I can always count on the Farnham Street blog for thought-provoking questions. Their recent post “Habits vs Goals : A Look at the Benefits of a Systematic Approach to Life,” caught my attention because it is something I struggle with. Namely, how can I operationalize ambitious goals into day-to-day habits? Goals can often seem daunting but when you break them down into daily or frequent habitual actions they suddenly seem easier.

Here’s the main takeaways from this five minute article:

• Killer quote that I am going to post on my laptop as a reminder:

“First forget inspiration.
Habit is more dependable.
Habit will sustain you whether you’re inspired or not.
Habit is persistence in practice.”
— Octavia Butler

• Highlights the difference between goals and habits:
  • “We want to learn a new language. We could decide we want to be fluent in 6 months (goal), or we could commit to 30-minutes of practice each day (habit.)
  • We want to read more books. We could set the goal to read 50 books by the end of the year, or we could decide to always carry one (habit.)
  • We want to spend more time with family. We could plan to spend 7 hours a week with family (goal), or we could choose to eat dinner with them each night (habit.)”

• Five problems with goals:
  • They have an endpoint
  • Rely on factors that we may not have control over
  • Rely on willpower and self-discipline
  • Keeping a goal in mind and using it to direct our actions requires constant willpower
  • Can make us complacent or reckless

• Benefits of habits
  • Habits can mean we overshot our goals
  • Easy to complete
  • Are for life
    • “Our lives are structured around habits, many of them barely noticeable. According to Duhigg’s research [author of Power of Habit, a book I recommend], habits make up 40% of our waking hours…”
  • Can compound
  • Can be as small as necessary
    • “A common piece of advice for those seeking to build a habit is to start small. Stanford psychologist BJ Fogg recommends ‘tiny habits’, such as flossing one tooth. Once these become ingrained, the degree of complexity can increase…”

So, the next time you are teaching your students to set financial goals, be sure they operationalize it by creating habits to support achievement of that goal OR ask your students for examples of

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Savings are a particularly good application of this question of habits vs. goals. Setting an ambitious savings goal ($1,000 from my summer job) seems much less daunting if you want to save $100 per week or $200 per paycheck if you get paid every two weeks for a 10 week job. Check out this NGPF Activity that helps to operationalize savings goals: Calculate: How to Save 

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.

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