Most people, to one degree or another, are influenced in their financial routines and habits by factors such as where they were born, the way they were raised, or the attitudes of their parents and friends about money.
For some, this means good habits like saving, living within their means, and avoiding debt. Conversely, others may take on more debt than they can reasonably manage or fail to plan for a secure financial future for themselves and their families.
Many routines become habits at a very early age and evolve throughout our lives, shaping us into who we are. They can be formed because of the people with whom we surround ourselves, groups we join, universities or churches we attend, or our individual experiences and circumstances. Bad financial habits, especially long-held ones, can seem impossible to overcome, but they must be in order to build a secure financial future. The big question is: how do we change those bad habits before it’s too late?
Identifying Our Bad Habits
First, and most importantly, you must identify the habit or routine you want to change. For many of us, that means spending. We’ve all heard success stories from people who saved money and paid off debt by making small changes in their daily routines - teachers who gave up their $5 morning lattes or clerical employees who began packing their own lunches. These success stories are based on a simple principle: in order to fix a problem, you must identify it first. Once you identify the habit that is adversely affecting your finances, you can begin the process of changing it.
Some people may need a little more encouragement to change a bad habit. Resentment about giving something up can derail your plan to change. It is also hard to be patient and allow your changes to impact your financial situation because results rarely appear overnight. That’s why so many do-it-yourself investors mistakenly chase short-term gains and pay the price with insomnia-inducing levels of volatility and risk.
Set Small Goals
If a habit is proving especially hard to change, set small incremental steps and reward yourself as you meet each new milestone. Using the latte example, decide that once a week or once a month, you will indulge in your old favorite instead of cutting it out entirely. Set aside a special account for an evening out or a weekend trip. Individual goals and circumstances vary, so choose something that will leave you feeling accomplished instead of deprived.
Seeking the assistance of a professional financial advisor is one of the soundest decisions you can make when you want to identify and change bad habits where money is concerned. The objectivity of a third party is essential in helping you understand those things that are holding you back from reaching your financial goals. More importantly, a skilled advisor can help you see these habits as part of an overall picture that includes your spending, amount of debt, and saving for retirement. They can also point out habits you may have never realized you had and the positive consequences of changing them now rather than later.
To discuss your own financial habits and identify areas where you can make adjustments to improve your overall financial picture, request a call with an advisor at Retirement Advisors of America.
Disclaimer: This blog is intended for informational purposes only and should not be construed as individual investment advice. Actual recommendations are provided by Retirement Advisors of America following consultation and are custom-tailored to each investor’s unique needs and circumstances. The information contained herein is from sources believed to be accurate and reliable. However, Retirement Advisors of America accepts no legal responsibility for any errors or omissions. Investments in stocks, bonds, and mutual funds may increase or decrease in value. Past performance is no guarantee of future results. Any of the charts and graphs included in this blog are not recommendations for the purchase and sale of any security.