Establishing good financial habits is within grasp

Establishing good financial habits is within grasp

Establishing good financial habits is within grasp 1157 788 Donna Skeels Cygan

We are in the dog days of summer. The days are often sweltering, we desperately need rain, and we’re wary as a new variant is causing COVID-19 cases to increase.

What can we do?

How about establish a new, healthy habit?

I recently read five books on creating good habits, and I share the wisdom of the authors of three of the books below.

Fortunately, the old opinion that we are morally weak or lack willpower if we can’t stick to a new habit has been tossed aside. Neuroscientists have learned that habits are stored in the basal ganglia portion of our brain, which is a part of the “ancient” brain. Habits do not occur in the prefrontal cortex, which is where logical thinking and analysis occur. In fact, when a habit is established, the brain stops fully participating. It is as though you are working on auto-pilot.

However, by using very deliberate actions (and the prefrontal cortex), we can change or replace a habit with a better habit. In “The Power of Habit,” Charles Duhigg describes the habit model as consisting of a cue, a routine (a behavior) and a reward.

If you want to replace a bad habit with a healthier habit, he recommends that you keep the same cue and reward, and simply change the routine (behavior) in the middle.

For example, let’s assume you start craving a candy bar each afternoon at 3 p.m. You realize the cue is actually boredom rather than hunger. (You need a break from work.) Perhaps you decide to get up from your desk at 3 p.m. as usual, but go for a 10-minute walk or do 10 minutes of stretching instead of eating a candy bar. If you are hungry, have a handful of nuts instead of the candy bar. You have left the cue in place, and you still have the reward (a break from your work), but you replaced the routine (behavior) in the middle of the loop. Any of these options are healthier than eating a candy bar. You may also have a new reward, such as feeling better all afternoon because you didn’t send a rush of sugar into your bloodstream.

There are strategies that can help create a healthy habit, such as “stacking.” This is when you add a new behavior onto one you already have as a habit. Let’s assume you want to start flossing your teeth each day. If you brush your teeth each morning, floss your teeth immediately after brushing. Or if you want to drink more water, drink a glass in the morning as you wait for your coffee to brew. Sit a glass beside your coffee pot each evening to remind you in the morning.

In “Atomic Habits,” James Clear states, “Habits are the compound interest of self-improvement. Getting one percent better every day counts for a lot in the long run.” This book encourages you to create a more disciplined environment in order to build healthy habits. Clear recommends practical steps such as laying out your exercise clothes the night before if you want to run in the morning. He also recommends cutting up lots of fruits and vegetables once a week if you want to eat healthier foods. Having healthy foods close at hand will help you make healthier choices.

Clear recommends that we follow these steps to establish new habits:

• Make it obvious.

• Make it attractive.

• Make it easy.

• Make it satisfying.

Clear also breaks down the new routine into very small steps. For example, if you want to walk three miles, start by putting on your walking shoes. Next, commit to walking for two minutes, then 30 minutes, and then three miles.

The third book is “How to Change” by Katy Milkman. She is a behavioral scientist who designs experiments to help us establish healthy habits. Her book is filled with practical tips, such as using a “streak” to track a new habit. For example, if you want to exercise for 30 minutes each day, track your exercise and celebrate your streak when you reach five days in a row. It is important that you set up a tracking system, such as a small calendar. Rewarding yourself with colorful stars on the calendar (you earn a star every day you exercise) is even better, and you can count the stars at the end of each week. Milkman also emphasizes that we need to be kind to ourselves. If you miss a day of exercise, do not fret. Just exercise the next day.

Milkman stresses that we must believe we can change, and having supportive friends and family can make a big difference. This is why a walking buddy can be helpful.

How does this relate to managing your finances? Let’s assume you want to start saving $25 each week. Perhaps the money will be saved long-term for retirement, or maybe you want to take a family vacation. The cue is any instance where you could save money. This could be deciding you will not buy junk food or soda at the grocery store. Or searching for a less expensive cell phone or cable TV plan. Or eating out less each week. Or taking a second, part-time job. Or not buying any clothes for the next three months. You get the idea. The routine (behavior) is saving $25 (or more) each week. The reward is knowing you are saving for retirement or the family vacation, or simply the personal satisfaction that you have established a saving habit.

The strategies for creating healthy habits can be used to establish any new habit you choose, such as exercising five times a week, drinking more water, eating healthier foods, losing weight, stopping smoking or drinking, saving money, learning about investments, or improving relationships with your family or friends. Happy summer!

*Illustration by Cathryn Cunningham/ Albuquerque Journal