Identifying and Changing Bad (Money) Habits by Val Njoroge

We all want to be able to say we have good habits. We aspire to be early risers, readers, active people, good friends etc etc. When it comes to money, the pressure is no different. We want to identify as being good with money, being good savers and investors. How many people would describe themselves like this? Not many, that’s for sure. So why is it so hard to form good habits and get rid of bad ones? They say habits take 21 days to form, but I have a different theory. James Clear’s position is that habits are a function of your identity. In his book, Atomic Habits, he says that when smokers shifted their mindset from “I’m trying to quit smoking” to “I’m not a smoker” they had a much higher success rate in quitting.

I recently experienced this when I spent a month in Toronto while my team was in Nairobi. We had an 8 hour time difference, which meant that we had about 4 hours of overlapping working/waking hours. I was anxious about this because despite not being an ‘early riser’, to make this work I had to be awake at 5:45 AM, so that I could wash my face and make a cup of tea before getting on a call at 6 AM (2 PM Nairobi time). This would allow me to give my team feedback on the work they had done during the day and still give them enough time to make adjustments before 5 or 6 PM. On the first day, it took some time for my brain to really wake up, but by the 3rd day, I was waking up and jumping into routine pretty easily. I found this interesting because I had struggled to get out of bed by 6:30 AM while I was in Nairobi for months! Despite finding an app that helped me wake up on time, I’d still spend 30mins to an hour on social media before getting out of bed.

So, what was different about being in Toronto? I believe it’s because waking up early was tied to one of my core values and to a big part of my identity. I want to be a good leader and that means being there to give feedback to my team. I want to lead a fast-growing company and that means we need to fail fast so feedback can’t have a 48-hour cycle. In Nairobi, I can give feedback at 9 am and that’s okay — no need to wake up early. But in Toronto, this was directly related to being successful in my goals.

I’ve been thinking a lot about how this applies to personal finance management. I definitely had bad money habits that tied strongly to my identity as a social and ‘high potential’ person. I would never hesitate when a round of shots was being bought or when a road trip was suggested. After all, I had a good job (which equals can’t be broke) and I was a good friend (which equals can’t say no). Before my money habits changed, I had to figure out what triggered my bad habits and what part of my identity drove those decisions so that I could rewire my mind.

Now, a lot of my financial habits are tied to my core identity of being an impactful global entrepreneur and a good financial partner to my fiance. To successfully achieve this, I need to have a sizable safety net to allow me to grow my business. This means that whenever I get any income, I put away a huge chunk of it into investments that protect my capital so that my safety net continues to grow.

If you are struggling with changing bad (money) habits, I would first suggest that you read “Atomic Habits” by James Clear. Then map out your bad money habits and figure out what part of your identity they tie to. Ask yourself why you do certain things at least 5 times until you get to the answer that ties to your identity or belief system.

Example of asking why:

Bad money habit: Whenever I see a pair of shoes I buy them.

Why? Because I like shoes.

Why do you like shoes? Because I like to look good.

Why is it important to look good? Because I want to be respected in the office.

Why do you want to be respected in the office? Because I want to get promoted to CEO one day.

Why do you want to be a CEO? Because CEOs are powerful and I want to be powerful.

This could go on, but when you finally get to your core, ask yourself does {Habit} help me become {identity}? If no, then work backwards from where you want to go and identify habits that can replace that.

For example, if you want to be powerful. Describe what a powerful person means to you, then keep doing things that powerful people do. Start with quick wins then build up as you reinforce that identity.

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