7 habits that helped me to save without even trying
What is a habit?
A habit is something we do repetitively without thinking about it, without conscious thought.
Habits are needed in our lives now more than ever, they help us to make sense of the world, they help prevent decision overload when we are constantly faced with temptations, options and choices. Habits make our lives run smoothly and in doing so they often give us pleasure.
In his book “The Power of Habit: Why we do what we do and how to change” , Charles Duhigg talks about the idea of a ‘Habit loop’ were we behave in a certain way in order to get a reward and after a while we continue the behaviour without needing the reward, because it has become a habit, we no longer need to think about it. This is classically how we alter bad habits (such as smoking or excessive drinking) and replace them with ‘good habits’.
Our habits are completely individual to us, we have learned to shape them around what works for us and our lives, we quite like them because they are familiar and ‘safe’. However, some of them do us more harm than good, and we know this, but we don’t know how to change it.
We all recognise the ‘bad’ habits of smoking, overeating, not exercising but the more difficult habits to break are those that others can’t see or judge you on and you can virtually ‘hide’ from the world.
Money is one of those habits.
For those of us in the UK, talking about personal finances openly is fairly rare, we tend to be a private nation, keeping our money matters to ourselves. However, it also means we are the only ones who truly know whether our financial habits are good or bad for us.
Are your financial habits good for you?
Just think for a minute of the way you spend, how and where does most of your money go? Think about whether you plan your money or take it day by day? Think about how you earn? Is it what you want and if not, what are you doing about changing it?
These are your habits, you probably haven’t thought about them for a while, but by questoning them, just once in a while and adapting your habits, it could be the difference between paying off your debts or accumulating more debts.
Here are 7 habits I changed to help me save for my first home:
- Check my statements monthly – I wasn’t always keen on checking my bank and credit card statements, I didn’t want reminding of how much I may have spent and there was always something more interesting to do. But I made it my habit to check each month, each transaction (and there were lots). It helped me identify patterns in my spending of when I was spending without thinking, mostly lots of small supermarket transactions full of unplanned purchases.
- Planning, planning and planning – A habit which had the biggest impact of my ability to save was planning ahead, no more last minute purchases, expensive birthday presents, wrapping paper and cards. I stocked up on anything and everything which would save me money in the long term.
- Take cash out – Might sound odd in an increasingly cashless world (and my last job was getting people to stop using cash in favour of cards), but you can only spend what you’ve got. I now decide how much I want to spend and have that on me, it’s surprising how quickly £40 can be spent with very little to show for it.
- Keep an eye on the small stuff – couple of coffees here, magazine there, you can justify the small stuff, particulary if you’re having a bad day – surely a cake is the least you can treat yourself to, but I was having far more bad days than good and my cake habit was starting to cost alot each month (and wasn’t helpful to the waist line). You are worth it – but treating yourself to the small stuff every day may mean you miss out on the bigger stuff later on.
- Have a goal – I never used to know how much money I had, I just knew when it ran out, and I never knew how much money I wanted, but when I knew I wanted my first house, I knew I needed to save £10k deposit to get a mortgage (this was 1999) Suddenly I had a clear mission – I knew where I was heading and any money I spent was less money towards my deposit. The goal of habit setting has been invaluable to me in everything I do, but particularly for saving money.
- Measure it – You get what you focus on. Do you weigh yourself on the scales every day? I used to when trying to lose weight and it was amazing how that ‘measurement’ stayed with me all day, through every tempting cake and treat, I knew those scales weren’t going to change measurement unless I did something different.
- Reward yourself – As mentioned at the start, every habit starts with a behaviour followed by a reward. So when I started changing how I managed money, it felt difficult to change, my old ways were much easier to follow, I didn’t have to think about them – but those habits weren’t going to save me £10k for my house deposit. I needed to find new ways to reward myself to keep my new habits going. Instead of spending, I indulged myself imagining myself in my new home, constantly looking in estate agent windows (the days before Rightmove) and driving around areas.
Whatever you dream of doing and money has been stopping you – take a look at your habits and see which ones you can change today.
Who am I?
My name is Fay Arrundale and I am a financial mentor who champions individuals to take charge of their money through the company I founded at www.lookafteryourpennies.com
If you would like to hear more from me and recieve a copy of my ‘12 step guide to mastering your Money Mindset’, sign up to my regular newsletter.
I am the author of “7 Steps to teaching your child to save: A parents guide to raising financially independent children” available to buy on Amazon kindle for just 99p, also available in paperback.