The first part to successfully iterating and keeping your system afloat is to build the initial system as well as possible. Really lay out the details of what you have and what you want. The more work you put in on the front end the less work you will have to do to maintain and improve. Andrew's Finances 1.0 was really ambitious and I didn't plan things out realistically and at the end of two months I had left myself no other choice but to start over. I saved too much and made it hard on myself to live and eventually I broke the system in defiance. I was pretty dejected. I thought I could make it happen but it was too hard. I was discouraged.
It took me a few months to try again. During those months my spending got out of control again to the point where I built up enough motivation to take a second crack at it. This time I played it safe. I had much smaller monthly savings goals. Things went well for several months until I had another influx of expenses. A couple of trips back to back to back. I noticed I was taking money from other savings accounts to cover this flux thinking I would pay it back later by redirecting my accounts until they balanced out. Wrong again! Redirecting my accounts required work on my part and I never did it. Now I was spending money on some things but not saving for others. I realized the problem was that all my accounts were with the same bank and when I logged into my online account, it was really easy for me to transfer money between the savings accounts or even back into my checking. It was time to make a change. This time, I moved all the savings accounts to another bank where I would not have a debit card, checks, or an online account. The only way to get money was to go during regular business hours and withdraw it manually. Since making that change, I haven't had any problems.
Finally, the last piece I needed to adjust was credit card use. I wanted to get the points of the credit card, but I found that it was easy for me to go past what I wanted to spend each month. So until I got my spending down, I removed my credit card from my wallet. That way I wouldn't use it for random things like food or gas. I would only use it for designated things like travel, and to make payments for recurring bills. I use it for recurring bills because I know I have the cash saved to pay this amount off every month. I also know that it will be consistent so I can still get my points without going over what I want to spend.
If you are reading this and it seems like these aren't obvious adjustments, then I encourage you to look at the commonalities between all of the changes. If I was doing something that I didn't want to do, it was probably because it was too easy to do that I was doing it unconsciously or when I was "in a tough spot". To iterate, I made it harder to bail myself out when I got into tough spots. This made me more aware of what I was doing and thus lowered my spending.
When something isn't working, don't give up on it. Start by asking questions. What isn't working? Why isn't it working? Is there an ability barrier keeping me from achieving my goal? What is it? Is it taking too much time, money, physical effort, mental effort, or is it related to social norms and habits? Once you discover the problem then ask how can I reverse this?
Behavior Design is an experimental process. Don't look at it as right or wrong, just learning. If something works for you keep doing it. If something doesn't work figure out why and make small adjustments until it is then move on to the next problem. Eventually you will have an optimized system that can run on its own with limited effort on your part and you will reap the rewards in saved time and increased wealth.
Thanks for joining me on my journey through personal finance. If you have any questions, feel free to email me at [email protected]. and if you like what you have read please sign up for my email list to get updates sent to you when I post a new article or when I have new material just for my email subscribers.
Thanks
Andrew