{"id":3068,"date":"2016-12-19T03:42:04","date_gmt":"2016-12-19T03:42:04","guid":{"rendered":"https:\/\/raizinvest.com.au\/investors\/big-plans-succeed-with-little-steps\/"},"modified":"2021-02-08T04:48:28","modified_gmt":"2021-02-08T04:48:28","slug":"big-plans-succeed-with-little-steps","status":"publish","type":"post","link":"https:\/\/raizinvest.com.au\/investors\/blog\/big-plans-succeed-with-little-steps\/","title":{"rendered":"Big Plans Succeed With Little Steps"},"content":{"rendered":"
\"image\"<\/figure>\n

By<\/p>\n

Clayton Daniel<\/a><\/p>\n

Have you ever woken up one day
\nand said to yourself \u2018wow, I really have to get my act together\u2026\u2019. The next day
\nit\u2019s all green smoothies, two hours at the gym, open the credit card
\nstatements, and of course \u2013 calling your mother.<\/p>\n

\u201cWhile we forgot what it meant to build something
\nslowly and quietly in the background, believe it or not, I think we are starting
\nto remember again.\u201d<\/i><\/p>\n

It\u2019s a knee jerk reaction. As
\nsuch, you and I both know it won\u2019t last. We over-estimate what we want to
\nachieve in a week. But in a similar fashion, we can also under-estimate what we
\ncan achieve in a year.<\/p>\n

I recently wrote an article on
\nhow a five year plan changed my life. It did quite well off the back of
\nLinkedin (I\u2019ll never understand Linkedin), but I think I know why. While we
\nforgot what it meant to build something slowly and quietly in the background,
\nbelieve it or not, I think we are starting to remember again.<\/p>\n

What was once a long way to the
\ntop if you want to rock and roll was replaced with reality TV singing
\ncompetitions. Napster came along in the nineties, the whole music industry went
\ndigital. And as Sanity and the Virgin mega-stores shut down, we called it a day
\non hard copy music . But then this happened\u2026\u00a0\u2018Vinyl albums just
\noutsold digital for the first time ever\u2019<\/a><\/p>\n

\u201cMoney it seems, is returning to its roots also.\u201d<\/i><\/p>\n

Instant gratification is rather
\ngratifying, but so is something else. Anticipation. The buildup. The ability to
\nappreciate what you\u2019re holding in your hands. The process of buying an album
\nwas a part of the journey. Music is more than just listening, it\u2019s experiencing
\nthe whole package.<\/p>\n

Money it seems, is returning to
\nits roots also.<\/p>\n

Credit cards are instant cash.
\nSavings take a little bit of time. But I can guarantee which one feels better
\nto spend. I can guarantee which one is guilt free spending and which one isn\u2019t.
\nI can guarantee which one will keep you from reaching all your other goals, and
\nwhich one simply plays it\u2019s roll in being a part of your financial life.<\/p>\n

\u201cEven if you are disciplined enough to put money
\naside in an account \u2013 the fact that it is sitting there and you aren\u2019t spending
\nit is a\u00a0<\/i>mental drain.\u201d<\/i><\/a><\/p>\n

So how do you build up a treasure
\ntrove of cash?<\/p>\n

Well with my work around
\nunderstanding decision fatigue in regards to money, savings make for a strange
\nsituation. See, even if you are disciplined enough to put money aside in an
\naccount \u2013 the fact that it is sitting there and you aren\u2019t spending it is
\na\u00a0mental drain.<\/a><\/p>\n

What a pain.<\/p>\n

This comes from the research
\nperformed by American social psychologist Roy Baumeister. Basically unfulfilled
\nsatisfaction distracts you from your task and hand. This in turn reduces your
\nperformance in all areas of life. Put simply \u2013 if you save money in an account
\nyou have access to, it\u2019s simple existence will demand you spend it. If you
\ndon\u2019t, your brain will be distracted until you do.<\/p>\n

Again, what a pain.<\/p>\n

So how do we achieve two things:<\/p>\n

Build up a guilt free amount of
\nmoney to spend once a year on something big<\/p>\n

Do so in a way in which we aren\u2019t
\nreminded of every time we look at our bank accounts.<\/p>\n

Luckily, you\u2019ve come to the right
\nperson – I do this for a living. You build up a savings accounts with regular
\ndeposits in a side account that you can\u2019t spend with a card.<\/p>\n

\u201cBuild regular deposits in an account you don\u2019t
\nhave instant access to. By accumulating savings in account you don\u2019t think
\nabout everyday, you avoid the decision fatigue associated with the constant
\ndesire to spend it.\u201d<\/i><\/p>\n

See my journey from sojourn
\nsavant to lifestyle finance expert took over five years of small regular
\nimprovements (plus another five years previously in accounting \u2013 but who\u2019s
\ncounting). When I woke up on a beach in Southern France five years ago and
\ndecided I needed to get my act together, I didn\u2019t make a large knee jerk
\nreaction. I built success with little steps over a period of time.<\/p>\n

