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Set smaller goals: impress friends, get girls, lose weight

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New readers: welcome! This is a blog on personal finance and personal entrepreneurship for college students, recent college grads, and everyone else. I’ve been writing for over 2 years and I have over 400 articles in my archive. After you read the post below, here’s a list of popular iwillteachyoutoberich posts and my RSS feed.

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If you had a life-threatening illness, would you take your medication? “Of course,” you might say. Not the average patient, though: Even when facing death, a surprisingly high percentage of patients don’t take the medication prescribed to save their lives. This is called patient compliance and last night, I was thinking about it in terms of behavioral change.

When I was studying social influence and persuasion in college, I learned about social psychologists’ and medical practitioners’ attempts to effect behavioral change for good things like washing hands, eating healthier, staying in touch with family, etc–and how hard it really is. “But Ramit,” you might say, “if someone’s going to die, you just give someone their medication and they’ll take it! If they don’t, they’re stupid!” Ah, I might reply, I see we have brought the wit and grace of Shakespeare to the debate today. Jackass. But in truth, getting people to change their behavior–whether it’s going to vote, clicking a button to buy something, or taking life-saving medication–is far more complicated than just giving someone the appropriate information and trusting them to do it (“information influence is the least effective form of influence,” we learned over and over). So I’m interested when I hear of people attempting to change their own behaviors.

Last year, a friend of mine who was entering college started getting really into fitness. I think was due to his laudable goal of “getting some girls.” Kudos, sir. Anyway, he started working out more than I would have expected: in the morning, running during the day, then working out again at night. I told him how ridiculous I found that. Do you know people who get so into their idea du jour that they go completely overboard and burn out? For me, I would rather do less, but make it sustainable. The problem is, that’s rarely sexy. Instead, if you’re working out for 5 hours a day, you can point at your effort (often just to yourself) and say, ‘Look, I’m doing it!’ But would you rather feel satisfied at your efforts, or would you rather get results through a methodical process?

This idea of sustainble change is core to personal finance. Sometimes I get emails from people who say things like, “Ramit! I read your entire site and I started managing my money! Before, I was spending $500 a week! Now I’m saving $495 of it and putting it into a bank account!”

I read this and just sigh. While you might expect me to get really excited about someone contributing $495/month to their savings, I’ve come to realize that when someone goes from one extreme to another, the behavioral change rarely lasts.

In my experience, this is true in personal finance, fitness, studying, and a bunch of other areas. When I make a change, I almost always make the most incremental change of all and work iteratively from there. This is why I just shake my head when I see personal-finance pundits giving families advice to go from a 0% savings rate to a 25% savings rate (“you can do it!!!”). Giving that kind of advice to someone is not useful if their habits have been set for years. That’s why you find articles like 8 lottery winners who lost their millions. Habits don’t change overnight, and if they do, chances are it won’t be sustainable.

For example, if I started keeping a budget and discovered I was spending $6,000/month, I’d do two things: First, make a plan for getting my budget down to something reasonable. Second, I’d immediately cut 10%. 10% isn’t too high or too low, but is does add up to something concrete. Then, a month later, I’d say ‘Hey, this isn’t so bad’ and cut another 10% off. And so on, according to my own plan.

The other way to do it is to look at your $6,000/month, freak out, and cut half your spending. Then, you’re suddenly in a completely different spending behavior without the means to cope. How long do you think your ambitious budget will last?

How many friends do you hear saying, “I’m not going to drink for a month” or “I’m going to study for 4 hours a day”? For me, the next month isn’t really important, and I don’t understand the point of short-term things like that. A month from now, okay, you only spent 50% of what you normally do.

And…now what? If you can reasonably expect that you’ll bounce right back to your normal spending, what did you really learn? “I can do it!” you might say. Well, I’m glad, but I’d rather have people cut their spending by 10% for 30 years instead of 50% for one month.

Sustainable personal finance

A ghetto graph I drew this morning

Did you know that 95% of diets fail? As Randi Cardonick, a nutritionist at the Penn Health for Women, notes, “If 95 percent of all diets fail, we have to assume it’s the diet that’s failing, not the dieter.”

