A co-worker introduced me to Dilbert by sharing his daily calendar comic. Each day I’m left with or scratch of the head.
Not being a fan of comics in general, I can say that this one does entertain me quite often. Maybe I should give other comics a chance 🙂
A major topic, if not the primary topic of this book, is on the idea of focusing on systems, not goals.
The dictionary definition of each are as follows:
System – a set of principles or procedures according to which something is done.
Goals – an aim or desired result.
Scott’s general reasoning for focusing on Systems, not Goals is that by focusing on Systems you are in effect reducing the required willpower to achieve a goal.
Scott isn’t the only person writing on this topic. Blogger, James Clear does as well. Here are some examples written by James on Systems, not goals:
Here is an example directly from Scott:
“Going to the gym 3-4 times a week is a goal. And it can be a hard one to accomplish for people who don’t enjoy exercise. Exercising 3-4 times a week can feel like punishment – especially if you overdo it because you’re impatient to get results. When you associate discomfort with exercise you inadvertently train yourself to stop doing it. Eventually you will find yourself “too busy” to keep up your 3-4 days of exercise. The real reason will be because it just hurts and you don’t want to do it anymore. And if you do manage to stay with your goal, you use up your limited supply of willpower.”
If you’ve ever had a health goal I’m sure you can relate to this example. You can also relate how this focus leads to failure.
Personal finance isn’t much different. The wrong focus leads to failure. Too much effort leads to failure.
Instead, focus on systems and your personal financial goals will be more acheivable.
Pretend that you started reading what it will take to have sufficient savings in retirement. Discovering the need to save to save 20% becomes your goal.
If you focus directly on saving 20% you will begin cutting expenses left and right. This might include not going out with friends. Eating ramen noodles every meal. Actions that “get you closer” to your goal quicker.
The problem is that dramatic changes like this requires significant willpower. Less socialization and more ramen could leave you sad and tired.
Eventually you will associate discomfort with spending less. In turn you will inadvertently train yourself to stop saving. The excuses will pile up right along with your debt.
Compare this to focusing on a system.
Everybody’s system will differ, but here are a few examples of systems to saving more money.
These are only a few of many systems you could use.
Let me expand on the first example listed. Saving 50% of your raise.
Pretend you currently contribute 10% to your employer sponsored 401(k). Your employer provides a 6% profit sharing contribution. In total you are saving 16% of your gross income each payroll.
Your goal of 20% means you are only 4% away.
You anticipate receiving a 4% raise each year. When you receive a raise your system is to save 50% of each raise. After year one your contribution increases to 12% and 18% with your employer contribution.
Year two you will reach 20%. Your commitment to this system requires no willpower. You never knew what was like to live with that extra 4%, so you didn’t have use willpower to cut your lifestyle expenses.
With your system in place you’re not focused on every penny coming in or out of your checking account.
Identify your goal. Focus on your systems. Create the life you desire.
Have you used a system to save more that has been effective? I would love to learn about your system. Shoot me a private email for a fun discussion.
Do you want to understand how to make your money work for you and keep more of what you have earned?
Reach out to me at firstname.lastname@example.org or schedule a free consultation.
Disclaimer: This article is provided for general information and illustration purposes only. Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, or investment advisory services. I encourage you to consult a financial planner, accountant, and/or legal counsel for advice specific to your situation. Reproduction of this material is prohibited without written permission from Nate Byers a Madison, WI CPA Financial Advisor, and all rights are reserved. Read the full Disclaimer in the footer below.