Incremental Habit Changes for Money

Tue, Aug 24, 2010

Budgeting, Financial Advice

One of the largest challenges of turning around a tough financial situation is the size of the task. When everything is a mess, it is hard to see anything but a towering mountain of debt, expenses, and numbers that sound completely unrealistic. Breaking everything down into smaller pieces is the best way around this sense of intimidation. Going through the pieces one by one makes things more manageable and improves your habits and discipline at a realistic rate.

Identify High Impact Changes. Saving on buying coffee out of the house is nice, but you must face your big money issues to make meaningful changes. This comes down to saving more, paying off debt, and things like that.

Put It Into Numbers. More specifically, this will mean putting it into percentages for many things. Instead of saying you want to save more, tell yourself you want to save 30% more, for example.

Set a Course for Success. Going back to the savings example, be realistic by saying you will save 5% more for two months at a time in order to get to the 30% number in a year. Saving 5% more is a different story psychologically than going from 0 to 30% overnight. Realistic, incremental changes like this lead to success.

Do Not Plan Too Much At Once. Usually one habit at a time is more than enough. That one habit should be walled off from the rest of your financial life and under no circumstances should you break the rules of the new habit you are trying to develop. Whatever goes on apart from that habit is one thing, but do what you must to protect your new financial self. This is the seed of the new financial you and it will continue to grow with each new habit you implement.

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