From my professional experience
\nof handling the cash flow of many young professionals over the years, I can say
\nthis applies to the personal finance space more than anything else.<\/p>\n

And so like everything else, how
\ndo we reduce the barrier to entry? How do we make this easy on you? Simple –
\nbuild regular deposits in an account you don\u2019t have instant access to. By
\naccumulating savings in account you don\u2019t think about everyday, you avoid the
\ndecision fatigue associated with the constant desire to spend it.<\/p>\n

\u201cIf you were to set in motion today a $10 a week
\nregular deposit arrangement, next year for Christmas there will be around $500
\nwaiting for you to spend.\u201d<\/i><\/p>\n

Great, so where can you find
\nthese types of accounts? Well, what about opening a new bank account with a new
\nbank? That would work right? Why of course! I\u2019m sure you\u2019re a massive fan of
\nthe banks and can\u2019t wait to open another account with another institution\u2026.<\/p>\n

To save that hassle you could
\nalways open another bank account with your current provider. But then, we both
\nknow a simple transfer is 0.2 seconds away from spending. That\u2019s going to
\ndefeat the whole purpose of cognitive minimalism. We want the money far enough
\naway from you so you don\u2019t have to think about it, but close enough to spend
\nwhen the time is right. So what are you to do?<\/p>\n

While Raiz is a financial
\nliteracy tool to help you engage with your money, it has a lesser known
\nfunction called regular deposits. All this does is automatically move a set
\namount across each month into your account. If you were to set in motion today
\na $10 a week regular deposit arrangement, next year for Christmas there will be
\naround $500 waiting for you to spend.<\/p>\n

And in the meantime you\u2019ll see
\nthe market go though it\u2019s classic roller-coaster up and down. It will go up, it
\nwill go down. And withstanding any kind of cataclysmic wild events – it will
\nonly ever mean a couple of dollars up or down as investment amount is
\ncomfortably low. The benefit however is your
\ninvestor intelligence will increase while simultaneously building a small
\nportfolio in the background that doesn\u2019t create decision fatigue. For more information on Raiz fees, click here<\/span>.<\/a><\/p>\n

Big plans succeed with little
\nsteps.<\/p>\n

Clayton Daniel<\/a><\/p>\n

In this example, $10 a week
\nput aside over 52 weeks would equal $520 if there were no movements in the
\nmarket. Obviously this is a theoretical case study with the end result being
\nabove or below this amount. The case study mentioned above is not a suitable
\nlong term investment strategy as anything less than five years in the market is
\nconsidered too short of a time frame to benefit from returns. Instead the case
\nstudy above is simply to provide education around the benefit of consistently
\nmaking small regular deposits into an investment account \u2013 the withdrawal after
\n52 weeks is not mandatory. Raiz cannot provide any certainty around how much
\nmoney an investor would be able to withdraw in the event they followed the
\nabove case study as investment returns are unpredictable, and past performance
\ndoes not provide insight into future performance.<\/i><\/p>\n

 <\/p>\n

\n

 <\/p>\n

Don\u2019t have the Raiz App?<\/h3>\n

Download it for free in the App store or the Webapp below:<\/p>\n

\n
\"download-raiz-app\"<\/a>
Click to download the Raiz app<\/a><\/figcaption><\/figure>\n

 <\/figure>\n

Important Information<\/strong><\/span><\/em><\/p>\n

The information on this website is general advice only. This means it does not take into account any person\u2019s particular investment objectives, financial situation or investment needs. If you are an investor, you should consult your licensed adviser before acting on any information contained in this article to fully understand the benefits and risk associated with the product.<\/em><\/p>\n

A Product Disclosure Statement for Raiz Invest and\/or Raiz Invest Super are available on the Raiz Invest website and App. A person must read and consider the Product Disclosure Statement in deciding whether, or not, to acquire and continue to hold interests in the product. The risks of investing in this product are fully set out in the Product Disclosure Statement and include the risks that would ordinarily apply to investing.<\/em><\/p>\n

The information may be based on assumptions or market conditions which change without notice. This could impact the accuracy of the information.<\/em><\/p>\n

Under no circumstances is the information to be used by, or presented to, a person for the purposes of deciding about investing in Raiz Invest or Raiz Invest Super.<\/em><\/p>\n

Past return performance of the Raiz products should not be relied on for making a decision to invest in a Raiz product and is not a good predictor of future performance.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

By Clayton Daniel Have you ever woken up one day and said to yourself \u2018wow, I really have to get my act together\u2026\u2019. The next day it\u2019s all green smoothies, two hours at the gym, open the credit card statements, and of course \u2013 calling your mother. \u201cWhile we forgot what it meant to build […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false},"categories":[1],"tags":[],"yst_prominent_words":[158,1480,1471,1477,1481,1474,1473,1476,1483,98,1470,97,82,1475,117,125,1478,1472,1482,1479]}