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Consistency - Life's Secret Sauce

Why is it that 92% of people who set New Year’s resolutions fail at achieving them? Many times, it’s due to a lack of consistency. It’s easy to change for a small amount of time, but it’s a completely different story trying to change your habits for the long haul. One reason long term goals and resolutions fail is because they’re too distant. It’s easy to save money for a weekend getaway next month, but it’s much harder to save money for a retirement that is 25 years down the road. So, what is the best way to achieve long-term results? As with most things in life, consistency is key.

One of my friends saves $10 a week for retirement. This is what she’s comfortable saving and right now it’s all she’s able to deposit. No, this isn’t much money. In fact, according to an online calculator she’ll have to work until she’s about 104 years old to be able to retire, but that’s not the point. The point is to develop the habit of saving. To become consistent. After several months, she’ll get to the point where she’s able to contribute more and she’ll bump it up. Although some advisers will say she is under-saved, her routine has already put her in a better retirement position than 45% of working households. For someone young the act of doing something consistently is much more important than trying to do too much in small doses. This is another reason why many long-term goals fail. People try to achieve them almost instantly, when this really isn’t feasible.

Even though people may realize a need to be more consistent they may not know the best way to go about it. People often ask how much should I be saving? Or, how can I improve my net worth over time? The answer to many questions along these lines is to develop a more consistent approach.

5 Ways to make consistency a part of your financial regimen


1 – Associate yourself with people who have similar interests

This is key but often overlooked. If your friends or significant other have a habit of eating out multiple times a week or going to expensive shows then chances are you’ll naturally do these same things. If you happen to associate yourself with people who are a bit more frugal then this will most likely transfer over to yourself as well. This transfers to many different aspects of life and is not isolated to just a person’s finances. Several years ago, I was in the best shape of my life. I was working out six days a week and eating clean. I attribute much of this to simply hanging out with others that lived a healthy lifestyle. I would meet my good friend at the gym every morning at 5:45am. We’d get a solid workout in and then head off to work. While others were rolling into work with a big gulp full of coffee looking as if they just got out of bed, I was wide awake, excited to have just blasted my pecs for 30 sets. At first it was difficult getting up so early. The first couple of weeks I’d give anything to just hit the snooze button for an hour or so. After a few weeks of this workout routine, however, something had changed. I no longer dreaded that alarm going off in the morning and instead I couldn’t wait to get back into the gym. Once my gym routine became an actual routine and not just a one-off event it was much easier. Much of this developed consistency stems from hanging out with the right people.

2 – Track your progress

Setting goals is crucial when trying to develop consistency. Although simply “showing up” is half the battle, we must strive for improvement. Tracking your progress will clearly show the ups and downs of your journey and it’ll make any improvements much more visible. In an earlier post, I wrote about tracking your net worth. I still believe this is critical and a must-do for anyone who is serious about improving their financial footing. A person’s net worth is as good a metric for someone’s financial health as you can get, which is why tracking it is so vital. It will show you how you’ve improved financially over time. Tracking your progress doesn’t only show you factually how you’re doing, it also means that you’re mentally checking in on your finances at least monthly or quarterly. By doing something regularly you will inherently gain consistency.

3 – Celebrate the small victories

This goes along with #2 above. After you’ve tracked your progress and seen improvements over time it’s important to celebrate the small victories. By celebrating the small wins you’ll naturally look forward to the next one, keeping you on track for your financial goals. As mentioned above, it’s very difficult to set goals that are many years out, but it’s easy to set goals that are only a few months out. If you have long term goals you should break them into smaller, more manageable goals. Once these are realized it’s important to acknowledge that you’re doing a good job and are on the right path. Again, seeing the progress you’ve made and enjoying a good celebration should keep you on track to maintain consistency.

4 – Set an investment strategy and forget it

This may be the easiest way to maintain consistency, at least with regards to investing. By taking this approach, you’ll be consistent and won’t even realize how consistent you are. Several months ago, I wrote about investing in a DRIP account. This is a type of account that automatically invests a certain amount each month from your checking account into an investment. The beauty with this type of investing is that once you set it up you rarely need to do anything to maintain it. The peace of mind from these accounts is also huge. I’ll check these accounts and have no idea whether it’s doing well or not, and that’s part of the beauty. I am not constantly thinking about timing the market, I just know that this account is one that I believe in and next month I’ll contribute more money to it. Over time I’ve seen positive results and plan on doing this indefinitely.

5 – Focus on the process – not the results

Numerous studies have shown that portfolios that consistently invest money over time will outperform a portfolio that only periodically invests money, given certain rates of return. It’s important to realize what you can control and what you cannot control. You can’t control whether a company’s stock goes up or down over time, but you can control whether you continue to invest or not. Don’t get too caught up in the short-term results and realize that things may take time to develop.

There you have it! Five keys to maintaining consistency and helping you achieve your financial goals. Have you tried applying any of these to your daily lives to be more consistent? If so, how did it work out?

#DRIP #Retirement #Savings