Improve your spending habits one at a time

Coin jars
Coin jars

Breaking bad habits is never easy. That’s why they’re called habits – they’re the things you do when you aren’t paying attention. Habits form over time and are deeply ingrained in the way people live their day-to-day lives. But bad habits can be costly, especially if they’re financial ones.

Changing your habits isn’t something that happens overnight. It will take time and perseverance, but putting the work in now will mean you will reap the benefits later.

Whether you are saving for a down payment on a home or working toward consolidating and paying down your debt, this can help make sure you stay on track and feel good about your incremental progress.

Set realistic goals

It’s important to remember that good habits take time to form. Many people try to jump right into change, but the sudden shock of a whole new lifestyle can hinder progress. Shelly Smith-Acuna, dean of University of Denver’s Graduate School of Professional Psychology, stated the best was to tackle a bad habit is to set a realistic goal, U.S. News & Report noted.

“If you try to deprive yourself of too much, where you spend almost nothing, then you end up giving up, and you indulge, and then you overspend,” Smith-Acuna said. “So if you have an unrealistic plan, you’re probably going to lose control."

Set a long-term goal and form short-term goals that will help you work toward that. Business Insider explained a goal could be to allocate 10 percent of your earnings from each paycheck to savings. This is easy to set up through direct deposit, which can put that 10 percent in a separate account from the rest of your finances. But, without a goal for that account, putting that money aside could just feel like another expense. Instead, if you decide the money in that savings account is targeted to saving for a home, you will feel good about that money being put away.

If you have debt, a good goal is to pay it down or pay it off. The interest on debt, whether from student loans, credit cards or another source, can be expensive and add up quickly. Tackling debt is a great goal to help you start saving sooner. A personal loan can help with this. Use it to pay down a high-interest debt to reduce the amount you’ll pay over time. According to PsychCentral, writing down a goal or promise to yourself and keeping it in a place you’ll see every day will help to encourage you to pursue that goal.

Take note of your bad habit

Changing your ways begins with acknowledging the behavior you want to alter. Writing down the details of your bad habit will help you to become more aware of it, but don’t beat yourself up, either. Instead, identify where and when you tend to be most vulnerable. Are you more prone to overspend after you’ve been ‘good’ for a certain period of time? Or is it when you’re feeling sad or depressed? Try to identify which feelings and situations trigger bad financial decisions and create a plan to combat them, such as giving yourself small rewards or finding a more constructive outlet for your emotions.

If one of your bad spending habits is buying unnecessary items at the grocery store, find out how you can change this. Maybe writing out a grocery list and crossing off items as you go will help. Once everything is crossed off, head straight to the checkout line. Or, The Simple Dollar suggests only going to the grocery store after you eat a full meal. Shopping while hungry will make you more likely to buy extra junk food you don’t need. If you don’t have time for a full meal before you go shopping, at least take a healthy, filling snack with you.

Change your environment

Taking control of your environment will also help to end your bad habits. If you find your disposable income disappearing because of shopping apps on your phone, delete them. Staying out of some discount stores can help, too. Business Insider says buying poorly-made products because they’re cheaper can cost you in the long term. This is because, chances are, you’ll have to replace or repair them sooner than if you had invested in a higher-quality purchase.

A similar mode of thinking is the ‘disposable goods’ mentality. When certain stores offer items that are cheap, you can’t pass the deals by because they’re ‘practically giving it away,’ but do you need or even want the item? And if you do get it, will you use it once or twice and then have it either break and or just take up space?

Find out where you are nickel and diming yourself. For example, many people pay out-of-network ATM fees, but they can cost you nearly $5 per transaction. Change your environment by finding out where your bank’s ATMs are located and make the effort to go there when you need money instead of finding the nearest one. Or, be prepared and take money out the day before you think you’ll need it. Even if you don’t use it, you’ll be prepared for the next time.

Be consistent and recognize that small, positive changes can help build your discipline and improve your financial situation just as the small, negative ones can undermine it until your confidence and commitment have been eroded.

Published January 27, 2016

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