Money Habits: How They Form And How To Break Them

8/18/2021 6 minute read

Learn more about how our money habits are formed.

We all have money habits to contend with in our lives. Some of them leave us without money to cover emergencies while others hurt our finances enough to block big dreams like owning a home. Just like other habits we develop in life, our money habits can work against us and be a source of stress.
Money Habits: How They Form And How To Break Them
Need some good news? All habits can be broken. The first step is recognizing where our habits come from.

Where do we get our money habits?
For each and every one of us, our experiences and choices add up over time. Our money habits come from:
1.  Family
A lot of what we learn about money comes from what our family modeled for us when we were growing up. Whether intentionally or not, they taught us a lot about money. Was your family frugal or frivolous? Was money talked about in a calm, open way or was it stressful? Was giving to others a priority in your household? How our family interacted with money has definitely impacted our habits and the way we view money today.

2.  Personality
We’re all wired differently. Our passions, fears and dreams are unique. Even siblings growing up with similar experiences may perceive those experiences very differently. That’s why we may have different money habits than our family members.

3.  Culture
We’re bombarded with thousands of advertisements on a daily basis. Those ads can make us feel like we aren’t good enough until we buy their product, and that can plan a role in developing our money habits.

Once we are aware of our habitual motivations we can begin the work of replacing the habits in our lives that are working against us with habits that will empower us. Here are some ways to increase awareness of your money habits so you can begin to develop new habits that will help you reach your goals.
1.  Spend with a plan
If you don’t have a spending plan, your money may disappear and you won’t know where it went. Many of us live on more than we make and use alternatives such as credit cards to cover the difference. But if you make it a habit of keeping track of how much you are spending, it can be the first step in building some financial slack.

2.  Thoughtfully spend
Forty-five percent of Americans say they’re spending more during the pandemic. One study found that nearly three out of four people said buying something impulsively during the pandemic has positively affected their mood. This is called emotional spending, and we’ve probably all done it at some point. It can feel good to reduce our stress with a little shopping, right? But that hit of happiness is temporary. If we want to feel at peace we may want to consider creating a new money habit which focuses on our long-term financial goals without letting feelings, people or a pandemic get in the way.
If you had to choose one to start which should it be?
Probably the habit of thoughtlessly saving. This money habit brings peace of mind as you build financial slack to pay for unexpected expenses. Imagine a rainy day in the future where your emergency fund helps you turn a crisis into a minor inconvenience.

For help getting started visit one of our Financial Health Centers. We’ll help you get started with a plan tailored just for your specific needs.

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