The Seven Habits to Financial Success – Part I
Recently I went to a Franklin Covey workshop titled “The Seven Habits of Highly Effective People.” If you’ve never been to this workshop, I highly recommend it because it’s great for helping you achieve your personal goals and finding a balance between the many forces at play in our lives.
As I sat through this workshop, I realized that I was excited. Granted, some of the stories and anecdotes were pretty cheesy, but what really motivated me was that I realized this material could be applied to many different aspects of my life, including my finances. And once I realized that these habits could be transferred to my financial habits, I realized I simply had to share them with you guys.
For the record, I’m not licensed or anywhere near qualified to teach you Franklin Covey’s 7 Habits of Highly Effective People. This post is strictly my observation on how the habits can be put to use in financial terms, which on that end I think it’s safe to say that I am qualified to share the information. Having been through the class, I will use similar terms and share some of the meaningful quotes, but I do encourage you to take the seminar when you get a chance as there is a lot of great material to go through.
Ok, so without further adieu, let’s look at my Seven Habits to Financial Success! As these are somewhat long and in depth, I’ll be breaking this up into a series of posts.
Habit # 1 – Be Proactive or The Habit of Choice
When we can no longer change a situation, we are challenged to change ourselves. – Viktor Frankl
Stephen Covey, the guy who created the 7 Habits series, talks about our view of things in the world, or our paradigms. Something he says continuously throughout the seminar is in order to change anything about ourselves, we must first change our paradigms. And it’s true, especially with money.
Most of us carry the view that we are a product of our circumstances. We are not doing as well financially because we don’t make enough money, or inflation is just too high. These are all ineffective paradigms and very often the reason we can’t seem to get ahead.
The Habit of Choice is about changing your paradigm and being more positive about your money situation. To go along with this, I read a great article over at ToughMoneyLove about changing your money mood. In a nutshell, Mr. ToughMoneyLove says that we spend so much time worrying about what we don’t have, that we forget to be thankful for all the things that we do have. By taking just a few minutes to sit down and focus on those things in our lives that we should be grateful for, we’ll find that our mood and attitude will be much improved when it comes to our money situation.
The same rule applies to the habit of choice. Instead of saying that we are a product of our circumstances, an ineffective paradigm, try considering that we are a product of our choices. Instead of saying that we are not where we want to be financially because we do not make enough money, we should be saying that we are not where we want to be financially because of choices we’ve made – whatever those choices are.
First Step
The first step towards changing your paradigm, and realizing that it’s all about your choices, is to use proactive language and get rid of the negative, or reactive language. Believe me, this particular exercise was extremely challenging for me when I first attempted it, and I’m still working on it every day. But, I’ve found the more proactive I am in my language to myself and others, the more apt I am to solve my problems to my satisfaction. All I’m saying is to give it a try.
REACTIVE LANGUAGE
“There’s nothing we can do about it…”
“That’s just the way it is…”
“I have to do that…”
“I can’t…”
“If only…”
Example: I can’t save money because I don’t make enough as it is. If only I could win the lottery.
That’s a pretty self-defeatist attitude, wouldn’t you agree? No wonder so many people have trouble with their finances. Instead of using this type of language, try using some proactive phrases and see if it helps.
PROACTIVE LANGUAGE
“Let’s look at our alternatives…”
“I can choose a different approach…”
“I choose…”
“I will…”
Example: I will find a way to save money by looking at my alternatives and choosing an appropriate plan for me.
For those of you interested in the inherent relationship between money and psychology, this particular piece of the puzzle should interest you. It has been proven that positive language does help overcome obstacles. This is because the subconscious responds to this positive stimuli by finding a way around the barrier. In my previous examples, someone is having a hard time saving money because they are likely living beyond their means. However, by positively reinforcing the fact that they CAN save money, their subconscious will consider alternatives until an acceptable solution is reached.
