In January, many of us take the time to reflect on our progress and trajectory in life, mentally scribbling a personal scorecard for the past year. We analyze and comb through the personal, the professional, the spiritual and the financial. Did I crush that credit card debt? Increase my 401k contributions? Save more, spend less? Kick my online shopping addiction? Then we map out our new and improved goals, because it’s a new year, damn it, and we can do it! But by mid-March, just as the packed treadmills at the gym are free again, the air has deflated in our hopeful money balloons.
There are two schools of thought when it comes to planning one’s financial future: visualization and goal setting, or the most powerful, the combo. The Frisky turned to finance expert and author Manisha Thakor for tips on how to successfully accomplish both. Some experts argue that goal setting is more effective than financial visualization. What are your thoughts on this? Should they be done in tandem?
I’m a huge fan of Napoleon Hill’s 70-year-old classic book, Think and Grow Rich. To me, it was the ultimate precursor to The Secret. And what I love about it is that it combines concrete goal setting with visualization. The idea behind the visualization component isn’t some woo-woo-hope-and-pray-strategy but rather tactically training your mind to be observant to the kinds of opportunities that can lead you to more effectively achieve your goals.
For instance, if your goal is to pay off all your credit card debt by year’s end, and you’ve written out exactly how much you owe on each card and the associated interest rates, and you’ve devised a plan (paying off highest interest rate debt or smallest debt first) and then, and only then, you visualize yourself having done this, your brain becomes attune to opportunities, such as extra work you can pick up after hours to help you accelerate that debt pay-down. The purpose of the visualization is to keep your brain open to new strategies and action steps you can take to reach your financial goals.
Why do you personally choose to practice financial visualization exercises at the beginning of each new year?
I believe in both goal setting and visualization as ongoing practices throughout the year. I like the ritual of setting them at the start of each new year just to maintain the discipline of not letting dreams and goals go stale. Once I write them down, I come back to them at least weekly, if not daily, to make sure they get woven into the DNA for that year.
How often does the vision of your financial future change?
For me it’s remained remarkably stable. My number one financial goal for years has been to have enough in savings and investments that I can fund all of my living expenses from my after-tax interest and dividend payments. I first read about this concept in a fantastic book called Your Money or Your Life by Vicki Robin & Joe Dominguez. They refer to it as the crossover point — the juncture at which you no longer have to work to pay your bills but because you want to work.
Why is someone more likely to be more successful if they do financial visualization exercises with their girlfriends?
Many people find the camaraderie and companionship of shared, publicly stated goals to provide them with the necessary fuel and money mojo to make it over the inevitable hurdles that hit when trying to change ingrained day-to-day patterns. Broadly speaking, the success of programs ranging from AA to Weight Watchers show how, for many people, the group dynamic is incredibly uplifting and motivating.
Have you ever hung up images of your financial future, such as pictures of your dream home, ideal vacation getaway, etc.? Do you think it’s effective for those that do?
Funny you should ask that. I just finished taking a wonderful course from business coach Gary Barnes and the very first thing he teaches is the power of visioning and creating vision boards. I have used them on and off during my life with success. In my case, I use them when I’m in the midst of a transition point rather than a yearly exercise. But during times of big change and big goals, I am a huge fan because I find they encourage your brain to remain open to the kinds of action steps that you can take to make those dreams come true.
What do you think of a book like The Secret that encourages people to visualize the bills in their mailbox as checks, so that they’re less focused on debt and more on being financially successful to draw more of that success to themselves?
I have mixed feelings about this particular piece of advice. In general I agree with coaches (like Gary Barnes) who point out that what you focus on is what you get. So if you focus on fear — failure, bankruptcy, losing love, getting fired, etc. — you increase the odds of those things happening. Importantly, the odds are not increased because of some flaky new-age vibe in the air but rather your brain being so focused on those outcomes that it fails to see alternative paths to help you avoid them.
I’d rather see people visualizing being on top of their finances. But if there was a cobra in the room, I’d prefer they didn’t visualize it as a poodle. It’s a cobra and needs to be treated as such. And that’s what bills in the mailbox are. If you don’t pay them on time or in full, their bite can be deadly!