Habits have help fight diseases, can it help fight poverty?

It’s nearly coming to 10th anniversary of last financial crisis and although on the outset economy has recovered but it’s just the tip of the iceberg.

In the recent study by Joseph Rowntree Foundation found that nearly half of all children in London, Birmingham and Manchester live in poverty. It’s not only children, 300k more pensioners livings in poverty than five years ago.

In January 2018, Office of National Statistics suggested that unsecured borrowing has been rising by nearly 10% a year in UK. The report found Young adults aged in their 20s were more likely to be in households with problem debt than older people, particularly low educated young adults were struggling. Debt problems tended to be more persistent for low-income households.

Financial education in low income household could be one of the leavers bring the positive change. According to research by money advice nearly eight in ten 15–17 year olds keep track of their income and spending. What if trend could be translated into a ‘habit’?

According to psychological theory, a habit is only a habit if it as an action that happens automatically when we encounter a certain setting or situation in which that action has been performed in the past.  Important part here is ‘automatic’, they override intentional behaviour. It becomes stronger and harder and harder to act differently even if there is an intention. Habits do not rely on memory or willpower. (Lally, et el, 2010, 2011). A good financial management habit could be the key.

As Charles Jaffe said, ‘it’s not your salary that matters it’s your spending habit. ‘ or in Warren Buffet words ‘Do not save what is left after spending but spend what is left after saving.’

As part of my first leadership challenge over next year, I have taken up the task to campaign in five primary schools about building good money management habits where there are high number of pupils from low-income and low education families.

A study found that habits in Children take root by the age of 9. (Pressman et al., 2014). Hence, I choose primary school as part of my leadership challenge.  With the help of Young Money Charity who have created resources and are already connected with many schools in London, I intend to apply behavioural habit framework to campaign about money management. According to behavioural studies, repetition creates a mental association between context (cue) and the action (behaviour) which means that when the cue is encountered the behaviour is performed automatically.(Gardner, 2012). For example each time, income is received a part of it goes into saving or each time we spend part of it is invested, a mental link could be formed between income and savings or investing and spending money irrespective of when money is available.

My background in working in Investment Management could help incorporate some of the investment strategies and translate into simple money management messages for primary school children.

My second leadership challenge is to build the stakeholder awareness that would enable our organisation to carry out an analysis about understanding key sustainability issues for the organisation. I have narrowed down 3 stakeholder groups whom I will be targeting this year. My approach for creating awareness would involve three channels, Bring in external SMEs, Show case from other organisations, and share industry insights. Being part of the central change team, I am well positioned to execute this challenge.

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2 thoughts on “Habits have help fight diseases, can it help fight poverty?

  1. I have enjoyed reading this post about your personal leadership challenges.

    Like you I believe that financial education of young people in low income household is crucial. I particularly like your quote of Warren Buffet: ‘Do not save what is left after spending but spend what is left after saving.’

    Although one cannot generalise since many low income households have debt issues not necessarily because they spend above their means but because unexpected additional costs generated by life events drive them suddenly into debt, all too often, young people have never seen their parents save or invest. As a result of never witnessing any good financial habits at home, they just do not know how to handle their own finances later on in life.

    Your objective of campaigning in five primary schools about building good financial habits seems realistic and a great way to participate to this effort of financial education of young people from low income families. I would be interested in discussing how you will go about it practically. Will it be through presentations, workshops or group discussions? How often and how long will you need to do this to see this campaign translate into good financial habits? How will you monitor young people’s effort? I would also be happy to make some suggestions based on my own experience.

    As for your second personal leadership challenge, I believe that your change management role will definitely allow you to make a difference within your organisation. This is a huge task and I look forward to discussing with you how you will go about it and hearing about your progress.

    Best of luck!

    Like

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