If setting goals in your Personal Finances doesn't work for you, try this !!

We often spend a lot of time evaluating what has happened in our finances and planning what we think will happen in the short, medium or long term. As we have said here before, and as Dwight Eisenhower said, we know that in preparing for battle plans are useless but planning is indispensable. That is why we insist so much on that action: planning, planning.

However, since we are expert planners and poor executors, since many of us go through life without anticipating events a bit - that's when we have extra income and we don't know what to do with it, or we have an emergency and we don't we are prepared for it– and since we are too busy to plan, we set out to investigate what alternatives there were to make the process a little easier and increase its effectiveness. The solution? Focus less on goals and objectives - something we insist on as financial planners - and focus more on building systems.

This stems from a book by Scott Adams, made famous by a cartoon called Dilbert. A couple of years ago he wrote How To Fail At Everything And Still Succeed: Kind of Like My Life Story - a title that could be the story of our financial life.

In his book, Adams suggests that when we view our lives as a sequence of goals and objectives we are faced with a state of continual near-failure, and he gives three reasons:

Thinking only about our goals reduces our happiness because we are convincing ourselves that we will not be good enough, or we will be happy until we reach the goal. That is, happiness and success are achieved after reaching a goal and are not an integral part of the process of achieving it.

The problem with the objectives, Adams suggests, is that once we achieve what we set out to do, we stop doing what we had to do to achieve it : since we have already achieved it, that goal no longer motivates us to keep saving - for example. This yo-yo effect, in which we have to permanently seek a new goal to be able to do what we should be doing permanently, can harm us in the long term - such as having enough money to retire, or buy our first home, for example- .

Goals suggest that we have control over things in which we have little or no control: it is a fact that we cannot predict the future , and staying alone in the goal is to ignore that there are situations that can deviate us from the path.

Exercise to turn your personal finance goals around

Creating systems , this applies to everything: for example, instead of focusing on losing 10 kilos, learn to eat healthily - the 10 kilos less should be a natural consequence of the system. Adams defines a system as something we do on a regular basis that increases our happiness in the long run, regardless of the immediate outcome.

Adams' proposal makes a lot of sense for our personal finances: it is about shifting the focus from the goal to the process and being aware that improving the way we use our money is something that we have to build on a day-to-day basis. . There are many cases of people who go to their financial advisor, manage to organize their finances, and months later they are in the same situation as when they went to him; part of this has to do with the lack of a system to manage our money.

Now, a system is nothing other than habits and principles that will help us guide our decisions on a day-to-day basis, let's see:

An example of how it could be applied to our finances could be that, instead of expecting to save 3,000 pesos a month, we create a system to save every day; for example, keeping the coins that are in our pocket when we get home every afternoon or every night. Another could be to commit to using our credit card only for those purchases that we can pay for at a fee and always defer them to that term; If we are not sure how much that could be, we can set a purchase limit, for example, up to a maximum of 5,000 pesos per month.

In short

So let's think about what could be the system that each one can create for their finances in the next month. Of course, objectives are important because they give us direction; This time, let's give ourselves permission to focus on the things we can control , which is solely up to us, and not the unpredictable outside world.

A good system must be an action or a set of actions that we can do every day, or at least very regularly, that is a process, that has no desire for immediate results, and that allows us to realize our progress (for For example, when we feel the weight of the piggy bank where we deposit our coins every day). Now, nothing happens if we find it interesting and we do not take action: having objectives or a designed system can be very important for our finances, but committing ourselves and acting in the process of our own financial well-being is what really makes the difference. Let's do it!