This post is from GRS staff writer April Dykman.
Bad money habits, like other bad habits, can be tough to break. Relying on willpower alone to stop cold turkey makes us long even more for the Stuff or the behavior that we’ve forbidden ourselves. The focus becomes solely on what we can’t have, which sets us up for failure. We’ll lapse, feel guilty, and the cycle repeats. Think about people who lose 70 pounds on a carb-free diet, only to regain the weight, and usually more.
Another example is someone who shops and overspends because he feels depressed. He gets a temporary high when he acquires the new Stuff. Unfortunately, his depression will return and worsen when he starts to feel guilty for spending too much money on things he didn’t really want or need. Maybe he’ll vow to curb spending temporarily, but then the depression leads to shopping and spending again as he looks for that temporary high.
Each of us create patterns or habits that we fall back on in specific situations. In the example of the overspender, he feels depressed, so his habit to relieve the depression is to shop. This pattern is so deeply entrenched that “willing” himself to stop isn’t enough. Forcing himself to say no to shopping without changing anything else will fail because it feels like punishment, and he’s too accustomed to his patterns.
It’s a vicious cycle, but there are ways out of the loop that are much more effective than willpower. If willpower were the answer, the majority of Americans would be slim and fit with a six-month emergency fund in the bank.
Habit is habit, and not to be flung out of the window by any man, but coaxed downstairs a step at a time. — Mark Twain
Step one: Awareness
The first step to changing bad habits is to become aware of the habit. Most of the time we follow our well-worn patterns without giving much thought to how we got to the end point. In the case of the emotional over-spender, he might be shocked by his bank balance at the end of the month and wonder how he could have spent so much money.
If he sets the intention to become aware of when he is spending, he can start to ask himself why he is there in the store, spending more money than he should. He’ll start to recognize that he’s shopping because he feels anxious or sad.
This isn’t an exercise in self-discipline. The point is not to criticize himself for what he is doing or to feel like a failure. In fact, that is counterproductive and would prevent him from observing the pattern. The goal is to accept the impulses, not shut them down.
When we acknowledge a behavior, we draw our attention to it. With time, we become aware of our actions sooner and sooner in the chain of events and can understand the origin of the habits we want to change. Exposing the root of the problem eventually kills the bad habit.
Step two: Encouraging the opposite
The second part of the bad habit-busting equation is to encourage the opposite behavior. Note that this is not the same as distracting yourself with another activity. Encouraging the opposite means intentionally creating new habits and patterns that are the opposite of the bad patterns.
In the case of the emotional over-spender, the opposite of spending is saving. He could find ways to encourage himself to save money, perhaps by setting a worthy goal like saving an emergency fund or putting money aside for a vacation. When he’s depressed and needs to get out of the house, he could turn to low-cost or free diversions so that he can keep saving money. The best money-saving activities are the ones that give him the same high that shopping temporarily gave, without the lows that follow overspending. With enough practice, his default action when he’s depressed will become one of these other activities.
There isn’t one solution that will work for everyone. What works for one over-spender won’t necessarily work for another, but with awareness and trial and error, you can discover what works for you. It’s a way to sneak around our bad habits and introduce positive ones, and it’s certainly a kinder approach than punishment and self-criticism when willpower fails!
GRS is committed to helping our readers save and achieve their financial goals. Savings interest rates may be low, but that is all the more reason to shop for the best rate. Find the highest savings interest rates and CD rates from Synchrony Bank, Ally Bank, GE Capital Bank, and more.