This past week we moved into a new house just a few miles away from our old house. Many of you know the pains and joys of moving all too well from college, medical school, residency, and beyond. The pain of moving is all the work it requires to pack and unpack everything. The joy is moving into a new house, which for us means a lot more space both inside and out. This got us thinking about our next step, unpacking, and how a Japanese improvement concept known as kaizen, could be helpful for not only unpacking after a move, but also for our finances.
Kaizen essentially means to break something apart and study it before putting it back together in a better way. At the core of kaizen are small, easy, and fast improvements. The concept was originally developed for the manufacturing industry in Japan. Years ago, the Japanese were far ahead of U.S. automakers especially in quality of their cars, and one of the reasons why was their focus on process improvement. Kaizen was and is still used to make small incremental changes that when stacked on top of one another lead to big results.
Why change is so hard for most.
Change is hard. Really hard in some cases. Most people tend to believe they like change. In fact, the term “change agent” is quite common on job resumes and CV’s. No one wants to be known as someone who is resistant to change. However, when it comes to the truth of the matter, most of us, especially as we get older, don’t like change. We like things the way they are. We like to be comfortable. We like predictability in our day.
Scott often jokes in his process improvement workshops that if Jana wanted to hire a hitman to take him out, he would only need to follow Scott around for a day to determine where best to take his shot. Like many men in their late 40s, Scott is about as predictable as the sun rising in the morning and setting in the evening.
One of the reasons we don’t like change is fear - fear of the unknown. We can’t predict the future, and change leads to a somewhat unpredictable future. For example, we just moved into a new house we visited several times and had inspected and appraised, but there are still many things we don’t know about. We can plan for the future by doing the aforementioned actions to better ensure we won’t have any surprises, but if you’ve ever owned a home, whether it be a new build or existing construction, there are always things that will come up you didn’t expect.
Can small changes lead to big results?
There is a common misconception that big changes are needed to get big results – not true! Sure, big changes, like getting a medical degree, do lead to big results like becoming a doctor, but big changes are also more challenging and more likely to fail, not to mention far scarier than small changes.
The power of small changes is they create less fear and are more likely to succeed, not to mention much easier to implement. For example, Scott is trying to learn Spanish by using an app called Duolingo that is a great example of kaizen. Each day the app sends a reminder that it’s time for Scott’s daily Spanish lesson that takes only a few minutes. The power in these small bite-sized chunks of Espanol is that they are quick and easy to do as opposed to taking a formal Spanish class sitting in a classroom or following an instructor online, which could take hours each week. In just a short time Scott has learned almost 1,000 words in Spanish.
5 questions to take small steps that lead to big results.
Robert Maurer, Ph.D. wrote a great little book titled One Small Step Can Change Your Life. Maurer is a clinical psychologist and on the faculty at the UCLA and University of Washington Schools of Medicine. He offers five simple steps / questions to get big results. The steps are:
What does any of this have to do with my finances?
Some of you might be thinking, “small problems? Are you kidding me! I’ve got six-figures in debt, which is anything but small!” True. Many of you do have big debt, but if you can start to break apart all that debt into smaller pieces it could seem less challenging to crush. Likewise, if you take smaller actions to move closer to getting out of debt that will also help.
Two of the most critical behaviors in getting out of debt are creating a monthly spending plan (aka budget) and routinely communicating with your spouse about your finances (aka getting on the same page). We finish this blog with two simple kaizen tips to take a few tiny steps toward becoming a debt-free millionaire doctor.
The kaizen budget.
Most people really struggle to get going with the budget. However, without a spending plan you’re not likely to get anywhere with becoming debt-free, or at a minimum it will take years longer than with a spending plan. A kaizen approach to your spending plan is to start by simply budgeting your needs and monitoring your spending on them only. For example, we would argue essential needs include:
At the very core of what you “need” are these five. You could argue that debt isn’t really a need, but don’t make any debt payments for a while and you’ll quickly see it as a need! Begin with budgeting for these five and then as you start to see progress and it becomes part of your monthly routine expand the budget to additional areas of spending. We’d also highly suggest using an app such as Every Dollar or YNAB to link to your bank account to make tracking spending much easier. Remember, the easier you make it the more likely it is to happen.
The kaizen “money minute”.
A second area to kaizen your finances is getting and staying on the same page as your spouse when it comes to money. Spend time each day, or maybe just once a week, having a “money minute”. This conversation could include how you’re doing so far in the current month with the budget. Maybe talking about your debt-free dream and what it will feel like when you’re finally free of your debt. These tiny conversations will begin to build teamwork between you and your spouse, which is critical to success.
Getting into debt is easy. Getting out is not. We wish you could fill out a few forms and click a few buttons to get out of debt like many of you got into debt, but it’s far harder. However, if you take small steps to climb the mountain you are facing, over time, step-by-step, you will reach the summit. And when you do, all the pain and hardship will be worth the view as you see clearly into the bright future ahead of you.