Right on. So when you’re deciding what to change about your personal finances, eating habits, exercise plan, or whatever…try making the smallest change today. Something you won’t even notice. And follow your own plan for gradually increasing it. In this way, time is your friend because each month gets better than the one before it, instead of the other way around.

 

Update: My old title (“How to make a sustainable change by being less ambitious”) sucked, so I changed it.

Update: Also see a related article, The Best Decision vs. The Financially Smart One

Update: If you’re a new reader, here’s a list of popular iwillteachyoutoberich posts and my RSS feed.

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52 Comments on "Set smaller goals: impress friends, get girls, lose weight"

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terrell
9 years 8 months ago
excellent post! I was just talking with my finanical advisor the other day and I told him I wanted to contribute an extra $150 to my IRA each month. He asked why and I said, I finished paying off my car over a year ago, and those payments were $250/mo, so I have this “extra” money I should probably move over to my IRA. Then he asked me if I’d become used to the extra $250/mo and I said of course. He advised that instead of going for $150/mo, why don’t I ease into it at $75/mo at first. His… Read more »
Brandon
9 years 8 months ago
This is an excellent piece! Like much of your writing, this piece focuses on empowering people to take control of their lives, instead of living forever as fearful mindless drones. I think that if people reading it can take this one piece of advice to heart it will do more for them than all the financial acumen in the world. On a personal note, last year, I became eligible for my company’s 401k and immediately started contributing the maximum that they would match. At first, this cut to my disposable income was noticeable, but not for long. Now I’ve just… Read more »
Nathan
Nathan
9 years 8 months ago
Right on, Ramit. I dropped 30 lbs. about 2 years ago and have kept it off largely due to one thing that I do that you won’t see in many diets: I give my self one day a week where I can eat anything I want. Having that one day where you can backslide just a bit (don’t over do it!) makes the next 6 a lot easier. Same with personal finance. No, you don’t need the shiny new car. But go ahead and get that cool little mp3 player it if makes you happy. Moderation in all things…Slow and… Read more »
Me, Myself and Money
9 years 8 months ago

Nice article! I have a list of goals for this year including personal & financial goals. I am going to go through my goals just to check if I am not setting unreasonable goals & to take it “Slow and steady”

Jim English
9 years 8 months ago

A Kathy Sierra you’re not (in regards to your graph) :), but I really liked the article.

So, if “information influence is the least effective form of influence”, what’s the next best step? Maybe a possible next article?

Colin Nederkoorn
9 years 8 months ago
This is fantastic advice. The changes that I have been successful with both in life and financially have been those that have been gradual. I have an auto-direct debit from my paycheck to a savings account and my Roth IRA. I adjusted my lifestyle and dont notice this money missing. When I tried to move an additional $380 a paycheck to another savings account, I found that it was too drastic a change and I had to take it back out immediately to settle my credit card bill for that month. Had I started doing $50 or $100 a check… Read more »
oneyearexitplan
9 years 8 months ago

Habits! Habits! Habits! Habits!

Ramit, over at I Will Teach You to Be Rich has written a fantastic post on how setting smaller goals and creating habits helps you become more financially independent. His article is right on target with regards to what the One Year Exit Plan is all about. Check it out!

laura
laura
9 years 8 months ago

I love your graph.

TZ
TZ
9 years 8 months ago

It’s funny how human psychology is–I’m glad you’re offering some of it.

Jackson Landers
9 years 8 months ago
I’m just looking around your site for the first time and it looks like you are generally offering some pretty sound advice. But tell me: are you actually rich yourself? Because if you haven’t actually managed this then I must take some of your advice with a grain of salt. I can recall all sorts of things that I read on the Motley Fool years ago that made sense at the time but since then I have found are not really great rules. And in fact the very nice people who wrote those articles were not rich themselves and turned… Read more »
Ramit Sethi
9 years 8 months ago
Good idea. And you’ll note that I absolutely don’t recommend specific stocks, nor do I recommend you listen to anyone who does. Most people are horrible at specific stock/fund recommendations, anyway. (I’ve written about Cramer, The Motley Fool, and others in my archives.) I try to use actual data to back up my points. I appreciate your suggestion. And as a further point, I’d suggest you take everyone’s advice with a grain of salt, no matter how much you trust them. The minute you start following exactly what someone says is the minute you have become a fool. Nobody’s suggestions… Read more »
marcosabraam
marcosabraam
9 years 8 months ago
Good post Ramit! Congrats! But I have to admit that it disturb me a bit (not this post in particular but the whole personal financing advising). It made me really anxious to share these thoughts that you and everyone else is about to read!!! Reality check people!!! If you need genuine personal fincancing advice then I suggest that you should try to get it from a hausfrau with five mouths to feed!!! She will be more than happy to have someone asking for her advice, and she will offer it to you freely immediately! You will be amazed to learn… Read more »
Ben Casnocha
9 years 8 months ago

