or any other discipline where behavior changes are required to achieve desired results.
For example, behaviors like "Pay Your SelfFirst", Investing, controlling your expenses, eliminating excessive spending, building a reserve, meeting opportunity squarely, and giving can all be looked at within the context of this model. This model can be used very effectively to assist in positive behavior change in area of personal finance.
Pre-contemplation Not thinking of changing the behavior
Contemplation Thinking about changing the behavior
Preparation Planning to change the behavior
Action Currently engaged in changing the behavior
Maintenance Has been engaging in changing the behavior and ready to become more advanced, learn more, etc.
Stages of Change Model for Behavior (adapted from Prochaska and DiClementi
Notice that there are five stages which follow a specific sequence. The first stage is having an old behavior which has become such a habit that the person is not thinking about changing it. Many people get stuck in the second stage, which is merely thinking about changing the behavior. Sometimes they are evaluating whether the old habit needs to change.
However, being stuck many times in this stage is what we call procrastination. It's when you hear someone saying: "I know I should get control of my spending, but...." The purpose of this book is to help you get out of that stage and into stages three and four.
Stages three and four involve planning and taking action, and that's where the four pillars of PowerSpending come in. This is where you work on acquiring the new skills and knowledge required to engage in new behaviors. This is also where you have to unlearn the beliefs and behaviors that might keep you from making the new behavior a habit.
Finally, stage five is where you make the new behavior into a habit through consistent follow through and commitment. This is where the rewards of the new behavior begin to become the most apparent. Getting there requires patience and persistence, but first you must have the right strategy for applying stages three and four. This is the strategy we will be focusing on in this chapter.
We'll begin by taking a look at how our behaviors create circumstances and eventually become habits. This is best understood by the circular process, which is outlined in Figure 1.1.
If you look at the figure above, you'll see that there is a repeating cycle here: you respond to a circumstance first with your thoughts and then those thoughts are followed by an emotional state. When this happens, a behavior comes which is consistent with those thoughts and emotions.
That behavior creates a circumstance, which eventually comes back to influence you in some way. When this happens, you once again respond with thoughts, followed by an emotional state which causes a behavior. The behavior causes a circumstance. As this happens, you create circumstances consistent with the thoughts and emotions you commonly respond with. This is how your habitual behaviors create the circumstances of your life and reinforce the same kinds of thoughts, emotional states and behaviors.
This can be good if you are thinking proactively about what you want and if you are focusing on things that will cause your emotions to support actions that will get you what you want. But if you are not, this cycle can lead you on a rapid downward spiral that seems to be controlling your life. There is only one way to take control and work on forming habits that will send your life in a positive direction: you must begin with the link in the cycle which you have the most influence over ...
You: the One in the Driver's Seat
If you think of the above cycle as the process of taking a trip in your car, this link in the process involves the person in the driver's seat: you. Breaking any habitual pattern in your life begins with changing yourself. Even if your habit patterns are not "bad," you have to make a change in yourself if you want to adopt new habits.
We will cover some specific strategies for using the principles of PowerSpending to improve your financial health very soon. But putting them into practice and making them a habit for affecting long term change will always require you to change. This will be accomplished using the four pillars of power spending:
Let's begin with your role in the process of knowing and unknowing. This begins with how your current knowledge is creating and supporting your current habits:
Beliefs: Your beliefs are the most influential thing you bring into any interaction or any response to the circumstances of your life. Your beliefs are the knowledge you feel the most conviction about, that contribute to the formation of your perceptions. Most of us know that people's perceptions of the way things are have more influence over them than the way things actually are. In fact, a person's perceptions are often more real to them than reality itself.
This is because perceptions shape the way that we see, feel about, and experience the circumstances of our lives. We call this perception of our circumstances and experiences our "paradigm."
Paradigm: A paradigm is basically the pair of glasses that you put on as you look at the world. A good example of a paradigm is the belief that all wealthy people are greedy and stuck up. While this is not the reality, it is possible to have a set of beliefs that support this paradigm and consequently shape the way a person sees wealthy people.
For example, if you believe anyone who has a lot of money works nonstop and neglects their family, and that they've walked over and taken advantage of other people to obtain and protect their wealth, those beliefs will shape your perception of any wealthy person. Whether your beliefs are valid or not, they will form a collective paradigm which will influence the way that you experience your own life.
