3 Steps to Changing Your Financial Habits

by Tracy · 20 comments


Raise your hand if you know you could be doing something to save a nice bit of cash each week but for some reason or another you just don’t. Maybe you have a hard time getting your act together to pack a lunch each week or somehow you never find the time to look for a cheaper auto insurance plan. Don’t be embarrassed if this is true for you, as almost everyone I know has these little, seemingly easy things that somehow just don’t wind up happening. If you’d like to conquer one of these items on your list, try my three step method for making a change in your habits.

Step #1: Figure out what is holding you back.

Pure laziness is not a detailed enough answer, as you can almost always find a good solution to a problem if you have enough information to work with. Take some time and give yourself a thorough question and answer session to identify what’s really holding you back. Note: Be friendly and kind to yourself when asking questions. Don’t go bad cop on yourself, because it’s not really productive.

For example, if you somehow never make the time to pack a lunch, think about all the reasons for not packing a lunch over the past week:

  • Ran out of bread.
  • Ran out of time.
  • Nothing seemed appealing.
  • Just plain forgot.

Or if you continually put off phone calls (my personal Achilles heel), your reasons might look like this:

  • Wanted to make sure I had everything at hand before I called.
  • Forgot until it was too late to make the call.
  • Wanted to wait until a time when I was sure I wouldn’t be disturbed.
  • Figured the lines would be way too busy on a Monday.
  • Figured Friday was too late in the week to call and Monday would be better.
  • My weird anxiety over making phone calls flared up.

Typing it out made me realize that some of my reasons for avoiding phones calls sound a bit ridiculous. I’m willing to share them though, because you probably have some rather silly reasons for not doing things too. I also want you to know that it’s not that big of a deal, as we all have our little quirks and weak spots. The thing is, unless you know the reasons you aren’t doing things, no matter how silly they seem, you won’t be able to make a workable plan to fix things.

Step #2: Make a plan to solve the problems that are keeping you from doing what you want to do.

Chances are good that once you understand and articulate the reasons you are not taking action, you’ll be able to come up with one or more workable solutions right away. For example, some solutions to the not packing a lunch problem could be:

  • Go grocery shopping every Sunday with a list.
  • Pack lunches in the evening as a part of your kitchen clean up duties.
  • Keep fresh and ready to go lunch choices at eye level in your fridge and pantry.
  • Start putting your keys in your lunchbox so that you won’t leave home without it.

For my problem with making phone calls, here are some solutions I’ve come up with and why they work for me.

  • Get everything ready the night before (old bills, checkbook, health insurance card – whatever information I’ll need to make the call as efficient as possible). Keep a pad of paper and pen along with my laptop on hand as I make the call. Breaking the task up like this makes it seem less intimidating. Having things ready to go first thing in the morning eliminates a reason for procrastinating. It also makes me feel more confident that I’ll come across as prepared and pulled together, which is important to me.
  • Make calls first thing in the morning on the day I’ve decided to do them. This might not be the schedule that efficiency experts would recommend, but as somebody who is resistant to making phones calls, I’ve found that I’ll let it slip my mind until after business hours if I don’t do them first thing in the morning.
  • Do my best to schedule calls for when I know I’ll be home alone. Again, do them first thing so that I don’t talk myself into putting it off because “the kids will be home soon” or some other reason. Give myself a pep talk that if the person on the other end of the phone thinks I’m a loser because I don’t have a butler to let the air conditioner repairman in, well, that’s their problem.
  • Plan to do something fun after I get the phone calls done to reward myself for biting the bullet and getting things done. I was resistant to this at first, because it seems like grown folks shouldn’t have to be rewarded for doing grown-up things. Then I decided that if it works, why not? I now usually plan on running fun, outside the house errands after I do my dreaded phone calls.

Step #3: Make the time to make this happen.

Until your new habits are well established, it’s going to take a conscious effort on your part to schedule the time you’ll need to make things happen. Even if it sounds silly to write “Saturday 4 pm: make a grocery list. Sunday 10 am: go to the grocery store” on your calendar, do it. In fact, it’s a good idea to write down a list of all of the things you need to do each day or week to accomplish your goals and cross them off as they are finished. This not only serves as a helpful reminder, it’s also a good way to measure your progress.

I’ve found that it helps to break tasks down into chunks. For example, I have a separate task for gathering documents for a phone call the night before and the actual phone call itself. Now, there isn’t a reason why I couldn’t just lump the two together into one task, but the truth is, most of us only have so much mental energy to go around and it’s psychologically easier to do a task if a lot of the prep work is already out of the way (and easier to do the prep work if you know you can take a break after!) Another example of putting this in action would be cutting up and bagging fruits, veggies and cheese for an entire week’s lunches so all you have to do is grab one of each and put it in your lunch bag each night.

Sometimes you can take advantage of proximity and momentum to get tasks done. That’s why packing your lunch when you’re already in the kitchen putting away dinner works well for most people. That’s also why I make a batch of phone calls at the same time instead of spreading them out during the week. It seems to work best when you lump like tasks with like tasks to take advantage of momentum.