Good post. In sum: Think bite size, and think day-by-day.

g
g
9 years 8 months ago

Jackson Landers, what does having money have to do with making good choices? Ramit’s post is as much about personal fulfillment as it does about having more money than the person next to him. Those born with money will have money, but if they are an idiot (or criminal, abuser, etc.), would you follow their advice? Having money is a heavy symbol in America, but no help in learning how to make lasting changes, which is the real point.

iportion
9 years 8 months ago

The 95% all diets fail is wrong it was on old study with 50 people.

20% of all dieters succseed in keeping the weight of
Weight watchers is 28% still low numbers but not 5%

theSeitz
theSeitz
9 years 8 months ago
2 (or more) Points. Ok. Your incrementally decreasing plan is impressive. but consider the situation where someone is trying to quit smoking a pack of cigarettes a day. its proven, you will have a bad time with your plan; and income has a similar reaction. once you have so much money coming in, you “adjust” to that level of income (aptly named the “income affect” http://en.wikipedia.org/wiki/Income_effect ) where a lower level of earnings hurts more than if you were poor then just got bumped up to that same level of income. In my experience trying to make small changes leads… Read more »
Tom
Tom
9 years 8 months ago

Everything in moderation – my personal motto in all aspects of life.

Kimber
9 years 8 months ago

I’m a big fan of baby steps. Trying to do too much at once doesn’t work.

Hhhmmm…if 20% of all dieters succeed in keeping the weight off and losing weight is the number one new year’s resolution, then why are most Americans still overweight?

John Wesley
9 years 8 months ago

This post sucks. Only kidding, I just wanted to be different. It is good to point out the importance of setting moderate and realistic goal setting. Staying motivated is hard enough already, without unrealistic expectations. I still think it is a good thing to set very high long term goals and balance them with lower short term ones. This way we can improve continuously in a manageable increments.

J
J
9 years 8 months ago

What Ramit is describing is a variation on the “foot in the door” technique: changing behavior gradually with increasing levels of commitment. Nice application, Ramit.

Good peripheral technique. I’m so sick of hearing how central methods are the only way to go.

Araceli Romo
Araceli Romo
9 years 8 months ago

Great Post Ramit. As always you have made me rethink all of my goals for this year and even write them down in a more reasonable manner. I always knew that if you want to start on something you should start little by little but when someone else tells you, it seems like you really have to do it. Great Thanks again

Marc
9 years 8 months ago
You’re absolutely right of course. The “right here and now” and “All or nothing” mentality is to blame, lack of patience too. Most people want direct instant rewards. Some try to get them but fail to see dangers and the cycle in it. I’m a good follower of another (more optimal, supercharged) methodology, used in jogging: Start small, gradual and slow, just get the feel of things. You can then try to pump things up a bit if you feel really motivated. At least now, you know how much effort moving from 0 to 20% takes and how you relate… Read more »
Cody McKibben
9 years 8 months ago

Hey Ramit,

I really enjoyed this bit about influence and psychology-I’d love to see more. And great “ghetto graph” too!

Karin Dalziel
9 years 8 months ago

I will offer one addition to your post (and you may have covered this before) – if you have a big upswing in income (a raise, a new job) ease into that as well, don’t just start spending with abandon. When I graduated college, I allowed myself a small bit of that extra money to increase my standard of living (about 10%) and put the rest into savings. Since I’ve been putting about $900 a month in savings, I’ve been able to pay off my undergrad loans and save for my Master’s.

kimen
kimen
9 years 8 months ago
Hey Ramit, We just talked about this concept at work–as it pertains to software development. The idea is that it takes you several releases to go from non-existent -> perfection. The first step is to move the action from impossible to possible, even if “possible” also means annoying, buggy, or ugly. As you learn more about how users want to interact with the feature and what other ideas might come from this feature, you build those into the next release where you move “possible” to “almost awesome”, etc. Overall, it seems that the baby step approach is applicable in all… Read more »
LP
LP
9 years 8 months ago

Hi,

First time on your blog, lot of common sense in what you write…I’ll be coming more often.

