How to Create Sustainable Money Habits
Today’s goal: Make it easy to do the right thing with your money.
The January 2020 Uber Frugal Month Group Challenge* ends today. Congratulations to everyone who participated! A major focus of this month-long challenge is enshrining healthy money habits for the longterm. It’s not good enough to do good with your money one month, you’ve got to do good with your money all the months. That’s the only route to true improvement.
I live my life according to habits and routines because without them, I’d be running around the house with baby socks flying out of the laundry hamper, braiding one kid’s hair while the other kid eats peanut butter off dirty plates in the dishwasher. JK, that happens anyway, but at least I have a routine for it.
*You can sign-up for the Uber Frugal Month Challenge at any time! Although we take the Challenge as a group every January and July, you can start it on your own whenever you’d like. Sign-up here.
Routines: For Schedules, For Money, For Life
Listen routine-haters, the routine routinely saves my bacon. If it’s not for you, I get it, but if you think it might possibly maybe be for you, hear me out. Routines create automatic pathways for how we live our lives; we can follow positive routines or negative routines. Science has proven this!
My favorite podcast, NPR’s Hidden Brain, recently aired this episode about building habits, during which I shouted YES and jabbed my finger in the direction of the stereo as psychology professor Wendy Wood explained:
When we repeat an action over and over again in a given context and then get a reward when you do that, you are learning very slowly and incrementally to associate that context with that behavior. Eventually, that behavior becomes automatic, to the point where we aren’t consciously thinking about the behavior anymore. Many of the things we do every day fall into this category. About 43 percent of everyday actions are done repeatedly almost every day in the same context. It’s very much like driving. We have this general sense that we’re doing things but it’s not driven by an active decision-making process.
Extrapolating Professor Wood’s findings: if we spend money every day in the same way, we’re probably doing it without even thinking about it. And if our spending is automatic and unconscious, all we need to do is reverse the habit and make not-spending our automatic, unconscious default.
Automate, reward yourself, reiterate. In other words, do the same stuff every day and do the stuff you want to be doing. If you don’t want to spend a lot of money, make it harder for you to spend money. Introduce artificial roadblocks that prevent you from spending on autopilot (such as the 72-hour rule). If you want to spend more time reviewing your finances and goal-setting, make it part of your weekly/monthly routine. Make positive money actions (or inactions, as the case may be) unavoidable, easy to accomplish, and consistent.
Disrupt The Cycle
The Uber Frugal Month Challenge is intended to disrupt your spending habits. If you used to buy coffee every morning at the same coffee shop on your route to work, the UFM challenged you to stop that habit and replace it with a new, less expensive habit: brewing coffee at home every morning and taking it to work in a thermos.*
It’s easy to fall into habits of spending, but it’s possible to unwind those habits and thread new, less expensive routines into our lives.
Identify: Think through your typical day/week and identify every juncture at which you spend money.
Disrupt: For every money-spending event you identify, make a proactive plan for how you’ll eliminate or reduce that expense.
For each of these spending junctures, figure out if you can: 1) eliminate it entirely; or 2) utilize frugal substitution. The coffee situation above is an example of frugal substitution: you’re not eliminating the expense, but you’re reducing it by substituting homemade coffee for coffee shop coffee.
Here are a few other examples:
- Frugal substitution: bringing your lunch from home rather than buying it out
- Elimination: cancelling a gym membership you’re not using
- Frugal substitution: buying a dress to wear to a friend’s wedding at a thrift store instead of new
- Combination elimination and substitution: not drinking alcohol on certain days/weeks to reduce your expenditure in that area
I’ll also note that it’s usually not a good idea to change a ton of things at once. Choose one habit at a time and make that change stick. Research points to success being most likely when you change a small aspect of a habit. Using the above example of making coffee at home, you could start by not buying coffee on Wednesdays. After a few weeks of successfully not buying coffee on Wednesdays, stop buying coffee on Mondays too and so on until you’re never (or rarely) buying coffee.
*P.S. I am NOT saying that making your own coffee will save enough money to move the needle on your finances. Rather, I employ it here because it’s a convenient, easy-to-understand example. Furthermore, the whole concept of the Uber Frugal Month is to identify as many of these “coffee out” expenditures as possible and to save on all of them. The total of all of these expenses is likely to tally up to something in the neighborhood of significant. So, no, you’re not going to reach financial stability by making your coffee at home, but if you couple it with: cancelling cable, switching your cell phone to a cheap MVNO, cancelling subscription services, reducing lunches out at work, decreasing dinners at restaurants, reducing your clothes budget, etc etc… you’re going to reach an actionable dollar amount.
We all have spending triggers and, for the most part, we know what those triggers are. Mine are almost entirely food-related and so I try to make it easy to not spend money on food. The main way I achieve this? I don’t go into stores that sell food. Sounds ridiculous, but it totally works. Plus, Mr. Frugalwoods is an excellent grocery shopper (and the one who does all the cooking) so this is an all-around win for us.
Professor Wood, quoted in The New Yorker this time, backs me up on this:
The central force for eliminating bad habits… is ‘friction’: if we can make bad habits more inconvenient, then inertia can carry us in the direction of virtue, without ever requiring us to be strong.
…the path to breaking bad habits lies not in resolve but in restructuring our environment in ways that sustain good behaviors.
