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- People can cultivate financial stability by paying attention to spending habits that happen automatically.
- Identify spending patterns by asking yourself questions such as, “What triggers my spending? Emotions or rational thinking?”
- To develop new habits, choose small actions to take consistently. For example, you might wait 24 hours between making the decision to buy something and actually purchasing it.
It’s no shock to anyone that we are creatures of habit. So many things we do without awareness or attention; mostly because it’s just easier that way. Think of your level of awareness when you brush your teeth, shower, or put on your socks… autopilot.
This is no condemnation. It’s merely a statement of fact that most people act without true awareness in many ways, including making spending decisions.
It's proven that the success rate for retirement plan contributions is higher when people are automatically enrolled and must opt-out to stop their contributions. The numbers are staggering. Why?
Because of the automatic nature of the decision.
Savings or investing using an automated system is very useful and effective. But spending on autopilot is a pathway to trouble.
If you're struggling to accumulate wealth, it could be a result of your inattention to what drives your spending habits. If you’re a point-and-click buyer, overspending can happen quickly. And if you're a stress shopper, damage to your financial stability can occur in the blink of an eye.
How to Identify and Change Your Spending Habits
Consider the following questions:
- Do you have a budget that outlines where you devote your resources?
- Do you buy things on an impulse or do you think through the decision?
- What triggers spending? Is it emotional or well-devised?
- Do you equate possessions with success or happiness?
Being intentional is a matter of understanding what drives your current habits first. Then, install new habits that support spending according to your values.
In his book, Tiny Habits, B.J. Fogg lays out his research on why taking small steps will help you incrementally shift your mindless behaviors into those you want. It requires you to decide what you want and find a situation that will prompt an action.
Combining your desire or motivation with the prompt and your ability moves you to success.
Here’s an example. Let’s imagine that you're a point-and-click shopper who wishes to spend more mindfully. The prompt would be after you put something in the “shopping cart” but before you click on purchase.
Your habit could become something like:
"After I put an item in the shopping cart, I will take 10 deep breaths and consider whether this is something I truly value. Or I will get up from the computer and drink a glass of water."
The point? It's something to break the cycle between adding the item and actually purchasing it.
You might also remove your credit card information from all shopping websites. This would force you to get up, find your card, and enter the information manually to make a purchase. Again, you want to break the automaticity of spending on things you don’t truly value.
Another idea is to decide that any purchase over a certain amount must wait 24 hours before buying.
The same idea applies to in-person shopping. Instead, your habit could be waiting 10 minutes after you put an item in your basket before getting in the check-out line.
Replace unconscious spending with considered spending decisions. Next, track your monthly outflows to see the difference. As you see the success of your conscious and intentional spending, you’ll be able to increase those monthly accumulation accounts.
The more mindful and aware you are, the more you will find comfort and security.
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