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Enforcing new money habits

With the dawning of a New Year, everyone starts the year fired up about your New Year’s money resolutions.

Kicking bad money habits would be more beneficial than kicking bad lifestyle habits, though you may feel that you will only be able to stick with your money goal for an average of six weeks before throwing in the towel completely.

This shows just how challenging turning over a new leaf can be, particularly if your efforts revolve around your finances. Sticking to a money resolution will be harder than giving up social media for a year, and even a diet resolution would be easier to maintain.

Clearly there’s no one-size-fits-all formula that can guarantee success for a New Year’s resolution, whether you’re trying to give up your weekend TV binges, get in shape or get your sweet addiction under control. But there is something that may help improve your chances: making the actions needed to achieve your goals so ingrained in your routine that they become, essentially, hard habits to break.

Here are a few mind-over-money tips that will hopefully, in time, make good financial behaviors feel like second nature.

  1. Focus on the Big Picture Payoff 

You’ve likely heard this advice: In order to make a big goal feel more manageable, break it down into specific mini-goals that help you benchmark your progress over time. That’s helpful, practical advice, but it’s also important not to forget what you’re ultimately trying to accomplish and connect it to what you value—otherwise, it may be harder to maintain motivation for the long haul.

Make a change without thinking about how difficult it would be and how it was connected to what you actually value. If you decide, for instance, to save an extra Rs.5000 a month, without understanding the bigger purpose behind that habit you may start to resent any belt-tightening you might need to do. Are you doing it because you want to be covered with a well-padded emergency fund if disaster strikes? Or because you want a house that your family can grow into? Knowing the answer can help you stay focused.

  1. Make Your Habit a ‘Do,’ Not a ‘Don’t’ 

One of the reasons money goals tend to feel so difficult is because we often focus on what we shouldn’t do, for example, “I’m going to spend less!” But you can’t ingrain a habit that involves not doing something. It is important to frame financial goals positively in terms of actions you perform, rather than negatively, in terms of things you’re not going to do. For instance, instead of saying, “I’m going to shop less on the weekends” spin that into something like, “Every weekend I’ll find a free, fun activity to do.” 

  1. Find a Cue That Supports Your New Habit 

If you’re not even sure where to start when it comes to forming a new habit, consider identifying a cue that can help remind you to implement the behavior you’re trying to ingrain. Cues can be a time of day or place, but they can also be an emotion, the presence of certain people or some other action or activity you already perform on a regular basis. Cues can be a good way to form a habit because there are many different ones within your environment to choose from. Say, for instance, you’re striving to get better at staying within your budget. You could choose lunch—a time that often encourages splurging—as the moment that signals when you should spend a few minutes tracking your expenses. Or you could opt to check your budget immediately after you read the news every morning. Or if you’re trying to save more, perhaps seeing when your paycheck is directly deposited is the trigger to immediately transfer money into your emergency fund. The more of these cues you think about, the more likely you are to succeed at doing the habit.

  1. Remove Roadblocks Before They Happen 

Consistency is key to forming a habit, so if you know there are obstacles that could potentially disrupt that consistency, make a plan to overcome it. For example, say you decide in 2017 that you’re going to have coffee at home every day rather than buy an expensive cup from the coffee shop. Think about what could stand in your way. If your excuse is that you always feel rushed in the morning, what can you do to remedy that? Perhaps it’s setting your alarm to wake you up five minutes earlier. Having a strategy in place will make it easier for you to follow through on your good habits.

  1. Encourage a Group Habit 

Know someone who has the same financial goals as you? Enlisting an accountability partner, like a friend or relative who also wants to build better money habits, can help give you a support system. You would be more likely to stick to a financial resolution if you talked about it with others. Indeed, even just talking about your money behaviors on a regular basis could be the first new habit that you both try to form together. Make an appointment to check in with each other every week, whether it’s via text, or in person.

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