systematically solve your financial problems, part 3

We’re in week three of talking about using systems to solve your financial problems, and before we dive into this week’s step, I want to step back and take stock of what is we’re actually doing. “How to create a system” seems awfully vague, doesn’t it? Can this possibly be useful?

Of course, the answer is “yes”, but it’s important to understand why. Think about your financial situation for a moment. How did you get here? (Insert obligatory Talking Heads reference.) If you’re like most people, the answer isn’t that all your money fell on you out of the sky, nor is it that it was all taken away in a single day. No, most people are where they are as a result of many choices: from larger ones, like going to Vanderbilt, getting a job as a professional clown, or starting a family, all the way down to how many times you choose to eat out each week. None of these choices by themselves is going to make or break you — rather, it’s the sum of them, the direction you’re heading, the path you’re walking, that determines where you will go. Creating a system is simply plotting out that path, so that in the end, you get where you want to go. You’re not going to get out of debt or save up for your retirement in a day or a even a month — you need a system to gradually take you there, over months or even years.

So: next step! First, you identified the exact problem you were going to solve, then you identified a system to try. The key word here is “try” — there is no One Perfect System. Once you realize that every system is an experiment, then you’ll realize that failure is not only okay, it’s expected! First, though, you need to set up criteria for success — how will you know the system is working? — and make a special note of it. If it’s obvious — I’ll know that my system for handling debt is working because my debt will decrease — then great. Make a note of it anyway; this will be important in step 4. If it’s not obvious, take some time to figure out your criteria for success. Things are tense between you and your spouse when it comes to money? Start tracking how many times you fight about money, or how many times you get that sinking feeling in your gut when talking about it, or some other arbitrary-but-meaningful measurement. Even if it’s entirely arbitrary and in your head, it’s vital to identify criteria for success before continuing.

Why? We’ll go into detail on this next week, when we get to the final — and arguably most important and least followed — step to creating a system.