How an ‘adept’ behavioural framework can improve our financial health

The beginning of a new year is a good time to reflect, take stock and formulate a plan, particularly with regard to the one aspect of our lives that we all wish we could do better – money.

Making it, spending it, managing it wisely – seems simple enough on the face of it, but in reality, is complex, multifaceted and dependent on so many fluctuating variables.

Common advice and principles such as spending less than you make, having an emergency fund and paying your credit card in full are frequently emphasised.

Yet, they seem to have a limited effect on people’s money behaviours.

Consumer debt is surging, financial fragility is widespread and money remains the biggest concern for most people.

So, maybe it is time to look beyond the obvious. To understand that our money behaviours lie at the intersection of psychology, behavioural economics and neuroscience.

To take the time to understand how a few key actions and perspectives could positively impact our financial well-being for the year.

Five steps based on the “Adept” framework is a good starting point.

Let’s start with the first letter A, which stands for agency. The first idea to grasp is that we need to take agency in this important quest.

It’s all too easy to sit back and wait for the stars to be perfectly aligned before we start, while weeks and months fly by.

We mistakenly and patiently wait for something or someone to urge us on. We need to realise that getting on the path to financial well-being is too important to be left to chance, or to other people’s motivational nudges.

Taking agency in this aspect is crucial.

We will realise that our actions compound over time and give us a financial advantage.

Secondly, we need to feel discomfort. It is the first sign that we are evolving. And if we are not feeling stretched beyond our usual boundaries, it is very likely that we are not doing enough reps to make a noticeable difference. It is not ideal. No one particularly enjoys feeling inept. It is scary. And intimidating.

Putting ourselves in positions outside our comfort zones is soul-strengthening. This growth will inevitably lead to financial rewards.

Third is education. Financially educating ourselves is a critical part of this framework.

Many of us fall victim to the Dunning-Kruger effect, a cognitive bias in which people with limited competence in a particular domain overestimate their abilities.

This is particularly pertinent in the money domain and has an expensive fallout.

Educating ourselves on different perspectives, learning key concepts that could affect our money behaviours and understanding how we can take control of our finances is extremely empowering.

It builds our competence and our confidence, both being material elements to financial well-being.

Purpose is the fourth part of this framework. Finding our purpose is crucially important. This is not merely about identifying a career or a set of goals; it is about uncovering the deeper meaning that propels us forward. It is what gives us a sense of fulfilment and direction, and maybe more significantly, helps us navigate challenges with resilience. We are happier when our work’s aligned with our purpose.

It is easy to see how this then translates to financial success and well-being.

Thinking long-term is arguably the most important element of this framework. It is also the hardest, especially in this age of instant gratification. Used as a primary decision-making strategy, it helps us to easily distil the good/ smart decisions from the bad/ stupid ones.

All we need to do is ask ourselves: “What’s better for us in the long run?” While the answer may not always be what we want, it will invariably align with what we need.

As with any skill, we get better at this with practice. Over time, the ability to prioritise the long-term impact of our actions becomes an invaluable asset, one that not only steers us away from impulsive decisions but also strategically positions us for success – financial or otherwise.

I hope that the “Adept” framework will inspire us all to transcend conventional wisdom and look deeper into ways that influence real behavioural change in our finances.

Take charge of your money, step outside your comfort zone, educate yourself financially and find your purpose