Breaking Bad Habits

Running - Courtesy of Sean Venn

Running – Courtesy of Sean Venn

We’ve all got bad habits.  I love cookies.  I especially love freshly baked chocolate chip cookies (keep this in mind everyone, I can be bribed with these).  I’m also one of those people that has to keep moving.  No matter what, I’m always moving.  Whether I’m tapping my foot or clicking a pen, I’m always doing something.  It’s a habit and it tends to annoy the hell out of the people around me.  The point is, we all develop habits, good and bad, over the course of our lives.  When we get to the point where we are trying to get back into shape, eat better, or rehabilitate our finances, we struggle and fail.  It’s why gym’s always have their promotions in December and January; they want to take advantage of your bad habits and get a paying member that they don’t actually have to cater to.

We’ve all built these habits up over the years.  The question here is how do we break them down and get rid of them.  A few years ago, I had a track coach that taught me a few things about habits.  In track you are always trying to build new, good habits.  You want to be able to pass the baton as if it’s an extension of your body.  You want to be able to keep your foot in just the right position, move your arm a certain way, react just right out of the blocks.  It’s all about perfecting these tiny, unseen movements over thousands of hours of practice that get you to become an elite athlete (aka, not me).  So when you’re teaching a habit, there are a few steps along the way before you know it without knowing it, you know?

1.  Unconscious Incompetence: You don’t even realize you suck.  This is what happens when you’re living paycheck to paycheck, leasing that BMW 3 series and partying every night (the $30K Millionaire style) and wondering why you’re broke.  You’ve never had a moment of self reflection about your finances and you have no idea what a budget is.  You think it might be French and pronounced boo-shjay.

2.  Conscious Incompetence:  You’ve figured it out.  You know you’re bad with money.  You think it has something to do with spending more than you earn but you’re testing out some general theories on the matter.  In general, you don’t know what to do, so you start reading some good finance blogs and reading some books.  You’re still screwing up but at least you know it.

3.  Conscious Competence: With your budget in hand, a vanguard account and IRA rolling every month, you’re maxing out your 401k and doing everything right.  But, you’ve still gotta watch your budget.  You can still be impulsive and sometimes you just plain don’t think when you buy more expensive items. At this level, you’re doing most things right but they just aren’t second nature to you.

4.  Unconscious Competence:  It’s all second nature. You’ve been budgeting and saving and thrifting for so long, you don’t know what else to do.  Everything is just automatic.

Now, these four levels apply to all aspects of life.  Want to run a marathon?  We’ll, you’re going to need to get in the habit of running a lot.  How long will it take before you actually go running everyday without your mind saying no way?  According to this study, it should take you about 66 days.  That means repetition every day, or else you’ll lose it.

So how can we apply this to our daily lives?  If you’re here, then I’m going to guess you’re at least at number 2 above.  To start with, make a budget!  Stick to it.  Plan your groceries out before you go and buy them and keep an eye on your mint.com account.  Don’t have one?  Start one!  Check it every day.  Keep your spending in control.  If you want to buy something big, expensive, wait two weeks.  Wait a month.  If you really want it, figure out how to get it without using credit or busting your budget.

In reality, these are all little things.  But each one of them adds up.  Most people don’t realize how much they spend going out to eat or drink.  Looking back at my mint account when I was more of a paycheck to paycheck guy, there were some months where I spent $500 going out to eat and $500 at the bars.  And I didn’t have that much money to spend each month!  But I just looked at it and moved on.  I didn’t recognize what was actually happening.  Now that I watch my budget and spending each day, each week, I’m on a much better path.

Each of these habits will take you a while to form.  Just recognizing that you need to form them will be difficult in itself, let alone the actual habit.  But with time, you can get to a point where you have good financial habits and are fixing the mistakes of your past.  It’s easy!  Just do something small, everyday and eventually, you won’t even notice that you do it.