Experience: Taking the above example, it's easy to see how your paradigm will influence your experiences of life and of money. For example, if you have the opportunity to earn more money on your job or work toward investing and building wealth, you will have a nagging fear about what it might do to your character. Many people who wish to be wealthy but who have a negative view of people with money will have conflicting feelings about the accumulation of wealth. As a result, many of them develop habits which sabotage their ability to succeed financially.
This is an example of how beliefs form paradigms which create a synthetic experience that shape a person's habits and behaviors. Again, this can be good if those beliefs support what the person really wants. But if they do not, that person will continue to sabotage their own success until they "unknow" what they "know" and change the way that they experience and respond to the circumstances of their lives. This is the root of habit transformation, and it's the thing that allows a person to move past stage two (contemplation) and into stage three (preparation).
You see, a person's ability to make a change in their life is somewhat dependent on their experience. Experience allows a person to develop the skills required in order to affect change. If a person's experiences are continually created and influenced by their habits, those experiences are going to provide them with more opportunities to continue the habits. Take for example the habit of smoking, which is a repeated behavior that becomes a routine in a person's life.
When a person first starts smoking, it's not easy for them to do it. Ask anyone about their first experience smoking and how their body responded to it. You can bet that they'll tell you how sick it made them or how it burnt their esophagus. Not to mention that smoking costs money and therefore you have to make room for it in your budget. But with enough practice, you get good at smoking and after you fit it into your budget for long enough, you don't even miss the money spent anymore.
Not only that, the experience the habit of smoking creates also helps a person to develop beliefs which support the habit of smoking. They begin to believe that they "need a cigarette" when they are stressed out. In reality, they don't need a cigarette at all. The habit of smoking has simply created the belief that cigarettes are a way of responding to stress. So a stressful experience is interpreted through the paradigm that stress is a signal that they "need a cigarette." This is an example of how a repeated negative habit creates experience which provides the person with the skills and motivation they need to continue that habit.
However, the same thing can happen with getting control of your financial life. At first it's difficult to keep track of what you're spending and earning so that you can work on spending your money responsibly. You'll probably find all kinds of reasons not to get your financial life in order and learn how to spend for value. You'll view the process as restricting or even unpleasant because of this. But if you stick with it, it becomes easier and easier to do. Eventually it creates enough positive experiences for supporting the belief that saving money is easy.
As you start to see benefits, you also begin to realize that spending money for value brings a great deal of financial security into your life. This feeling of security begins to create beliefs that wise spending is positive behavior, instead of a restriction. Again, the habit creates beliefs which make the experience of wise financial planning positive and therefore easier to continue. Eventually you won't even miss the monetary benefits of spending impulsively.
As you can see, skills are acquired through the formation of habits and multiply as those habits become second nature. But it all started with unknowing the beliefs which were working against your forming the habit and replacing the disempowering knowledge with knowledge which would support positive habit formation.
This affects the final stage of habit formation, which, as you remember, is desire. Desire is the very thing which controls your motives for engaging in a habit or behavior ...
Motives: When it comes to your habits, it's impossible to separate motives and desire. A person's motives for engaging in a behavior are directly influenced by their desire to fulfill some kind of need. For example, many young people begin smoking because of the need for significance and personal validation. Smoking is considered cool and someone who smokes appears mature (since kids are not legally allowed to smoke). In the same way, many people who spend more than they make do so because of the motive to fulfill some kind of desire. The most common of these is to fulfill the need for significance or "keep up with the Joneses," while people who spend less than they make or who pay attention to what is happening with their money, are regarded as "tight wads" or "anal."
All of these are examples of faulty beliefs which support faulty paradigms and lead to faulty habits motivated by the desire to fulfill a misinterpreted need. In reality, smoking has nothing to do with being significant, and neither does owning bigger, better and faster toys. In both cases, what people "know" causes them to develop beliefs which form paradigms and shape the way they experience their lives.
This synthetic experience (interpretation of what is real) causes them to behave in a way that eventually becomes a habit and helps them develop skills for reinforcing that habit. All of this is based on the motive that the habit will fulfill some kind of desire. This is why trading an old habit for a new one always requires developing some new means of fulfilling that desire. Otherwise, it will be too easy to go back to the old habit in order to meet that need.
Excerpted from Spend, Don't Save by Frederick W. James Copyright © 2011 by PENTIME PUBLISHING LLC.. Excerpted by permission of Trafford Publishing. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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