If taking control of your finances is one of your resolutions, then consider focusing on creating a habit that will move you toward your goal.
In my experience of working with clients over the last eight years, the keystone habit that changed everything for them was to Track Their Spending. Right now you might be thinking… NO! That’s like counting calories. Not fun!
I’m not gonna lie to you. At first, it may not be an enjoyable task. But a funny thing happens when you start Tracking Your Spending. As you become aware of where your money is going, you start to spend differently. You start to focus your spending on what is most important to you – a key savvy habit! Also, as the habit starts to take hold, it becomes something you look forward to doing. I’ve seen it happen with clients that have protested the most. They almost always become the biggest advocates for the habit.
In order to create the Track Your Spending Habit, consider implementing the “Cue, Routine & Reward” formula Duhigg explains in his book.
For example, a Cue, Routine & Reward system you can set up to Track Your Spending might be:
- Cue: Turn on your computer first thing in the morning.
- Routine: Enter or download yesterday’s spending into your *tracking system
- Reward: Read your favorite websites for 15 minutes.
* As for tracking systems, you can use Quicken, Mint.com, an Excel spreadsheet or the paper check register that comes with your bank checks.
According to the European Journal of Social Psychology, it takes an average of 66 days to form a habit. So, to make your habit stick, Track Your Spending every single day. Even if you didn’t spend money the previous day, at least log into your bank account to check your balance. Then, put a check mark, happy face or some other symbol, on your calendar when you’ve completed your tracking habit for that day. If you start on New Year’s Day, on Friday, March 7th, you’ll reach the 66 day mark.
I’m more of a carrot than a stick person and most clients that I’ve worked with are too. So, consider giving yourself a reward when you reach your 66 day mark such as dinner at your favorite restaurant. Just remember to mark the expense in your tracking system the next day.