Bad money habits are the invincible chains that hold us back from achieving our financial goals. These habits include things such as impulse buying, spending too much on convenience and operating without a budget, etc.
According to Warren Buffet, it’s important to break these invincible chains before they are too heavy to carry. In today’s blog, we are going to discuss 4 ways that you can break your bad money habits so you can start building the life that you want.
1. Change one thing at a time
The truth of the matter is that change is overwhelming, especially when it comes to money. It’s easy to want to change a lot of things at once. Picture a scenario where you just realized that you have been lagging financially and you start to panic 😰From the panic, you decided to create a budget, stick to it, track your expenses, build up your savings, evaluate different money market funds… I mean… doesn’t all this sound so overwhelming to do at once? Maybe, maybe not. Most people would find this overwhelming which could reduce their chances of success in implementing the new habits.
Change doesn’t have to be overwhelming. Just change one thing at a time. You could maybe just start by building your savings in the next 3 months, then create a budget and stick to it, restructure your finances later on and eventually start investing. Just take it one step at a time. This approach is more likely to be successful because it’s considerably less overwhelming.
2. Prepare for the weak moments
From what we have discussed already, implementing new habits is not easy. Before you can even start to implement change, you need to find out the cues or triggers that lead to your bad money habits. Why? Because you need to eliminate or work on those cues to avoid some sort of relapse in the future.
Okay, let’s pause for a bit and talk about these cues.
There are 4 ways that you can identify the cues that lead to your bad money habits. Whenever you find yourself overspending or impulse buying, or whatever bad money habit it is, ask yourself the following questions;
Once you have identified the cues that lead to your bad money habits, you need to prepare for them as you are changing your habits. Based on the examples that we had, maybe you could have a special budget for your best friend and ensure that you never go above it whenever you guys are together. Maybe you could go out to the club with the exact amount of cash that you need to avoid overspending. Maybe you could install an app that blocks your transactions in the night time.
Whatever it is, you need to prepare for any weak moment that could lead to relapse.
3. Set regular reminders / automate your finances to keep you on track
Let’s face it, we are busy human beings. Whether you are employed, or you are an entrepreneur or a stay at home parent, there’s probably a lot that you are juggling at any moment. When this is the case, it’s very easy to have some things fall through the cracks and get forgotten completely.
When it comes to implementing new habits, there are 2 ways that you can deal with this.
One, you could set reminders/alarms to keep you on track. For example, if you have a new resolution to track your expenses every day, you could put a daily alarm to remind you to track your expenses.
Second, you could automate your finances. With automation, you take the thinking out of the process making execution so much easier. For example, if your goal is to grow your savings, you could have a conversation with your bank and set up standing orders such that a percentage of the money that comes in, is instantly transferred to your savings/fixed account.
To learn more about automating your finances, check out our flagship course Your Roadmap To Wealth which includes automation and discusses other money management aspects such as, growing savings, restructuring your finances, assessing if investments are right for you and so much more.
4. Reward your success
Back when I was in primary school (elementary school/grade school) I had a very interesting “contract” with my mum. If I worked hard during the semester (or were they called terms?) and got good grades in my exams, I could receive a gift, of quite literally whatever I wanted. Whether this was that new monster truck toy, or a bike, or a trip to…whatever it was, I could get it once I performed well in my exams. (On an unrelated note, this is probably why I have developed a tad of blackmailing skills in my life but let’s not get into that today).
This is the same approach you should take when implementing new habits. Sometimes, that treat is all you need to keep you motivated on your journey to achieve your financial goals.
To execute this, first, figure out whatever it is that you would want to achieve financially. Second, once you have achieved it, create a fun fund to treat yourself (P.S: Don’t go too crazy and ruin everything that you have already built ??). Third, treat yourself and reward your success as you gear up to achieve your next milestone.
By using these 4 tips, you empower yourself to break the invincible chains that are holding you back financially and once they are broken, you are finally free 😍 to start building the life that you want.