Habits - The Good & The Bad (part 1)
By Kevin Gibbons
You want to do right by your future self while conducting your daily life. But sometimes the constant bombardment of information and onslaught of decisions we’re faced with can be overwhelming. Imagine if you also had to remember to take a breath every 15 seconds, or had to really think about how to move your leg muscles with every step you took.
If you had to concentrate on those basic activities (and some people indeed do) would you be able to get nearly as much done, or would so much of your brain power be consumed with these tasks, there would not be much left over for the “regular stuff?”
If you feel overwhelmed by what should be everyday life, it may be because your system for dealing with it is not sufficient.
This is why cultivating good habits is so important, not just in your personal spending and money management, but in all aspects of your life. The more mundane activities and task you can consign to habits, the more brain power you can free up to deal with the novel or important things in your life.
Consider your morning routine. Many of us get out of bed, maybe do some stretching, jump in the shower, brush our teeth, fix our hair, apply makeup or personal care and start getting dressed, all on “autopilot.” Maybe we have our first cup of coffee and don’t even remember making or pouring it. That’s because we’re doing it all by habit. Those activities really don’t change from day to day, and so don’t require a lot of thought to execute.
You can, and should do the same thing with your daily, weekly and monthly financial life. By identifying and ritualizing the elements that remain largely the same, and the practices you want to follow, you can create the habits that will allow you to accomplish your goals without overtaxing your brain, focus and willpower.
The key to developing successful habits is to keep them simple, tied to a rewarding behavior and directly associated with concrete results.
Most financial experts agree that tracking your spending is critical to understanding and managing your daily finances. But many people find the process tedious or overwhelming. To create a workable money tracking habit, try these 3 steps:
1. Start by tracking a small number of categories of expenses that you are most concerned with, rather than all your expenses. Look at the variable expenses you want to change, like grocery shopping, eating out, on-line purchases. (Do you really need to track your rent or mortgage? It should be the same every month.)
2. Put it on your calendar and make it pleasant. Set aside 30 minutes (or as little as 15 minutes, if you’re only tracking a few items every week) one day a week. Make yourself a cup of coffee or tea and sit in a comfortable chair. Tell yourself, “after I review this spending, I can take 15 minutes to do…” something simple you enjoy, like read an article, listen to music, play with the dog. The idea is to associate some small positive reward with completing the task. It may sound simple, and a little “self-manipulative,” but it really does work!
3. Take the data you gather every week and determine if you are spending your money the way you want. If you are spending more than you would like on dining out, start making changes. Compare your weekly spending as you start changing your behavior. As you see the changes, it will become easier to maintain this habit, because you will clearly see what you are getting out of it.
Tracking Your Spending is one of the Keystone Habits we develop in The Savvy Life. Once you get that habit up and running, it can domino into so many other positive changes. First you have to measure before you can correct!
Creating habits to deal with routine tasks is a powerful way to ensure consistency and free up our brains to focus on the more dynamic and challenging aspects of our lives.
In our next article, we will talk about how to modify bad habits and turn them into good ones.
Kevin Gibbons is a Cash Flow Planning Expert, the Vice President of The Savvy Life and co-author of the international bestseller Living The Savvy Life. For the past eight years, Kevin and Savvy Life Founder Melissa Tosetti have worked with over 625 individuals and families to create Spending Plans.
To learn about how Kevin and Melissa work with clients to create Spending Plans, visit The Savvy Life’s Home Page. If you’d like to learn about how they work with financial advisors and their clients visit: The Savvy Life Advisor’s Page.
