Personal financial planning has instilled in me a profound interest in why some people succeed and others fail. The simplest answer is that people often spend too much. It is never the market, at least for those of us who maintain diversified portfolios and are not compulsive spenders. Unfortunately, the simple answer does not provide us with the means to help people attain their goals. Neither does it provide us a way to help people uncover what it is that they truly want. Because we hate to see people fail, we are always reading books about behavioral finance and goal setting. With that in mind, I recently read Get It Done: Surprising Lessons from the Science of Motivation, by University of Chicago Booth School of Business professor Dr. Ayelet Fishbach.
As an award-winning psychologist, Dr. Fishbach frames the challenge in terms of behavior change. To use my spendthrift example, the problem is clearly one of behavior and motivation. It has nothing to do with intellect, education, morality, assets, or income. A person who is not motivated to change can quickly run through many millions of dollars. A brilliant psychiatrist friend once told me that his group of doctors could usually tell who would commit suicide almost immediately. I told him that I could also tell who would commit financial suicide with uncanny accuracy. We agreed that we always have to try to help and that sometimes we do have success. An easy tell is “I can’t do that” in response to every suggestion.
In her book, Dr. Fishbach shares “the four essential ingredients in successful behavior change.”* These are:
- Choosing a goal.
- Sustaining motivation.
- Learning to juggle multiple goals.
- Letting others help you.
Anyone who has read my previous posts on goalsetting knows that there is no such thing as a single goal. Every goal has multiple goals. These are outcome goals, process goals, and performance goals. As financial planners, we coach people in the development and maintenance of goals and motivation.
In my next few posts, I shall share some of Dr. Fishbach’s insights.
* FISHBACH, AYELET. Get It Done: Surprising Lessons from the Science of Motivation. MACMILLAN, 2022.