The longer I have been alive, the more I realize the amazing power of habits. Habits have the ability to improve or destroy our lives in a slow and methodical manner. Honestly, I have more bad habits than good ones. My real struggle is changing a bad habit into a good one. Once a habit is formed, it’s easy to maintain – the difficulty is starting the habit in the first place.
This article is going to dive into what a habit is, how to determine if it is good or bad, and how we can change our habits to work in our favor. Perhaps I should have named this article, habit hacking!
What Is A Habit?
For the most basic definition, Merriam-Webster defines a habit as:
a settled tendency or usual manner of behavior, an acquired mode of behavior that has become nearly or completely involuntary.
What I want to focus on is the involuntary aspect of a habit. Can you see the power of this? Imagine if you could set yourself up with a few involuntary financial habits that would help you get out of debt and start building some major wealth?
Winning with money without even trying? Count me in!
A habit is something that we routinely do – either intentionally or not. When you start to think about it, habits are very interesting actions we take on a daily basis.
For instance – I am willing to bet you dry yourself off with a towel every day the exact same way. Think about it the next time you get out of the shower. I am willing to bet that you dry off the same arm each time before the other. You do this each day without even thinking about it.
If you drive to work, you probably drive the same route each day without even thinking about it. You found the quickest way to get to work and you stick to it. When you get in your vehicle, you don’t think about what roads you need to take – you pretty much do it on autopilot.
Did you know you do the same thing with your money? You can either have good money habits or bad ones. Let’s figure out what type you have and if we need to change them.
Why Your Brain Forms Habits
When you do something over and over again, your brain understands that this is routine and you don’t need to spend a lot of time and energy thinking about it.
By automating your daily activities, your brain actually saves energy in the process! That grey matter in your skull is constantly looking at ways to improve processes and automation does just that.
How A Habit Forms
A habit is formed by doing the same thing over and over again. Through repetition, you will begin to train your brain that this is something important. Our brains are much more capable than we give them credit for.
By training our brain intentionally to our advantage, we can form habits that can increase productivity, improve our finances, and lose weight without even thinking about it!
How Many Days Does It Take To Form A Habit?
Maxwell Maltz, a plastic surgeon, published a book in 1960 called Psycho-Cybernetics that explained his belief that it took 21 days to form a habit. Conventional wisdom hooked onto this and it has been touted as being the standard time frame to form a habit.
Recently, a 2009 study from University College London came to the determination that it may actually take up to 66 days to form a habit.
What does all of this mean? It means that no one really knows how long it takes to form a habit and that each person is different. You can’t put every person in a box because we are all unique.
However, the way to form a habit is the same. Doing the same thing over and over again until it becomes automatic.
Creating A New Habit Is Easier Than Breaking An Old One
When many of us know we have a bad habit, we spend most of our time and energy trying to break that old habit. What if we could create a new habit that would replace our old bad habit rather than trying to fix what isn’t working?
Old Habits Are Embedded Deep Within Us
Take smoking for instance. Most smokers know they shouldn’t smoke and the majority of them would quit today if they could. Yes, nicotine is an addictive chemical but there is also a habit aspect to smoking.
If you can’t quit smoking cold turkey, you could switch to vaping, which is safer generally speaking, in order to transition off smoking entirely
Habits are difficult to break because we have spent so much time and energy into training our brains to perform a certain action. In order to break a habit, you would need to exert more time and energy into overcoming your trained response.
New Habits Use Less Energy But Require Focus And Repetition
Learning a new skill is easier than forgetting an old one. The same is true with habits. The more you practice, the better you will be.
For example, I am currently going through a program called Couch To 5K. It is an app on my phone that trains me to go from inactivity to being able to run five kilometers in about eight weeks (56 days).
Three days a week, at a certain time, a notification goes off on my phone that reminds me it’s time to go on my daily run. Reluctantly, I have taken the time to stop what I was doing to accomplish this task.
I’m in week three now, and each time it has been a little easier to get up and go run. The reason for this? I’m developing a habit! I’m training my brain to stop complaining and get up and perform this task. My brain knows I’m stubborn so it might as well tell my legs to start moving.
Replacing New Habits For Old Ones
If I was a smoker and every day after lunch I went out to smoke a cigarette, it would be very difficult to just stop one day. All I would think about is how bad I wanted a cigarette.
What if I replaced that habit with a new one?
A way to do this is to intentionally do something that replaces my old habit. After lunch, I could get into the habit of brushing my teeth and immediately walking up and down the stairs of my office 5 times. A short stint of exercise could be a great replacement for that cigarette.
Identifying Our Financial Habits
Now that we have looked into how habits are formed and how we can influence old ones, I’m going to apply this to our money.
In order to change the way in which we manage our money, we need to be sure we know what we are doing with it. If you don’t budget each month, you need to start – today! I have free budget printables that you can download here to get you started.
If you need a more detailed explanation of how to start a budget, refer to my budgeting 101 article here.
Once you have that budget in place, you will easily see where your money goes each month. From there you can decide what you are spending money on that adds value to your life and what you are wasting your time and money on.
Is Coffee The Culprit?
Everyone jumps on the anti-coffee bandwagon but it makes for such a good example. For instance, if you buy coffee every morning before work, implement a new habit that can replace it – to save money.
Set your alarm for 10 minutes earlier so you can make a pot of coffee at home for a fraction of the price. They even have coffee makers that start each morning automatically on a timer so you can prepare it each night before you go to bed.
If you still like having that coffee in the car, invest in a coffee mug that will keep your beverage hot all the way to work.
Focus On One Habit At A Time
When you identify several financial habits that need to change, fight the urge to try and create a bunch of replacement ones. The shotgun approach to life and finances rarely works. Rather than trying to do everything at once, which usually produces poor results, focus on one thing at a time and do it well.
This is exactly how we pay off debt. Don’t try to pay everything off at the same time, make minimum payments on all of your debt except the main one you going to pay off first.
Use Technology To Improve Your Habit Hacking
Similar to my running app, if you want to form a new habit, create an alarm or notification that reminds you to do it.
Technology runs most of my finances on autopilot so I don’t need to worry about my faulty memory or lack of good habits taking over. I do this by setting up an auto bill pay for my bills and automatically invest money from each of my paychecks.
My retirement portfolio looks better each day because I set up the automatic deductions that do not rely upon me having to write a check to my retirement fund.
If you’re worried about having to form a new habit to control your finances, see what technology is available to help you accomplish your goal!
Use Automation To Track Your Retirement
If you’re looking for a good free program to track your retirement, I highly encourage you to check out Personal Capital. Personal Capital is a great resource that I have personally used.
The company provides free software that puts all your investments and finances in one place. You can track your net worth, your cash flow, your portfolio, your investments, and more. Click here to sign up for free and tell them I sent you 😉
Wrapping It All Up
Habits have the power of automating your daily activities without much thought. Use this amazing power to create new habits in your life that can replace the bad ones.
Habits are small intentional acts repeated over time that will help you reach your goals much faster.
Tap into the power of your brain and take advantage of the automation process you already have inside of you!