Everything you do with your money is a habit.
Have you ever noticed this?
The way you spend money - do you always use your debit card? Your credit card? Cash? Whenever you go out to buy something or shop online?
The stuff you buy - the brand, the quantity, the exact type. Rarely do you ever step out of your normal here to get something else, right?
The stuff you won't buy is even a habit. The way you save money. How much money you save. Where you save your money.
And honestly, very few of us ever notice that we have these habits, or automatic actions. I have spent countless hours just watching people. It's just something I absolutely love to do, just watch what other people and observe. I've also been reading the book Atomic Habits by James Clear.
While reading this book, things that I notice about others and even things I've noticed about my own personal habits have really had a light shone on them. So I wanted to talk more about our habits with money.
My own personal habit is to always use my debit card to buy anything when I do it in person and to use my credit card when I buy anything online. I rarely ever use cash. But these are just my own personal habits around money. Take a moment and see what your habits are with spending money.
Something in the book that really struck a chord with me is the two minute habit. Basically you do something for two minutes and then stop. And it got me thinking, how can we apply this to our money? How can we build new habits with our money.
When you think about the habits with money that most people are trying to change, for me, 3 things come to mind: debt, keeping track of our finances and spending less money.
So lets look at these for a minute and how we can change them.
Hiding your credit card
Cutting up your credit card
Stop using all forms of credit and accumulating more debt
Making a list of all of the debt that you owe to everyone
Paying an extra payment each month on just one debt
Keeping Track of Your Finances
Read every receipt and paystub you receive
Logging into your bank account daily to see what is happening
Writing down every instance that money comes into your bank account
Writing down when you spend money, where, on what and why
Creating an in depth budget and sticking to it
Spending Less Money
Create a list of what you need to buy and only buy that when you go to the store
If you have something you want to buy on impulse, pause for 2 minutes, walk away from the item and if you still want it after those 2 minutes then buy it
Now pause for 24 hours and walk away from the item you want to buy. If after 24 hours, you still want it, then buy it
Create a pros/cons list for why you want this thing you are planning to buy. If it actually passes your list, then buy it.
Create a savings account and save for the purchases of things you want that aren't actual needs right now
Saving More Money
Save $1 a month
Save $10 a month
Save $50 a month
Save $100 a month
Save $200 a month
In the chart above, there are 5 steps going from easy to hard. You can't start a new habit if the easy task is something that you just aren't going to do and it basically takes longer than 2 minutes. Now when it comes to your money, there is very little that takes more than 2 minutes. It takes seconds to make a decision that you want something. It takes seconds to swipe your credit card. It takes seconds to hit submit on that order on Amazon.
But the tasks in the easy column are something that you can do to start building the habit towards something new with your money. Is there something else in this chart that you would include?
Start with the easy column and work your way over to the hard column and you'll have built yourself a brand new habit with your money. As humans we sometimes need the incremental steps like this to build a new habit. If we start at the hard column, after a few days or weeks, we will stop because it's just too hard.
There is a reason why we don't start with saving hundreds of dollars a month or making multiple extra debt payments a month or creating a budget and actually sticking to it as a first step. For most people it just doesn't work. For some it may, and you may or may not be one of those. But we have to start somewhere easy so that we can start the process of building the habit and then build onto that habit.