This likely includes money habits!
If you are looking at your money habits, and realizing that you could be doing something differently, now is the time to do something about it.
You can change your bad money habits, and replace them with better habits that will eventually lead to financial freedom.
1. Acknowledge Your Problem Areas and Take Responsibility
The first thing you need to do is be brutally honest with yourself. Look at your spending habits, and consider what triggers your spending. My husband loves getting a good deal. However, he’ll spend hours on Amazon or eBay looking for “great deals.”
When you’re looking for a reason to spend money, chances are that you will, in fact, spend money. I am willing to be more extravagant than I should be when away from home. I’ll pay ridiculous amounts for things because “I’m on vacation.”
Before you can make changes, you need to look at your spending habits, and be honest about the way you interact with money. Only when you acknowledge your problems and take responsibility for your mistakes can you begin to move forward.
2. Sort Out Your Financial Priorities
Now that you recognize your problems, it’s time to decide what’s really important to you. You need to sort out your financial priorities. If travel is more important to you than watching TV, cancel the cable and reduce the times you go to the movies each month; plan to put the money you save in a vacation fund.
Stop and think about what you really value, whether it’s more time with your family, the ability to help others, or the goal of returning to school for an advanced degree. Think about how your bad financial habits are keeping you from reaching your financial goals. This will provide you with motivation to improve your money habits.
3. Make a Plan
Next, you need to make a spending plan that fits with your new spending priorities. The best way to overcome a bad financial habit is to replace it with a good one. Make a plan that will help you address your financial goals of getting out of debt, saving for retirement, and enjoying yourself a little bit now.
Not to long ago, my husband expressed a desire to pay off our private student loans ASAP. We decided to make it priority, so we shifted our spending plan to reflect that desire. Now, when he’s considering buying a new action figure for his collection, we consult our plan.
Since we rate paying down that student loan debt above getting another trinket, we won’t get the figure if it will alter our ability to accomplish the more important financial goals we have.
4. Continue to Encourage Yourself
You won’t replace your bad financial habits with good habits overnight; it takes hard work and effort to make a permanent change. You can accomplish this, though, if you remember to stay focused, and find ways to reward yourself. Set milestones in your debt pay down or emergency fund build up goals.
When you reach a milestone, you can reward yourself with a small treat. Also, if you get off track, don’t assume all is lost. Take a deep breath and get back on track as quickly as possible.
You can change your money habits if you are willing to recognize your shortcomings, and make a plan to replace them with better money habits.
What steps have you taken in the past to get rid of your bad money habits?
Photo by hmvh