We all have bad financial habits. Every day we have a choice to continue with these habits or to break the cycle. It is not easy, but a habit-breaking process gives you the best chance of success.
Some examples of bad financial habits: spending too much, failing to say no, missing payments, or focusing too much on either the present or the future at the expense of the other. The truth is we can all make better financial decisions, but our habits often lead our behavior astray.
Recognize Your Bad Habits
The first step is recognizing which habits don't benefit you. Each bad habit fulfills some need, so simply cutting it out often isn't enough — you need to replace it.
Find a Good Habit to Substitute
If a lawyer always overspends with a credit card, a good replacement habit might be withdrawing a set amount of cash for spending and sticking to it.
Cut Out Triggers
Identify what triggers the bad habit and remove it where possible — unsubscribe from shopping emails, remove bookmarks, and mitigate what you can't fully avoid.
Automate
Automating savings transfers on payday removes the moments of weak willpower that let bad habits take hold.
Surround Yourself with Supportive People
Who you spend time with influences your spending. Being intentional about your circle — or leaning on a financial planner for support — can reinforce good habits.
Visualize Yourself Succeeding
A visual reminder of your goal, like a photo of a home you're saving toward, can be a powerful trigger in the opposite direction of temptation.
Accept That You Will Fail, And That Is Okay
The key isn't avoiding failure — it's responding to it by reflecting on what happened and getting back to the process. Each successive day of the new habit makes it easier to continue.
Final Takeaways
After creating a process — recognizing bad habits, identifying replacements, cutting out triggers, automating, finding support, visualizing success, and accepting failure as part of the process — you are far more likely to succeed in breaking away from bad financial habits.
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