I was listening to the car radio recently and two commercials that aired back-to-back struck me. The first one was for some expert who could teach me how to flip houses for profit. The one that followed was for a local casino. Both ads are promoting gambling. Not sure what it means, but start paying attention to the extent to which many people are engaging in speculative behavior these days. Please don’t be one of them when it comes to your future security.
“Those who do not remember the past are condemned to repeat it.”
– George Santayana
Spanish Philosopher (b. 1863 d.1952)
A habit is something you do regularly or a fixed way of thinking. A habit is triggered by an external stimulus. For example, if you brush your teeth when you go to bed at night, it’s probably a habit triggered by the act of getting ready for bed. Or if you immediately feel fear when your tax documents start arriving in the mail in January, it’s a habit triggered by the mail. Some habits are negative – you know they are not in your best interest, but you do them anyway – and some habits are positive – they are good for your overall well-being (like always calling your sister on her birthday).
We all have money habits too. Most personal finance books are filled with suggestions to fix negative money habits – don’t overspend, eat out less often, keep a budget. These are not bad ideas, but I wanted to write about positive money habits instead. Here is a list of positive money habits I’ve observed from clients over the years. Can you add to this list?
• Observe the 24-hour rule before making a big purchase
• Pay bills on the 10th and 25th of each month
• Put loose change in jar and use accumulated savings for fun experience with wife
• Put every $5 bill that you receive in change into savings jar
• Do an annual net worth review on New Year’s Eve with spouse; celebrate success with bottle of bubbly
• Call wife before spending more than $20
• Review investment accounts at end of each quarter and rebalance if necessary
• Check Mint before using debit card
• Pay extra on mortgage every month so that an extra full payment is made over the year
• Shop with a grocery list; never buy anything not on the list
• Give two items your currently own to charity for every new one you buy
You can set up triggers to create positive money habits. For example, tape your annual money goals to your credit card so that every time you use your credit card, you’re reminded of the bigger goals. Or, you could put positive money habit reminders on your calendar for every payday to remind you, for example, “transfer $XX to the family vacation account. “
Creating positive habits takes time and we are not perfect. If you make a small mistake and don’t follow a habit you’re trying to create, give yourself a break and get back to the habit. Start small with a habit you know you can accomplish and do it for 21 days. Then try another one.
If you want to learn more about the power of habits and how to use them to your advantage, I suggest that you check out the website for James Clear (www.jamesclear.com). He is a wonderful personal development writer/coach and his free eBooks are valuable.