If you’ve ever set a long-term goal, such as losing weight or running a 5k marathon, and actually accomplished that goal, then you probably created some habits to get you there. Sheer willpower is not enough day in and day out.
A habit takes time to form, some say 21 days, some say 66, and initially you ARE using your willpower to get it started. Enthusiasm and motivation are high at the beginning of a new activity, so the most optimal time to form a habit is right at the beginning.
About ten days into a new diet or running program, your excitement starts to wane and you wonder why you ever thought it was a good idea. But, if you’ve been tracking your calories every single day, or putting your running shoes on first thing every morning for those first ten days, then it becomes easier to continue and feels weird to not do it. You start acting more out of habit than from motivation.
Habits are a way for your subconscious to take over so your brain has less decisions to make and can go on autopilot, leaving room for other thoughts and reactions. Imagine if you had to decide on every action you took all day long. Thankfully, habits clear up a lot of brain space for more important things.
For me, I get up every morning and automatically stumble to the bathroom and brush my teeth. I don’t have to decide if I’m going to do it or not. I’ve been doing it first thing my whole life and it would just seem weird not to.
So, let’s talk about how habits can help you stick to a budget and reach your goals.
Payday
Let’s start where the money trail begins. Before payday even comes, you should have already determined where your money should be going with your budget. And, if your employer offers it, you should set up a direct deposit straight to your bank account.
This is one habit your subconscious doesn’t even have to be involved in anymore. You wake up Friday morning, or the first of the month, and your money is already in your account. Nice!
Savings Habits
But, another habit that you can set up to be automatic and clear even more brain space is savings. Maybe you’ve decided to save 10% of your take-home pay. You can fill out that direct deposit form to say that you would like a certain amount to go to your savings account and the rest to go to your checking account. You will get so used to not seeing that money that it will begin to accumulate without you ever missing it. Yeah, right.
Even if you are on the debt-free path and are putting all your money towards paying off your bills, you will still need to have sinking funds, so you can direct those amounts to your savings account.
Spending Habits
Think of ways you spend money that you would like to change, like eating out or driving through your local Starbucks. So much of our spending is just a habit, but we think that we don’t have any willpower to stop.
According to The Power of Habit by Charles Duhigg, creating a new habit is best done by replacing part of an old habit. You can either change the cue that prompts your behavior, or use the same cue, but take a different action.
Change the Cue
If you have a habit of driving through McDonald’s on your way home from work or school, then you need to change the cue. Try driving home by a different route that doesn’t pass by McDonald’s. Do this for several days and soon you will no longer feel the urge to stop there.
Or, if you always pay with your credit card when you are shopping, and it’s getting you in trouble, then leave the card home and only take enough cash with you to make your day’s planned purchases. Your action will change, how you pay, and you will most likely spend less with cash.
Make it convenient
Maybe you want to save money by not going out for lunch everyday at work. It’s a real drag having to pack a lunch every morning, so make forming this habit as easy as possible. Buy all the stuff you need on the weekend. Pre-prep whatever you can. Buy simple, convenient items at first that can just be thrown together quickly before you run out the door. Purposefully make extra for dinner each night and pack it up right away and leave in the fridge to grab the next morning.
You can change your Starbucks habit by setting your Keurig up the night before and adding your own fancy stuff to your coffee every morning.
The point is to become aware of how and when you spend and find ways to replace these habits with new and better ones that work to get you closer to your next goal.
The Monthly Budget
If you can designate one day a month to set up your monthly spending plan, this habit will keep you on track to reach your goals. Your budget may not change much from one month to the next, but just reviewing it and making slight tweaks will motivate you to keep going and you will get excited to see the progress that you are making and how much closer you are to accomplishing another goal.
Use this day to write out your checks for the month, or to schedule online payments. If you have a goal tracker, like a graph on your refrigerator door, you can fill in the next marker.
Cash Envelope System
Another habit to help you stick with your budget is to use the cash envelope system. Each payday, make it a habit to fill those envelopes to keep you from overspending on things like groceries, entertainment, and miscellaneous spending money.
You will soon be used to not only using cash for purchases, but will also form the habit of only spending the designated amount each month for each category.
Change the Context
In Atomic Habits, James Clear talks about how small changes in context can lead to changes in behavior over time. The small habit of walking into the grocery store with a limited amount of cash in your envelope will eventually change the way you shop for good. Your behavior changes so that you rarely shop without a list and are only buying what you need and not being distracted by impulse buys.
Limited Willpower
Since willpower really is limited, help yourself while you are forming new habits by avoiding situations that require self-control. Stay out of the mall and away from new car lots. Leave your credit cards home and stay off of social media if it makes you feel like you need to keep up with the Jones.
Remember, habits take time to form, so give yourself a chance to get them going by having a firm plan of action, removing the temptation or distractions, and by celebrating your progress often.