Breaking Bad Money Habits: The Key to Sustainable Wealth
In this article, we will be exploring the relationship between habits and our financial behaviors, particularly the bad money habits that are hard to break. Habits are patterns of behavior that occur in our brain without conscious thought, meaning that we often engage in these behaviors without even realizing it. Breaking Bad Money Habits is the focus of this article, as we look at the ways in which our financial behaviors can be shaped and changed for the better.
Have you ever found yourself reaching for a chocolate bar when you’re checking out at the grocery line, or grabbing a coffee on the way to work without even thinking about it? These may seem like small habits at first, but they can be hard to break over time.
This is because habits often have cues, routines, and rewards connected to them. In the case of grabbing a chocolate bar, the cue may be the line at the grocery store, the routine is grabbing the chocolate bar, and the reward is the satisfaction of eating it.
To understand why habits around money can be hard to tackle, it’s important to know that about 40% of the things we do in a day are habits. These habits happen in the background, without us even realizing it. This makes it difficult to change them because we have no control over them.
When it comes to money, there are cues, routines, and rewards that are connected to our spending and saving behaviors. Sometimes we become so attached to the reward that comes from spending that we continue to do it in a routine way, even if it’s hurting us financially.
However, the good news is that we all have the capacity to change. Small changes in behavior can have a big impact over time, and this applies not only to our finances but also to our mental, emotional, and physical well-being. So, how can we identify what’s holding us back and start forming healthier spending and saving habits?
One of the first steps to change is understanding what stage of change you’re in. There are five stages of change: denial, contemplation, preparation, action, and termination. In the denial stage, you may not think you need to change your habit.
In the contemplation stage, you are starting to think about making a change. In the preparation stage, you are planning for the change. In the action stage, you are actively making the change. And in the termination stage, you have successfully changed the habit and don’t have the urge to do it anymore.
So, let’s take an example. Let’s say you have the habit of whipping out your credit card and grabbing a coffee every morning. In the contemplation stage, you may start to think about whether this habit feels good for you financially. If it does, you can keep doing it.
But if it doesn’t feel good, that may be an indication that you need to check in with your finances. In the preparation stage, you might plan to get to work a few minutes earlier and park a little farther away so you have time to take a walk before starting your day. This way, you can replace the habit of grabbing a coffee with a new habit of starting your day with a walk.
Habits are patterns of behavior that occur in our brain without conscious thought. Habits around money can be hard to break because they often have cues, routines, and rewards that are connected to them.
To form better habits, it’s important to understand what stage of change you’re in and take small steps towards change. By understanding your habits and taking small steps towards change, you can start forming healthier spending and saving habits that will unlock your financial potential.
Building Better Money Habits
As we learned, habits around money can be hard to break because they often have cues, routines, and rewards that are connected to them. To form better habits, it’s important to take small steps towards change and be patient with yourself. Here are five habits that can help you achieve financial stability and success:
- Saving a small amount of money every month: Saving a small amount of money every month, such as £50 ($50), can make a big difference in your financial life. This is because of the power of compound interest, which means that the money you save grows over time.
- Focusing on one habit at a time: Instead of trying to change everything all at once, it’s better to focus on one habit at a time. For example, if you want to stop spending on takeout, focus on that habit first and then move on to another habit, such as saving for retirement.
- Building positive associations with money: The more you can associate positive or neutral habits with your money, the better off you will be. For example, instead of seeing saving as a chore, see it as a way to reach your financial goals.
- Getting support from friends and family: Sharing your goals with friends, family, and coworkers can be a great way to form new habits. This is because associations and connections become important when we share with others.
- Practicing self-evaluation: Regular self-evaluation is important for forming and maintaining new habits. This includes awareness, reflection, and accountability.
Building better money habits takes patience and support. By focusing on one habit at a time, building positive associations with money, getting support from friends and family, and practicing self-evaluation, you can achieve financial stability and success.
