By Carolyn Bigda
Financial resolutions are as common as Champagne and confetti on New Year’s Eve, and just as commonly forgotten after the holiday. But a new book, “Picture Your Prosperity: Smart Money Moves to Turn Your Vision into Reality” (Portfolio, $27.95) to be released in mid-January, offers suggestions on how to make your financial goals stick this year.
Co-authors Lisa Kueng, an executive director at Invesco Consulting, and Ellen Rogin, a financial adviser, explored the science of what motivates us to reach the resolutions we set.
Although the book is geared toward women, Kueng and Rogin’s advice can apply to anyone and may be especially helpful for 20-somethings, who often are setting financial goals for the first time.
Picture your prosperity. As the title of the book suggests, one important step in goal-setting is to visualize what it is that you want.
“A visual financial plan serves as a motivator,” Kueng said, and by having one that you can revisit again and again, you increase your likelihood of reaching your goal.
To start, Kueng says to think of an image. Some samples, such as a picture of an airplane, are provided in the book. Then ask yourself, what does the image mean to you? Give it a specific setting: Where are you flying? Fill in other details: Are you with friends and family? What do you smell? What do you hear? How do you feel?
By doing this exercise, Kueng says you stimulate the same part of the brain that fires up when you actually achieve a goal.
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“Athletes have done this intuitively for years,” she said. “A gymnast will visualize her routine before competing, and then give a great performance.”
She added: “With financial planning, so many people, and probably a lot of young people, just focus on the nuts and bolts. That’s great, but you’re missing the whole foundation. You need something that’s going to give you the motivation to do what you need to do.”
Frame your picture. If, like many people, you have more than one financial goal, Kueng and Rogin suggest drawing a box that has four quadrants, with the top boxes labeled “more money” and the bottom boxes, “less money.” On the left, write “less time” and on the right, “more time.”
Next, place your pictures in the appropriate boxes, depending on the goal. Now you have a visual image of what it’s going to take to reach your goals.
“It’s often easier to see pictures than to have a written plan,” Kueng said. “Within 15 minutes, you can create something that’s motivating and that will serve as a blueprint.”
Make it easy to succeed. Once you see the complete picture, you can start to take smart steps toward fulfilling your resolutions.
“If you have a picture of an airplane in the upper right quadrant, and that represents taking a year off to travel around the world, you can start to take practical steps,” Rogin said. Ask yourself, how much will it cost? How much will you need to save? What expenses can you cut to reach that goal?
“I’m all for picturing goals, but if you don’t take action, it won’t happen,” Rogin said. “You need to actually spend less than you earn if you want to build your savings.”
The picture frame can help you make informed decisions. For example, if the goal is far to the right within the frame, you may have enough time to invest your savings for that goal in stocks and other potentially high-risk but high-return assets.
Don’t forget about other sensible tactics, such as setting up automatic monthly contributions to a savings account.
Said Kueng, “We need both parts of the brain, the visionary side and the pragmatic side, working for you.”