Investing For Your Future
Monthly IFYF Investment Message
January 2006
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Happy New Year! At the beginning of each year, it is customary to make resolutions to improve your health or wealth or both. This is not surprising as many Americans are experiencing serious problems such as obesity, diabetes, low savings rates, and high household debt. There are also many similarities between health and personal finances:
- Problems generally develop slowly over time
- Many people expect quick fixes and are susceptible to fraud
- Lack of limits causes problems and restrictions (e.g., portion-controlled meals and automatic savings programs) help avoid them
- Drastic solutions, such as bankruptcy and gastric bypass surgery, have serious drawbacks
- Small changes, such as saving pocket change and cutting 100 calories a day, make a difference
The Cooperative Extension system is in the process of rolling out a new program called Small Steps to Health and WealthTM (SSHWTM). The goal of SSHWTM is to encourage participants to set personal health and financial goals and implement behavior change strategies to achieve them. Participants can attend SSHWTM classes and/or register online to describe their goals, report progress, and receive motivational messages. Below is a description of five of 25 SSHWTM behavior change strategies:
1. Put Your Mind to It- Picture yourself achieving your goals and how good it will feel. State your goal without "weasel words". For example, "I will save $100 monthly" or "I can exercise 30 minutes daily" instead of "Hopefully, I will" or "I'll try to." Experts advise describing intended behavior changes in the present tense (e.g., "I quit smoking"). It makes people accountable because, otherwise, they are basically telling a lie. Likewise, speak of negative behaviors in the past tense (e.g., "I used to live paycheck to paycheck") as you strive to eliminate them from your life.
2. Defy Someone or Defy The Odds- If others say you'll never be able to change (e.g., lose weight, save money), defy them and prove them wrong. For added motivation, make a bet with a desired reward and time deadline. You can also use this strategy to "defy the odds" and not allow yourself to "become a statistic" such as "two-thirds of American adults are overweight or obese" and "the average U.S. household carries about a $9,300 credit card balance."
3. Meet Yourself Halfway - If you want to improve your health and increase your wealth, downsize your eating and spending. Decrease the portion sizes of your favorite foods by half and do the same for "discretionary" expenses such as meals eaten away from home, clothing, and lottery tickets. Save at least half of all "windfalls" (e.g., tax refunds) or use them to repay debts.
4. Convert Consumption Into Labor- Figure out how much exercise is required to burn off a certain number of calories. If it takes two hours on a treadmill to work off a slice of apple pie, you might ask yourself if it is "worth the calories". A comparable financial example is calculating how many hours of work are needed to earn the income to purchase something.
5. Compare Yourself With Recommended Benchmarks- A frequently cited health benchmark, the body mass index (BMI), is based on a person's height and weight and is used as an indicator of overweight and obesity. A financial benchmark is a person's credit score, a three-digit number that can range from the 300s (lowest) to 800s (highest). Another is having at least three months expenses set aside for emergencies.
When trying to change a health or financial behavior, remember the phrase "If it is to be, it is up to me." Nobody else (e.g., other people or an employer) can make you healthy or financially secure, least of all the federal government (although they're certainly trying with obesity awareness campaigns and tax incentives designed to encourage workers to save for retirement). The actions you take (or don't take) today will influence your future financial security. Set realistic goals, take small steps to get started, and believe in yourself and your ability to succeed. Be healthy, wealthy, and happy!