Money and Habits

It's not surprising for most people to read about money and habits.?In recent years, especially with the developments of behaviourism, habits have received quite a lot of attention.?From body (or bio) hacking to psychometric tests, we all want to understand our behaviour better, optimise ourselves for greater efficiency and results, and eliminate bad habits.

But before launching into the money side, we must grasp what a habit is.

It is also necessary to distinguish between routine and habits. A habit is, boiled down to its bare essentials, a pattern in your behaviour. Forming a routine may be a habit, but not all habits are routines. For instance, for some individuals developing a routine may come quickly and with little planning or effort. The behaviour of forming a routine is well-habituated and includes a predictable pattern. However, some individuals need help to create routines. Even with conscious planning, immense mental effort and lamenting their inability to form routines, the habit is not mature, and therefore the predictable pattern is… a general absence of routine. All habits need three things: 1) a stimulus (or cue), 2) a response which is repeated, and 3) a sense of reward/avoiding danger or loss after the behaviour has been demonstrated. The more we show a specific behaviour with a particular cue or stimulus preceding it, the more mature the habit will become over time.

When an action is well-habituated, you can physically respond to the cue without showing the specific behaviour! Fascinating stuff! For instance, if you are a regular coffee drinker, did you know your body will "rev itself up" by smelling coffee (you don't even have to consume it)? That's why the smell of freshly ground coffee can be a "pick me up." It's riding on the wave of the profoundly ingrained habit.

"Money" is also a very unspecified blanket term. You have habits relating to money, and probably a lot of them. More specifically, you have a ton of habits regarding 1)? Spending cash, 2) budgeting, 3) grappling with data about investments (or not), 4) inhibiting spending and purchases (or not), 5) emotional, financial decisions, 6) who and what to trust…? the list goes on.??

When people are in a financial pinch, most people don't have money problems.? You probably have habits that drove you into a situation you can't ignore anymore.? That is a different way of putting it, but it's what it boils down to.

Habits are sticky. ? The reason why they tend to stick is to maximise brain capacity. Your brain is constantly "looking" for patterns to optimise and "hardwire." Why? Because it frees up your thinking capacity to do other stuff. Remember when you first learned to drive your car? Was it tiring, nerve-wracking, or stressful? Did you need your full attention at first? And then? Yes, it got more manageable and smoother, and now many of us drive around without even remembering that you took that off-ramp. That is a habit at work. Wonderful stuff.

As I said, habits are sticky until they get you in trouble. Changing any habit (specifically, learning a new habit set that eventually becomes your preferred habit) can be challenging. There's a lot that has been written about habits and changing them, but the basics are:

1. Understand the cue. For instance, do you overspend when you are upset? Do you go grocery shopping when hungry? Understand your cue well so that you recognise it.
2. Here's the hard truth. Willpower is a great thing, but it's actually in short supply. Willpower gets you going, but relying on it is not sustainable. Don't try and rely on willpower. Habits will, eventually, ALWAYS override willpower.
3. Could you change your environment. Cues and stimuli come from your environment. If you overspend when upset, don't go to the mall. Instead, could you do something else? "But what?" you might ask…? remember what I said about habits being sticky? They are automatic and don't require much thought…? This is where the tricky part comes in. You have to think and design new ways of dealing with the cue.
4. You can use veto power. Veto power is your brain's ability to be aware that it is being cued and, at that moment, use veto power to take a different route dictated by the habit. Veto power is extraordinary but in short supply, like willpower. Use it in a pinch, but ultimately it can change your environment.
5. Don't go at it alone. Social support can make all the difference when changing a habit. Tell a friend to keep you accountable is an option. Joining a club or group where topics relating to the habit set are discussed will help you. There are always more options available than you can think at first (again, habit at work there!).
6. Habit inertia is a real thing. It gets easier the more you make the new habit. Remember that. It will be challenging initially, but the flywheel effect will happen naturally. Could you give it time?

Ultimately, managing ourselves as we relate to our finances, money, and other resources is the task of self-mastery. It's a life-long journey with many frustrating bits in between. However, it can (and will be) gratifying and is worth the effort.??

Jan Niemand