So if we can engineer an environment that doesn’t take us past our favorite coffee shop on our way to work, or an environment that doesn’t reinforce excessive consumption, we’ll be less likely to buy the coffee and spend the money. It’s no longer a question of resisting temptation–it’s a question of the temptation not existing in the first place.
None of this is rocket science. None of this is about sudden, radical transformation. It’s about making incremental changes that add up and bear fruit over time. It’s about crafting a life that shifts away from a consumer mentality and towards a worldview of simplicity and sustainability.
This idea of removing temptations is about setting yourself up for success. For example, since my family tries to eat healthfully, we don’t buy chips and cookies at the grocery store. If we had chips and cookies in our pantry, I WOULD EAT ALL OF THEM. But since they’re not there? I can’t eat them. I’ve set myself up for not eating chips and cookies by not having them in my house. Figure out what your spending triggers are and then engineer an environment that supports your goals.
Make Money Management Simple
For the most part, being good with your money means being simple with your money:
- Only buy stuff you need (live below your means)
- Avoid buying things you can’t afford/don’t need (don’t fall victim to lifestyle inflation)
- Save/invest your surplus money every month (plan for the longterm)
That’s pretty much it. But most of us get hung up on the whole ‘avoid buying things you can’t afford/don’t need’ part. It’s not something to feel guilty or embarrassed about, it’s just something to be aware of. Find ways to change your behavior–and your routines–to enable you to simplify how you manage your money.
You might need to start going to a different grocery store–one that doesn’t tempt you with their colorful displays (looking at you, Trader Joe’s… ), you might need to avoid going into your favorite shop where you always find the perfect dress/cardigan/pair of flats (if you don’t know it’s there, you can’t buy it), you might need to unsubscribe from sale and promotional emails that tempt you to shop online (if you can’t click it, you can’t buy it).
You can also play tricks on yourself, such as I game I like to call “Go Places Without Any Money.” When we lived in the city, Mr. FW and I used to leave our cash and credit cards at home when went on strolls around town. With no money on us, we couldn’t pop into a cafe for a latte or buy a cute dishtowel we saw in a shop window. It’s a basic, effective way of keeping yourself in line.
Mistakes Happen: The Goal Is Not Perfection, The Goal Is Consistency
Avoiding temptation and following your routine aren’t always possible. I recently spent no less than $50 at a CVS Pharmacy due to an ill-advised (but unavoidable) roaming of the aisles with my two sick children while waiting for their prescription (for said sickness) to be filled.
This was a deviation from my routine in many, many ways:
- I never shop with the kids (if I can help it)
- I never shop at CVS (if I can help it)
- I never go anywhere with sick kids (if I can help it)
- I never shop without a list (oh this was a list-less roam, let me tell you)
As fate had it, Mr. Frugalwoods was out of town and I had to go to CVS to get their prescription filled and they do not have a drive-through pharmacy pick-up and we had to wait for the prescription and it was 2 degrees outside. The perfect recipe to induce impulse buying.
And I was not buying necessities, people. I bought a balloon for my kids, I bought a bag of chocolate chip cookies (the really soft gourmet kind… for myself… ), I bought hand lotion, I bought fruit for the kids. I mean it was ridiculous. So I don’t write this from a place of perfection. I write this from a place of knowing what can work over time because…
I used to spend $50, $100, $150 at places like CVS and Target all the time. Allllllll the time. Like every week. Once I brought awareness to this excessive spending (by tracking my expenses every month), I realized I was roaming the aisles of these stores, buying unneeded stuff that seemed like a good idea in the moment. Since coming to this realization, I avoid going into these stores. Again, this tactic boils down to the removal of temptation: I can’t buy what I can’t see.
Frugality–and wise money management–aren’t about doing things right all the time. Rather, they’re about setting up guardrails and guidelines around your money that are easy for you to follow… most of the time. When you do break a rule you’ve set for yourself? Notice it, acknowledge it, readjust your habits/routines as needed, and move on. We’re not going for perfect here, we’re going for consistent and easy-to-follow.
Clarify and De-clutter
Clarify your priorities. Spend money on things related to those priorities and eliminate spending that’s counter to those priorities. De-clutter your home and your mind: pare down what you own and what you think you need. Pare down what matters so that you can identify and work towards what matters the most.
If everything is important, then nothing is important. Similarly, if your house is overrun with stuff, you might as well own nothing because you can’t find anything for all the mess.
My reasons for not buying stuff aren’t solely related to saving money. They’re also related to a desire to not own too much stuff, a desire to reduce my carbon footprint, a desire to eat healthy foods, a desire to model non-excessive consumption for my kids, and more.
Slice away at your spending and your possessions to let the best rise to the top. Do away with everything that’s an unnecessary distraction and reap the benefits of lowered spending, decreased stress, and more time, space, and peace.
- Know your priorities and goals.
- Set clear rules for your money (and follow them).
- Aim for consistency, not perfection.
- Avoid paralysis by analysis: don’t drive yourself crazy debating purchases. Instead, rely on the guidelines you’ve set for yourself until those guidelines become automatic and habitual.
- Make small, incremental changes you can stick to.
- Simplify, clarify, and de-clutter: your priorities, your mind, your physical surroundings. Let the important stuff rise to the top; eliminate everything else.
- Managing your money well is ultimately about creating habits that work. Habits that stick. Habits that are easy to follow and that make you proud of yourself.
How was the Uber Frugal Month Challenge for you? What are your good money habits and how do you follow them?
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