My recent webcast explored how “kaizen” can help you to change your deeply ingrained financial habits.


In 1940, F. Scott Fitzgerald wrote his final novel The Last Tycoon. Fast forward to the 80s, and the book that modern-day business tycoons were all reading was a management manual called Kaizen: The Key To Japanʼs Competitive Success.


What is kaizen?

I mention these two very different titles because they both contain Japanese words. But while tycoon has become as familiar as kimono, futon and bonsaikaizen didnʼt really stick. The word roughly translates to “change for better” or “continuous improvement,” a method pioneered by Japanese manufacturers as a solution to the problem of assembly

line workers not adapting very well to radical changes in production processes. It was, in fact, a solution to a problem as old as the human race—that an abrupt shift in our environment activates a fight or flight response in the brain: A major shake-up of your household budget triggers the same part of your brain that is triggered by an earthquake shaking your house.


Think small

In my joy-based spending article I talked about how subtracting joyless experiences and waste can be a fun and uplifting

way to pursue financial wellbeing: A radical departure from the Western model of acquiring stuff. This approach to spending really seems to resonate with people, so I recently took this concept one step further in my recent webcast, here on the Woman2Woman community. Catch up, re-watch or share the webcast here.


Central to the kaizen process is this concept of gradually eliminating maladaptive behaviors. Letʼs face it, habits are really hard to change. The kaizen method is predicated on the understanding that baby steps are required to improve human

behavior; as a result, incremental modifications can have a big impact on your financial wellbeing both today and in retirement.


The brain is more receptive to tiny changes

Unlike most management crazes, the kaizen philosophy is supported by modern neuroscience, which separates the brain into three parts: 1) the brainstem (responsible for the bodyʼs automatic functions, like breathing); 2) the amygdala (responsible for “fight or flight” survival instincts); and 3) the neo-cortex, where creativity and thinking reside. The amygdala does not, on the whole, enjoy change (even if itʼs for the better). When your financial advisor tells you to radically rein in your shopping splurges, or an article reminds you how off track your retirement savings are, the amygdala lights up, draining wattage from elsewhere in the brain (including the neo-cortex).


In other words, financial advice can trigger fear just as surely as the sudden pounce of a predator triggered our ancestors. The neo-cortex knows how to budget and save but is hampered by well-meaning appeals from experts to do something drastic—and all that finger-wagging advice falls on deaf ears. In other words, a radical financial plan can be worse than no plan at all.


Embarking on a big change, any big change, can elicit this all-encompassing flight response. What I call “Financial Kaizen”—tiny changes to your budget, saving rate and other financial variables—can work because it stills this panicky “fight or flight” instinct, allowing you to more easily adapt to improvements in your spending or saving habits.


The kaizen approach: A tortoise in the race to retirement

Baby steps are what propel Financial Kaizen—steps so teeny weeny as to seem ridiculous. But if they are small enough, the amygdala (and its natural flight response) may be circumvented.


Modesty is highly valued in Japanese culture, just as the culture of kaizen values modest improvements. So, whether you commit to reading one article a week on Woman2Woman—or catching up on my recent webcast, tiny changes for the better—also known as kaizen bursts—can help transform your life.




Manisha Thakor is unaffiliated with TIAA, College Retirement Equities Fund, and their affiliates and subsidiaries (collectively TIAA), and TIAA makes no representations regarding the accuracy or completeness of any information made available by her. Manishaʼs statements are solely her own and are not endorsed or recommended by TIAA.


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