LP.

Confused
Confused
9 years 8 months ago

I tend to over analyze things so I fail to set goals. This is how it starts:

I see a need or am unsatisfied with a particular frame of mind or behavior pattern I am keeping.

I intend to set out and change it.

I immediately become distracted by all the factors I try to take into account and then fail to implement any plan because I’m overwhelmed with the idea that I’m missing a key component to the plan, which will ultimately result in a failed strategy.

How do I take action? How do I priorities and find all the facts?

Lost.

Anonymous
Anonymous
9 years 8 months ago

small point: the preferred term these days is ‘patient adherence’ rather than ‘patient compliance’

Allen.H
9 years 8 months ago

Nice post Ramit, I just stumbled here and i’m really enjoying your posts.

It took me nearly 2 years to make something significant out of my online projects, but now that I’ve based them really well – they are pretty much robust.

Allen.H

RJ
RJ
9 years 8 months ago

My goal before reading this post was to sell the Indian equivalent of Ask.com ‘poocho.com’ for $1m. Now, I’ll settle for $250k.

Ask.com was bought by Barry Diller’s IAC for $2.3 Billion in 2005. The indian translation ‘Poocho.com’ is on Ebay for no reserve and a Buy It Now price of $1m. Barry Diller, Yahoo and Google have been invited to bid.

Hawk
Hawk
9 years 8 months ago
While I’m sure starting small doesn’t work for everything, I hope it’ll work for me. Considering I’ve watched things I’ve tried to do end up sitting around gathering dust, perhaps I just need to start small. I’ve noticed something about myself. I write fiction as a hobby, and my ideas balloon. I can’t write a ten page short story. It just gets bigger, and bigger, and bigger, and then it’s so big I can’t see it anymore for what it is and give up. I think the same mechanic is at work with financial goals but in a different way:… Read more »
robbie
robbie
9 years 8 months ago
Ramit, Great post. I have never posted on your Blog before, but have followed it for the last year. I found it when I was looking for info about Stanford University for my girlfriend. The idea that radical behavior changes don’t last is right on — unless there is a forcing function that serves as an artificial motivational factor. I would say this dates back to the Epicuran philosophy of “Everything in Moderation. Nothing to excess.” Epicurus’s “personal hedonism taught that only through self-restraint, moderation, and detachment can one achieve the kind of tranquillity that is true happiness.” Preach On… Read more »
b2a
9 years 8 months ago

Ramit,

I would like to thank you for the investment advice I have received from your website in the past few weeks. I am trying to get something started as well to follow my journey into becoming financially fit. Thanks!

lornajay
9 years 8 months ago

“How many friends do you hear saying, “I’m not going to drink for a month””

Umm, lots? Many of my friends give up alcohol for January. Every year. It works the way ‘going easy’ doesn’t. It’s far too tempting to just have another once you’ve started.

I agree that generally change should be gradual and easy to sustain, but sometimes a short sharp shock is the only thing that will work.

Christina
Christina
9 years 8 months ago
I’ve found that having a way to see results (and not just looking at a bank statement or scale) is a great way to keep behavioral changes going. For years I’d been complaining about my own bad habits and saying I was going to change them. Never happened. So I created a long list of everything I wanted to change and picked out a few key starter items in various areas. They’re really just baby steps. After that a checklist that I carry with me keeps me following through. I look at it and am ashamed of a day where… Read more »
GRKarr
9 years 8 months ago

Personal finance, like eating/dieting, is more personal than it is financial, I have come to learn.

Karl N
Karl N
9 years 7 months ago

Wow, great post! I got this link from 37signals and you can bet I’ll keep reading now.

In fact, I’m going to check this blog 12 times a day!

But really, great post.

