How To Change Your Financial Habits

Changing a habit can be a daunting task. The problem, whether you are trying to fix your marriage, start a new business, raise your children, or get out of debt, usually boils down to a combination of these 3 things; lack of planning, like budgeting, and lack of action. Where people go wrong is that they say they want to change a habit but then they try to do too much at once. This leaves them discouraged and inevitably makes them want to quit. The key to any goal setting success is to know your goal and take small incremental steps to accomplish it.  The same goes with your finances.

Dave Ramsey says that personal finance is 80% behavior and 20% head knowledge. You probably already know some of the major steps you need to take in order to change your financial situation like, create and set a budget, lower your spending, put money aside in savings. But we as humans are wired to take short term comfort over long term success. 

Here are a few tips to help you make the incremental changes in your finances that will give you long term gratification in the future:

1. Know Your Why

It’s not enough to say, “I want to save money” or “I want to get out of debt.” You have to know why taking this action is important to you. What would your life look like if you accomplished this goal? What types of things would you be able to do? How would it make you feel? How many lives could you help? Think about it, write it down and look at it daily for motivation. This is your planning phase where you create what you want your life to look like.

2. Set a Budget

The next thing to do is set a budget. The first step to budgeting is to find out what you spend your money on. Write down your mortgage/rent, utilities, transportation costs, food and finally, monthly debt payments. Once you have an idea of what you spend on an average basis, you can determine where you can spend less. Look at your last 2 months of bank statements, for example, and get a good idea of where you can adjust. You can either write it by hand, create a spreadsheet, or use budgeting apps like Mint, if you’d like. But track your numbers because numbers don’t lie. They have no opinions. And remember, a budget is never set in stone. Do a new one every month, because life happens.

3. Get Support

There are many resources out there to keep you on track. The best thing for you to do is keep it simple. It takes nothing but effort to make a change. And the best way to stick to a change is to know your why and have support.  It is not necessary to have an accountability partner for success, but you can dramatically increase your success if you have some to encourage you and to keep you on track. Just like when you’re working out, having someone help keep you accountable is vital. 

If you would like to change your financial situation, start today. Don’t stay stuck in the mindset where “I’ll start tomorrow, I just need to do this thing first”, or “Someday I’ll get started”, do it now! If you need help getting started, we can help with that too. Book a consultation.

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