Breaking bad financial habits is not easy, but the first step is to examine your spending and identify a few habits that may be hurting your finances. You do not have to tackle everything at once. Start by changing one to three habits at a time.
For some people, the problem may be eating out too often or spending excessively on alcohol. For others, it could be impulse shopping, chasing designer labels or spending to impress others. Whatever the habit may be, write it down or make a note on your phone.
Recognise that these habits may not be adding meaningful value to your life or financial situation, and make a conscious commitment to change them. One effective way to stay accountable is to tell your spouse, a trusted friend or someone who can support you through the process.
Identify Your Triggers
Most habits, whether good or bad, are triggered by particular situations or emotions.
For example, someone may stop at a drive-through every morning for an expensive coffee and breakfast simply because they did not prepare the night before or wake up early enough. But why did they not have enough time? Perhaps they stayed up late watching Netflix, had an extra glass of wine or failed to plan their meals for the week.
Much of our spending can be reactionary. When you identify what triggers unnecessary spending, you can begin to eliminate or manage those triggers, making it easier to break the habit.
Replace Old Habits With Better Ones
One of the most effective ways to eliminate a bad habit is to replace it with a healthier one.
Mel Robbins, in her TED Talk on the “5 Second Rule,” explained how she used a countdown from five to one to interrupt her habit of repeatedly hitting the snooze button in the morning.
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Changing a spending habit may require more than counting backwards, but the principle remains the same. Replace unnecessary spending with productive alternatives, such as listening to personal finance podcasts, reading financial blogs or learning more about budgeting, saving and investing.
Know Why You Want To Change
If you are trying to pay off ₦1 million in debt, it is important to understand why becoming debt-free matters to you.
Having a clear reason, combined with a realistic plan that still allows you to enjoy life, can help you stay committed.
For many people, the consequences of poor financial habits constantly create stress and prevent them from living the life they want. Ask yourself: What kind of life do I want? What do I want to do, have and become?
Those answers become your “why” — the reasons you are willing to change your habits and improve your financial life.
Reward Your Progress
Milestone rewards can help you stay motivated.
For example, if you are trying to stop buying lunch every day and usually spend ₦3,000 a week eating out, you could limit yourself to one or two lunches out each month after successfully developing the habit of taking lunch to work.
You could also celebrate with a date night or another meaningful experience using only a small portion of the money you have saved.
The key is to choose a reward that motivates you without undoing your financial progress or creating another unhealthy spending habit.
As the popular quote attributed to Mahatma Gandhi puts it: “Your beliefs become your thoughts. Your thoughts become your words. Your words become your actions. Your actions become your habits. Your habits become your values. Your values become your destiny.”
Building a better financial future begins with the habits you practise today.