Don’t believe me, give it a try. Make the choice to save money, regardless of your tight budget, and use the proactive language. Your subconscious will find a way, even if it’s just $5 every two weeks. That $10 a month can add up, and the longer you go with the decision to save money, the more you’ll find you can spare to your savings account.
Second Step
The second step in this habit is to expand your circle of influence. Ok, what does that mean? Before I can explain that, I should explain what the circle of influence is.
Your circle of influence includes those things that YOU can affect directly. Everything else falls into your circle of concern. The circle of concern should include things you care about, but cannot directly control.
Now, imagine a circle within a circle. If it helps, draw it out. The outside circle is your circle of concern and the inside circle is your circle of influence. The goal of the Habit of Choice is to grow your circle of influence.
Now, going back to your proactive focus, those who focus on the things they can influence will gain knowledge and experience, thus increasing their circle of influence. Those who focus on the things they cannot control have less time and energy to spend on things they can influence, which means their circle of influence shrinks.
Looking at this in terms of our money situation, consider the circle of influence the things we can directly control with our money – creating a budget to live within our means, not eating out everyday, not having cable, nixing the luxuries, etc. We have control over these things and can increase our circle of influence by focusing our attention on these controllables.
Our circle of concern includes those things we can’t control, such as monetary emergencies, interest rate drops, 401(k) matches, etc. These are things we have no control of, so as a proactive individual on the road to monetary success, the best thing to do is acknowledge them and move on. Dwelling on these things will take your time and energy away from things you do control. This puts you right back where you started in the beginning, no closer to achieving your money goals.
Recap
Habit 1 – Be Proactive is the Habit of Choice. This habit states that if we are proactive with our thoughts and efforts, we will have more energy and time to focus on our goals. We will be setting ourselves up for success and putting ourselves firmly on the road to being financially successful. The first step is to re-evaluate the language that you use. Are you constantly using reactive language that leads to a self-defeatist attitude? Try using more proactive language to kick-start your subconscious. The second step is to increase your circle of influence. That means worry about the things you can actually change and not the things you have no control over. It’s good to care about the things you can’t control, but if you can’t change them, don’t waste energy obsessing over them. You’ll lose sight of your immediate areas of influence.
In terms of your financial success, Habit 1 says to think positively about your finances. Instead of believing that you can’t save money or have the things you want in life because you simply don’t make enough, realize that you are where you are based on choices. To make changes, you must first shift your paradigm to see things as they are, not as you believe them to be. Incorporate proactive language so that your subconscious is let loose on the problem to find a solution. And finally, don’t worry about the things you can’t control. There’s nothing you can do about getting a flat tire or taking a sick pet to the vet. There’s nothing you can do about interest rates dropping so low they no longer keep pace with inflation. There’s nothing you can do about the stock market dropping. Acknowledge what’s happening, guard yourself against it as best you can, and then move on. Put your energy into the things you can change, such as how much you save and put into an emergency fund.
Ok, so let’s discuss this habit in detail. Do you find yourself using negative language towards yourself and others about money?
What are some areas in your finances that are in your circle of concern, yet you still worry them to death? How can you shift your focus to give you more energy to focus on your circle of influence?
Related posts:
- The Seven Habits to Financial Success – Part II
- 7 Habits of Financial Success…Part VI
- 7 Habits to Financial Success – Part V
- The Seven Habits to Financial Success – Part III
- 7 Habits to Financial Success… Part VII
Great summary and follow-up of the Covey seminar. And thanks for the mention.
Regarding the habit of choice, I definitely need to work on my reactive attitude about money in my family. Also, I am trying to accept that the government will not change so that I can move on and not obsess over its failures. Good stuff.
I love paradigm thinking. One example I have been shown is, think to yourself how much money you make and then think beyond your wildest dreams how much you would like to make.
Now understand this- Neither is a lot or a little, its a value you put on them, from past experiences you have put yourself through.
Reactive thinking, Its not so much what happens to you, Its how you react to it.
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