Momentum: Is the Force With You?
Between the adrenaline rush of the Australian Open and the wild capital markets gyrations, I find myself pensive about the importance of momentum. The ‘when’ and ‘how’ of a momentum shift is almost palpable in a sports or trading environment. You can sense when a competitor feels emboldened to chase more opportunities to score / monetise, and how they win more because their growing confidence helps them focus better and be more consistent.
While it’s easy to pinpoint these concepts in controlled environments, I think we would all do well to be sensitive to how momentum is at work in our own lives: whether it’s actively working in our favour, against us or has fizzled out.
Momentum - in this context - is how I view the compound effect of decisions big and small which create real world outcomes and consequences. It’s what happens when the theory of compound interest meets life.
Successful careers and financial wellbeing depend on positive momentum, of which generating and sustaining it requires thoughtful strategies and massive amounts of action. As we shed our early stage idealism of meritocracy and grasp the importance of ethical corporate politics in our mid-level+ career stages, we embrace new intentional approaches that unlock further momentum. Stephen Duneier’s excellent talk about how to achieve ambitious goals explains the elegant simplicity of how to build momentum. He shows that no matter how big the goal, accomplishing it is a function of several small decisions consistently compounded over time which get amplified by marginal improvements along the way. Momentum or the compound effect can change any area of one’s life - it really is that simple.
When I think of what creating momentum looks like practically in areas like managing careers and personal finances, I can easily recall some of the helpful simple decisions I have made over the years. I’ll share a few illustrations in case useful to others as well.
An example for creating positive career momentum
Desired outcome
Deepen industry knowledge.
Small decisions that will get me there
Read one book per month relevant to the industry, client experiences, historic or expected future trends, etc.
Read relevant news publications daily.
Schedule meet-ups with people who are smarter than me, and listen more than I talk.
Invest in attending paid webinars and conferences to combine learning and networking opportunities.
Dial-in to 2-3 virtual thought leadership platforms every week.
Why this approach?
It breaks down the absorption of information into smaller chunks and factors in valuable real life experience. Paid events tend to attract people who value networking, and are therefore willing to engage. It enhances my ability to make insightful comments rather than rehashing what’s in the media.
An example for creating positive momentum in personal finances
Desired outcome
Financial stability.
Small decisions that will get me there
Set my credit card limit to the lowest amount possible. I’ve had it as low as ZAR 1!
My expenditure is designed to earn reward points from available cash, not from using credit.
Keep at least 3 bank accounts: one to run all my debit orders for fixed mission-critical things (shelter, insurance etc), another for monthly expenses for variable items (groceries, dining out, etc) and the last one to collect my savings.
Between segregated accounts and a detailed spreadsheet, one must always know where the money goes!
Set realistic monthly budgets and stick to them with the help of automating as many financial decisions as possible.
Save or invest at least 10% of monthly income in a tax-efficient way.
It takes discipline to not touch your savings to splurge on a tempting ad-hoc item once the designated account for expenses has been depleted. When I decline invitations, I re-frame the Fear of Missing Out as rather the Joy of Missing Out in order to meet my long-term goals. It’s very important to honour the promises one makes to themselves.
Plan how to responsibly invest and spend extra inflows BEFORE they are deposited into my account, lest animal spirits takeover!
Why this approach?
What I keep matters more than what I earn. If I can trust myself with small amounts, I can be more confident with bigger amounts and bigger risks like getting a mortgage. Productive debt like a mortgage is acceptable to me (despite Albert Einstein’s comment) but not consumptive debt like a credit card - even if it’s for buying shares or bitcoin! In my experience, “lifestyle creep” (spending more because you earn more) is best tackled by detailed planning plus affirming my money goals in order to keep spending changes minimal - it can be a real internal struggle.
Although these are not comprehensive lists, I hope it sparks some creativity about what small decisions you can make to promote progress in your desired area of impact. I’m equally supportive of big ideas that have a massive transformative impact. However, I personally don’t have those very often! I find I build a lot more confidence and satisfaction with my approach to life when I am consistent with the small things rather than putting pressure on myself to generate and execute big ideas.
It’s also important to identify and address the small decisions that result in negative momentum. It can look like this: a decision to show up to work later than your peers (whether or not it’s justified) which leads to > 1) you missing out on ad-hoc morning meetings where critical issues are discussed > 2) your colleagues becoming accustomed to not seeking your input for certain decisions > 3) people valuing your work when you get around to doing it but not regarding you as a strategic decision-maker worthy of promotion or better pay > 4) no promotion or better pay. Of course, organisational context determines what sort of issues might be generating negative perceptions. It’s important to be aware of this so you can mitigate them early on before certain perceptions become entrenched.
Momentum is a powerful force, and it’s usually directly working for you or against you regardless of whether you’re aware of it. To think it all begins with aligning our small decisions with our big objectives! Let’s not leave easy ways to generate massive value on the table.
