How to Change Your Money Habits

In a previous post I talked about the end goal of a budget being the formation of good financial habits. By forming good habits, the day-to-day worry of staying within our budget can be replaced by simply enjoying our lives, since our normal habits should naturally keep us within your budget.

Like many things, this can sound great in theory but be difficult in practice. In general, the easy part of this is identifying the behaviors we want to change and the habits we’d like to form in order to change them. The hard part is the change.

So how do we go about it? By making one small change at a time. Good financial habits take time to form, and if we try to tackle everything at once we’re not only likely to be overwhelmed, but we’re likely to struggle to accomplish any of it. It becomes much more manageable if we can break it down into a series of smaller steps.

For a simple example, let’s say that we’ve looked at our current spending habits and identified two things we’d like to change: lowering the amount spent eating out and starting an emergency savings fund. Rather than trying to tackle both of these things at once, or even all of one, I’d want to start with a small change. Maybe I look at my eating habits and see that I’m buying lunch every day at work. As a start, maybe I resolve to bring in a lunch instead the next day to see what that’s like. Just one day. The point is to start with a small, achievable goal that gets me moving in the right direction. Depending on how that first experience goes, I can make a next goal right after. If I can string a few of those goals together, I’m on my way towards forming a habit that will positively influence my finances.

On the savings front, it can be overwhelming to think about building up significant savings, particularly when facing all of the new costs a child brings. So again, the goal would be to start small. I can set up an automatic monthly transaction that moves $25 from my checking to my savings. Then I can just let that happen automatically for a little while as I work on other aspects of my budget. Eventually, I can revisit it and possibly up the amount. But just getting started is a huge step.

The point here is that we shouldn’t try to tackle everything at once. That’s setting ourselves up for failure. By just trying to make one small change at a time, everything becomes much more manageable and we’re able to take positive steps towards change on a regular basis.

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