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How Do You Change Bad Financial Habits? Understand the Four Forces of Change


Let’s face it, people embrace financial planning about as enthusiastically as they look forward to trip to the dentist.  Deep down, we know we need to make changes, and we know it will be painful and difficult.  So to avoid this discomfort, we file the issue away to be dealt with some time in the future.  Nothing changes, and “the monkey” remains firmly on our backs.

To help break this cycle of despair, and put you on a path to the prosperous and fulfilling future you desire, it is helpful to reflect upon the four universal forces of change that directly affect the likelihood of positive change successfully prevailing.

1. Dissatisfaction With The Current State

There must be sufficient pain to force us to take action, otherwise we wait until such time when the pain becomes intolerable, requiring an even more extreme remedy.

Prodding Question: Can you think of a way to increase the pain associated with the current state?

Example:  Lock away credit cards until outstanding balances are paid down to target level.

2. Satisfaction With Desired State

An alternative reason for inaction may be that the value of any perceived reward associated with the desired behavior or desired state may not be great enough to motivate change.

Prodding Question:  Can you think of a way to way to make the desired behavior more appealing?

Example:  If you reach a savings goal, reward yourself by using a portion of the savings to pay for a vacation; better yet, the more you save, the more extravagant the vacation.

3. A Clear Vision of the Desired State

You can’t change direction if you don’t know where you are heading.  What exactly are you trying to achieve from the desired behavior – what’s the end game?  Think carefully about this desired future state and what it will look like – have a clear vision.

Prodding Questions:  Do you have a clearly defined, measurable, and timebound goal?  Where will you live?  What will you do for fun?  Will you be working?  If so, doing what and how often?

4. Create a Plan & Process to Get There

Analyze the gap between the current state and desired state, figure out what specific changes will be necessary in order to get from Point A to Point B, and what you need to do to make those changes happen.

Prodding Questions:  What changes are necessary?  How disruptive will the transition to new behavior be, and how can you manage these disruptions?  How much will your future desired state cost?  How long will it take?

A successful path to prosperity and peace of mind requires each one of these four forces be in place – consider the absence of each in isolation:

Missing Force                                        Result

Dissatisfaction with Current State             no action

Satisfaction from Desired State                no action

Vision                                                        effort fizzles  & dies.

Plan and Process                                      anxiety & frustration

Laying all this out does requires work, and it may involve a few iterations as, for example, you realize that there is a gap between your desired vision and plan – you may need to change one or the other to make sure that it is achievable, that the satisfaction gained from success and the confidence that you have in getting there creates a positive force greater than the counter-force associated with pain from the sacrifices you will need to make to get there.


Sure, this is fairly straightforward and perhaps common sense, but there is a certain brilliance and elegance about this that framework that I find quite powerful.  Reviewing these basic requirements sometimes send up a red flag and immediately make it clear what is missing and what is needed to move forward – be it a change in the reward equation, a clearer and more developed vision, or a plan and process for change.

I hope this helps!


Posted by

John Bevacqua on March 8, 2012

Filed Under

Financial Behavior

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