We all have habits.  Some are good, like exercising regularly and some are not so good, like the biscuit or chocolate bar late in the afternoon to “keep us going.”

The thing with habits is they are just that; habits.  Often we’re not even aware of them.  I have a habit of fiddling with my watch strap.  I didn’t realise how often I did it until my watch had to go into for repairs.  For the first few days, I kept looking at my wrist feeling as if something wasn’t quite right.

We have money habits as well.  To improve your financial situation, to get better outcomes, you need to be aware of those money habits.  And some of them might need to change.

Here are some of the troublemakers – and some ways to deal with them.

Spending when you’re emotional

This is so easy to do!  Emotions cloud our judgement and we’re more likely to end up with buyer’s remorse (or a hangover), depending on whether your emotions take you to the shops or a bar.  The spending makes you feel good at the time.  But once that wears off, reality sets in and you realise it wasn’t such a great idea.

How do you break this money habit?
Find something else to do when you get emotional!  Go for a walk.  Call a friend.  Stand in the garden and scream.  Do whatever you need to do to release the emotion that doesn’t involve you using your credit card.  If you can’t resist hitting the shops, take someone with you and give them permission to say, “No don’t buy that.”  Set some limits.

Lending money to friends and family

They say the easiest way to ruin a friendship is to go into business or lend money to them.  Be really careful about this one.  If you’re going to lend money, make sure it’s money you can ‘afford’ to lose if it doesn’t get paid back.  Can you just give them the money instead?  If you really feel you have no choice then make sure you get the loan documented: include repayment amounts, time frames – try and step back and be impartial.  This may be enough of a deterrent for your friend not to ask for the loan at all.

How do you break this money habit?
If you don’t have the money, you need to say no.  That includes if you do have the money but it’s flagged for another purpose.  If you do have the money, and you really want to help your friend out, gift it to them.  Or come up with some other way you can help that doesn’t involve your personal money.

Always paying the bill

While you may think this is just you being generous, it can become very awkward for some of your friends.  They can feel guilty that you always pay.  Or resent the implication that they can’t pay.  They may want to treat you and never get the chance.  The flip side of course, is that it becomes an expectation.  Are your friends spending time with you because they like you?  Or because you always pick up the tab?  What impact is this having on your own finances?

How do you break this money habit?
Stop paying!  When the bill comes to the table (or you go to the counter to pay), simply pay your share, or whatever you have agreed with your friends.  When I go out with my girlfriends, we don’t even think about it, whether there are two of us or 10, we just split the bill evenly.  It makes life and the evening really easy.

Comparing yourself to others

This one can have multiple applications, but let’s just stick to money for now.  Do you have to have the latest smartphone because your best friend has one?  Do you have to have a swimming pool because your neighbour has one?  Once you start playing the Keeping up with the Joneses game, it’s very hard to stop and the stakes keep getting higher.  And, so can your debt levels as a consequence.  Also remember, you may be keeping up with the Joneses, but the Joneses could be broke!

How do you break this money habit?
Decide what’s enough for you. Once you know what’s really important in your life, it’s much easier to make wise spending decisions.  This gives you your own measure of success, not someone else’s.  And that’s a powerful thing.

Being an ostrich

Burying your head in the sand and ignoring your financial situation is common, and not a good habit to have.  Usually this happens when you know in your gut that your finances aren’t good, but you’re afraid or don’t know how to deal with it.  Ignoring the problem isn’t going to make it go away – it’s more likely to get worse.  The longer you keep your head in the sand the harder it becomes to pull it out and fix whatever needs to be fixed.

How do you break this money habit?
Start with a deep breath, then look at your bank account, credit card statement, mortgage balance.  Make a list of what you think your income and expenses are for a month.  Then pick up the phone and call someone who you know can help.  This may be a friend (make sure it is someone you can trust), your mother, or a professional like us.

If you are serious about discovering ways to change your money habits so you can reach your financial goals and build a happy and successful life, then drop us an email or click on this link to find a day and time that suits you to have a chat with us.  Best of all – it’s free!