Changing a habit – any habit – can be challenging. But when it comes to finances, change can be especially tricky. Perhaps you’re constantly overspending, and you know it’s time to rein in your daily budget so you can focus on some longer-term goals. Or you’re ready to get a handle on your debt once and for all. Whatever your good intentions, here’s how to change your financial habits.
First things first – know what you’re changing
Before changing your financial habits, it goes without saying that you need to be clear about what you’re going to change. To do that, you need some financial intelligence on your side.
Financial intelligence is all about knowing how money works. That might include what the law says about the regulation of investments, and how they apply to your personal (or business) savings.
Having some financial intelligence allows you to create a better plan for your money so that what you have will grow more effectively. It also means you can check whether what you intend to create, will actually happen.
You may have some disposable income and some savings – but are they really working for you?
Are they moving you towards your goals in life or business?
You have a mortgage… but is it in the best place?
For a detailed look at your circumstances you’ll need to work with a professional who understands your situation – and to feel confident about acting on their advice.
Or check out One of many’s Wealth Insights – a 4-hour focused workshop into what keeps some of us women stuck around money and how you can finally set you and your family free.
Create a plan to move forward
Having a plan gives you a focus and allows you to create goals for where you want to be financially over time.
Maybe you want to be debt-free in 5 years: write a plan of how you are going to achieve that.
Think about where you want your money to be in five or ten years’ time.
- Is it in your children’s trust funds?
- In your pension?
- Or paying off credit?
Which would you choose?
Get the basics right first
Looking at your general spending, and getting a handle on what is going out each month is a major and important step. If you want to start with any financial habit, tracking what’s going on right now is a really good place to start. It sounds so simple but often the basic simple stuff is what matters.
Will you do it though? Will you put the time aside to achieve the basics? Without the foundation, we aren’t able to build a strong position. So, to make sure you have the best possible chance of achieving your goals, here are my top 5 tips when it comes to changing your financial habits.
5 tips for how to change financial habits
1. Remember – changing a habit takes time
According to leading psychologists, it takes 21 days to change a habit. Now of course, this isn’t a hard and fast rule. It’s a generalisation, and it doesn’t take into account how long you have had the habit for and how hard it could be to break.
It does however give us a starting point and proves that it takes time to break an old habit and form a new one, so basically, don’t expect things to change overnight!
2. Don’t change everything at once
The next important thing to realise, is that you can’t change it all at once. For starters you will get burnt out and bored which can mean you stop everything. And secondly, you get into overwhelm, which can be even worse as you cling on to the old habits to give yourself comfort!
So make small changes. Something huge will send you into panic mode and that will stop you in your tracks.
3. Recognise every habit has a reason
We form habits for a reason. So, start to look at the reasons why you have your current habits. Perhaps you’re resisting putting money in a savings account because you’re worried you might not be able to access it in an emergency. Or you’re indulging in purchases you don’t need because you’re feeling insecure – and you know opening a parcel gives you a quick “buzz”.
Once you see the emotional and sensory triggers behind your habits, you can then start to look at ways to replace those old habits with new ones that are perfectly able to give you the response that you desire, but are also helping you keep the money in your pocket at the same time.
4. Make your habit easy
Make the new habit easy for yourself. Have things in handy places at home, or shift your workplace around to make it easier for you to put the new habit in place.
And in return, make the old habit hard. Set up your accounts so that you can’t spend money you’ve allocated for saving, or commit to only buying things with cash for a while if you know you tend to quickly rack up spending on your card.
Another way to make things easier is to give yourself little reminders, such as a note in your purse to ask yourself ‘do you really need that?’, or a reward chart for the kids to turn the lights off when they leave their bedrooms.
5. Accept that you are only human
If you falter, don’t panic, just tell yourself that tomorrow will be better. Maybe ask one of your friends to watch out for you and distract you! Or make a point of celebrating every day you do make a positive change, so that you can feel motivated to keep going.
Want more support?
For a comprehensive introduction to getting your money stuff sorted, One of many’s Wealth Insights event is a powerful live training happening in London in June. Click here to book your ticket.
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Rebecca Robertson is the author of Evolve Financial Planning – financial planning education for women; a TedX speaker; and the seven times award-winning Founder and Director of Evolution Financial Planning.
Rebecca is known as the financial planner who is passionate about putting women firmly in control of their finances. She has helped thousands of individuals and families to achieve financial freedom and given them peace of mind that their finances are properly protected in case the worst should happen. With 19 years’ experience, she’s proud to have a 100% satisfaction rating from her happy clients.
As well as providing holistic and independent advice to clients, Rebecca’s also been featured in the Independent’s ‘Women in Finance’ and is a regular media commentator in FT Advisor and New Model Adviser, discussing financial issues particularly in relation to women.