"All of our life, so far as it has definite form, is but a mass of habit - practical, emotional, and intellectual - systematically organised for our weal or woe, and bearing us irresistibly toward our destiny, whatever the latter may be." ~ Williams James
Beginnings are not grand. They are mostly humble, and the subsequent steps, to keep forward momentum consistently applied, become habit forming.
One of the biggest differences between those who do, and those who don't progress their goals or achieve change, is getting so tied up in fear of failure or anticipating unknown outcomes that trip you up before even crossing the starting line.
One of my favourite books recently, Atomic Habits, by James Clear makes the same point over 300 odd pages. I was gifted this book last Christmas by my niece, and it was an unexpectedly riveting read from start to finish.
Clear starts with his own journey of transformation, sharing his improbable recovery from a debilitating brain injury. It is a story of mind over matter, as well as a series of staircase triumphs.
Using compelling case studies, like how the British cycling team pulled itself out of the performance gutter to world-leading, Clear makes the point that big change is not one-time-radical but a series of small but cumulative tweaks over time. Honestly, this book was a page-turner for me.
Like most people these days, I admit to suffering from a bit of attention deficit, given the competing pull of social media snacking. Atomic Habits kept me glued.
Charles Duhigg's "The Power of Habit, Why we do what we do in life and business" was similarly mesmerisingly. Duhigg doesn't focus as much on the micro but on the macro behind what drives human behaviours and the overlapping insights and connections that lead to great outcomes. The quote above comes from his book.
One of the many stand-outs was Chapter 4 on Keystone Habits or the Ballad of Paul O'Neill.
This chapter describes how O'Neill, a former US bureaucrat, transformed Alcoa, The Aluminium Company of America, from one of the most lethal workplaces in the U.S. to a shining example of workplace health and safety. In doing so, he transformed their balance sheet beyond expectation. It's a cool story and a reminder of what can be achieved when social good is a priority.
The Starbucks chapter was a similar feel-good story that revealed some humanity underlying corporate America.
If these books don't leave you feeling inspired, I'm not sure what will.
They are both must-have additions to your personal finance library or reading list.
Psychology is central to personal finance. Habits are too.
If you understand your mind, as well as your habits, you'll find that sweet spot in personal finance where it becomes less like work and more like a challenge.
Everything in your life reveals a story.
Your weight, your scars, your job, your relationship, where you live and how you live.
If you were conscious of those choices and decisions, chances are they will be a net positive.
If you're looking to improve your finances, you need to understand how you came to be where you are and then map a different journey if you want one.
Most millionaires are not made overnight. They are the product of cumulative choices made over time.
Ask, and you shall receive.
Seek, and you will find.
Firstly though, define what are you looking for?
Map out a timeline and a series of steps you need to do to achieve that goal or destination.
Note the impediments, challenges and resistance you may encounter.
Expect a setback. Expect several. That should be implicitly understood as part of the process.
Find a buddy or mentor to hold you somewhat or fully accountable.
Reward yourself with little victories along the way.
And to quote a now famous fishy, "Just keep swimming."
Oh, and if you need one more little reason to feel hopeful, dig up the incredible back story of Ellen DeGeneres's voice acting job for the role of Dorrie and where that subsequently led her, if you don't already know. Incredible story.
If you can't find it, watch her Netflix interview with David Letterman on his show "My Next Guest Needs no introduction."
Big topic! It's hard to know where to begin.
Let's put aside all the other core parenting requirements under the banner of 'investing', including proper nutrition, quality time, good role modelling and boundaries and focus on the financials, shall we?
If you're a Kiwi parent, you'll wonder about KiwiSaver as a starting point for investing.
This used to be a no-brainer, given your child received $1,000 free from the government to kick-start their account. The bonus provided a huge incentive to sign up for the programme when it was introduced in 2007. It worked a charm. The country now has more than 2.8 million people enrolled in this Government-regulated, workplace-supported retirement savings "Scheme." They couldn't have picked a worse word to call it, but fundamentally it is a good scheme.
To hear more, tune into my last appearance on NewstalkZB's Smart Money on the Weekend Collective.
Given that KiwiSaver is designed for retirement, you may wonder whether it makes sense to sign up your sprog before they can walk. It is hard to imagine them a senior when they are still drooling and babbling in your arms. Alas, they do grow up way faster than you may expect.
Many parents choose to open an account to help give their kids a head-start on a first home deposit. Remember, unless you leave the country permanently, get seriously ill, or fall on your luck financially in a bad way, you can't quit KiwiSaver after you have joined.
This is an excellent reason to think through the decision tree carefully, without too much sentimentality.
If you want to help junior avoid student debt, investing outside of KiwiSaver would be the logical move because you can access those funds when you want to.
Today, there are plenty of options for investment fund accounts for kids. Typically, you or another named guardian will manage those accounts until they turn 18 and then have access. You will have to trust that your child doesn't buy themselves a car at this stage, instead of an education.
Who knows if first-year fee-free will be around when your child comes of age for college. Maybe it'll be four-year fee-free, or perhaps junior decides college isn't for them.
If there isn't an immediate need for the funds, then you could elect to keep the investment for a first-home deposit, move it into a retirement savings account or designate it for a different purpose. That's your business entirely, well, junior's, but it is worth some frank discussions over the years to ensure the funds are well managed and spent.
Dedicated university savings funds came with all sorts of fish hooks, including (believe it or not) forfeiting a portion of the money to your fund manager if the kid didn't go to university!
Fortunately, today there are so many more options available that empower the investor.
The difficulty is choosing a fund manager or deciding between online investment platforms.
I can't tell you what to do. If you don't know what to do, it would be wise to get a financial adviser to help you decide. Choose a fee-based advisor, as many will otherwise rope you into a product for which they receive a commission and or 'trail.' This means that if they get you into a particular fund, they will receive a % of that investment balance as long as you are invested in it. I know, right! Well, it may be a good option, but it isn't easy to tell if it's the best option when your adviser also benefits from their guidance.
This is why low-fee diversified index fund options are so hot right now. They don't cost you an arm and a leg. You're invested in a cross-section of assets across many countries, which helps to reduce your risk. Unlike putting all your eggs in one sector, for example, housing in New Zealand, having multiple investments spreads your risk.
If you are DIY'ing, make sure you choose a fund type that is appropriate for your time horizon.
While the markets are dismal at the moment, a few years ago, we saw people piling into growth and aggressive funds, lured by the double-digit returns being generated. Now that interest rates are on their way back up; inflation is running its hottest in decades. On top of various geo-political disasters, returns are back down to earth, many in negative territory.
In any case, be sure you line up your fund type to the following:
Regulations today are stricter than ever in New Zealand and other places worldwide. After decades of being fleeced via high fees and crappy products, investors are better protected than ever. There is a heavy onus on fund managers and other financial providers to fully explain and outline their investment's costs, risks and nature.
The hazard with low-cost online investment options is that many investors tend to rush in and tick all the boxes to declare they've read the essential details when they couldn't be bothered.
These are all critical learnings, and if you get burnt, you won't make a mistake again. Still, if you can avoid any financial mistakes by doing your research, asking around and taking a measured approach, you'll be far better off for it, as well, little Johnny or Jenny.
What is your risk profile? Check out Sorted.org.nz calculator here
Amanda Morrall is a New Zealand based personal finance expert. Her first book Money Matters was published in 2013 by Penguin Random House in NZ.