You should also consider when your mental energy is greatest to decide when to do tasks that require a great deal of willpower and/or concentration. Since I hate making phone calls so much and it tires me out, I plan to do those first thing in the morning when I am at my peak. Night owls might be better off waiting until later in the afternoon. It’s also good to accept that doing things that feel difficult or unnatural to you will be exhausting so try to balance it with things that you can do on autopilot immediately following.

Don’t feel like you have to rely on sheer willpower alone to make positive changes. Instead, understand your own personal reasons why the change is difficult, make a plan that incorporates your own personality and lifestyle instead and give yourself the time you’ll need to turn these changes into habits.

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{ read the comments below or add one }

  • James says:

    My weak spot is tracking what I spend. I just haven’t found an easy way to do it, and it’s easy for me to think that it isn’t really necessary because I’m still a teenager. Thanks for the tips!

  • My weak spot is tracking what I spend. I just haven’t found an easy way to do it, and it’s easy for me to think that it isn’t really necessary because I’m still a teenager. Thanks for the tips!

  • Stacey Walsh says:

    Indeed, you have put some valuable tips here. Your financial habits determine how secure you are. You should be sincere to achieve a financially contented life. Changing bad habits can change your financial standards. Be pro-active and focus on your goals.

    • David Ning says:

      I like how you put financially content rather than financially successful. It focuses on being happy (which is what we ultimately want), instead of focusing on gathering more assets.

  • Ashley Corn says:

    Changing your financial habits is not a rocket science, but it isn’t easy either. Managing your phone calls in daily routine will save your time and increases the earning too. It is good that auto piloting the tasks will save you time and manage your finances, but then, you need those auto piloting skills.

    • David Ning says:

      The theme of everything personal finance is that nothing is rocket science but still, it’s difficult to change.

      Taking the time to plan tasks so they go in auto pilot is a great way to build better habits. Slow and steady is the name of the game when it comes to making long term improvements.

      Thanks for chiming in!

  • Indeed, you have put an extremely valuable article here. There is a common adage that people should actively walk an extra step forward instead of waiting for things to happen. Similar applies to the financial life. With so many problems are mounting on our life, we cannot be lethargic in waiting for someone to solve our problems. We should be responsive and committed to have a balanced financial life.

    • David Ning says:

      Taking action is definitely priority number one. If you keep working at it, you will eventually get to the destination no matter how inefficient you are. On the other hand, those who won’t make the first step will never get there, no matter how much “potential” there is!

  • David Chen says:

    Great article! My mom always said no matter what comes your way, don’t make excuses. When it comes to finances, owning up to what holds you back is the first step to successful savings and frugal living.

  • Desi Hisab says:

    The best way to change financial habits is to reduce the bouts of procrastination. Let the future problems don’t concern you.

  • lifeisdynamic says:

    You wrote this with me in mind David – you must have! My biggest humbug is putting-off phone calls I know will settle a nagging issue; simplify my life by having the information needed to make a decision or even save me money by acting on the new information. Making phone calls is just one of my procrastinating problems. So I have a huge problem! I was never this way once – always straight onto sorting what needs doing. I do need to self-analyse and get on with breaking this self-imposed spell which now paralyses my life. Your advice to ‘wake up’ and face the demons is timely and probably the best information about frugality for me so far. Thanks for reminding me I am not some sort of freak just too kind to myself about things which I need to ‘grasp the nettle’ about and get on with it.

  • Pat S. says:

    I like that… Laziness is not an excuse! Although it is probably a frequent reason.

  • To do lists work for me – a new one each day – as long as I make sure the tasks on each day’s list add up to my yearly goals I’m good to go.

  • ImpulseSave says:

    It seems that for every excuse I can come up with, there really is a very simple solution. When I get down to it, and if I am going to be perfectly honest with myself, I am just being a baby and I need to act like a grown-up and get it done. It is so easy to forget that sometimes: that I am an adult now and I need to do the boring, stressful, responsible stuff all by myself. Thanks for the baby steps to get there!

  • Emily Hunter says:

    I am incredibly guilty of the procrastination as well. I used to be firmly convinced that I had to find the right time and create the perfect atmosphere to make something happen. What I found was that there’s never going to be a right time, but we’re going to make things work anyway. You’ve reminded me that I need to work on my resume! 🙂

  • Marbella says:

    I usually say “never change a winning team” that means about my private finances and family that I believe we have come so far that everything goes smoothly and financial planning is perfect.

  • As an entrepreneur I think it is most important to find out when you are your most productive with the tasks that add most to your bottom line and work your life around that. Dont make life an uphill battle, find what works and make changes to maximize it.

  • Jean says:

    I have to say I too have my bouts with procrastination every now and then despite making constant resolutions to attend to those tasks that I detest most first before the less stressful ones. I also try to tend to those tasks first thing after I’ve had my breakfast as that’s when my tolerance level is at its highest and things get done much faster than they would later in the day.

    -Jean

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