Aileen
Aileen
9 years 7 months ago

So… where should I start? I’m 23 and pretty much living paycheck to paycheck. I have a 401k through my job and they match 90% of what I put in. I only started that about a year ago though. I opened up an account with ING and have so far ended up taking out just as much as I put in because I couldn’t pay my bills…

sukumar
sukumar
9 years 6 months ago

i have no girl friends so please give any idea for get more girl friends

RaymonWazerri
9 years 5 months ago

Hey,
I love what you’e doing!
Don’t ever change and best of luck.

Raymon W.

sarah
sarah
8 years 11 months ago

don’t just gear these articles to men.

Parvinder
Parvinder
8 years 11 months ago

Awesome ! and i rightly fit into this category, truly i do 🙂

Peter
Peter
8 years 11 months ago
Nice post. I’ll add a personnel example. When each of my children was born I decided to put some money away for a college fund. I started with twenty dollars a paycheck into a savings account and a commitment to try to bump it up by a few dollars every year or so, or if I got a promotion, etc. My eldest is now a junior in high school and I’m saving $80 a paycheck for her, and there’s 25K in her funds for college. Will this pay for four years? Maybe (depends on what she does and where). Will… Read more »
Anonymous analyst
Anonymous analyst
8 years 11 months ago
Great advice. Looking at this from a basic behavioral aspect for most people savign for retirment is to effimeral a concept. Stashing away that $100, $200, or more a month is a constant reminder of the opportunity cost of enjoying that money now. As an analyst I have participated in more seminars than I can count where a financial advisor tries to wring out every cent of extra spending from a client’s life just so he can invest it and the advisor makes more money. If we return to the adage of pay yourself first, every time we find new… Read more »
Mari
Mari
8 years 7 months ago

Excellent post! I love your graph!

Monevator
8 years 7 months ago
It’s worth remembering too that several small goals can add up to one big goal. Say you want to save $5,000 a year. If most of us set that aside out of our pay checks, we’re probably going to struggle. Instead we might: 1) Initiate savings of $250 a month ($3,000 a year) 2) Swap all utility bills for cheaper suppliers (say $300 a year) 3) Refinance a mortgage (saving say $1000 a year) 4) Grow a second income stream from a hobby (say $500 a year) 5) Collect loose coins in a jar ($200 a year) Like this, all… Read more »
Chris
Chris
8 years 5 months ago

An interesting article (long but interesting) on behavioral change. Part of the article speaks to how large changes elicited greater adoption than small.

Josh
Josh
8 years 4 months ago
I think in terms of personal finance this article is right on point. With working out for example, I work out 30-45 minutes every day… It is much easier than the 2 hours 3 days a week that i used to do. However, the person who compared quitting smoking to reducing spending – i don’t think that is accurate. Here is why. Smoking is not necessary but spending is. You don’t HAVE to smoke one cigarette to be a successful person, but you do have to spend money. What level of success you decide upon is up to you, but… Read more »
Sterlzs
Sterlzs
8 years 4 months ago

Great wisdom in this article! This concept of adding or subtracting to obtain the results you want in your life is the foundation that most successful people live by. Congrats again and I will continue to read your post through my google reader!

Sterlzs

G.L.
G.L.
8 years 4 months ago

Wow, what an excellent post – it’s so rare to see something truly original, as well as unorthodox, in the PF blogosphere. Major kudos. 🙂

And even major-er kudos for making me LOL at your Shakespeare comment (I’m going to steal that haha) and your “ghetto graph.” ^__^

Anewperson
Anewperson
8 years 3 months ago

Hey, great advice!!
In terms of losing weight, I’ve been using the same idea, and it does work!! Here’s a great article geared towards just that:
The 10% solution
It hadn’t occurred to me to put my spending on this kind of diet! ha.

jana
7 years 8 months ago
i agree sustainable change is best, but there is another thing at play which might have gone unnoticed. the motivation factor might be higher when you do a big change as you see your progress more clearly. i have experienced this firsthand (started dieting about a year aho and lost a very big amount of weight. the change was quite big – writing every calorie down, spending lots of time on diet forums etc.) and it was contrary to the “10 or whatever%” rule), but i have to say that seeing quite big results was what kept me going (and… Read more »
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