Contrary to other personal finance bloggers out there, I have no big debt or financial emergency story to tell. It’s one of the main reasons why you won’t find any “how to get out of the red” advice or a “from financial zero to hero” narrative on my blog. I do, however, enjoy reading those kind of stories and I’ll tell you why.
The main reason for my vicarious enjoyment of debt success stories lies in the fact that they add a lot of sincerity and credibility to the person talking about them. Just look at Alicia from Financial Diffraction’s progress or Kate from Goodnight Debt’s success, not to mention Weenie from Quietly Saving’s life story – they all seem like great and interesting people because of the way they dealt with their financial emergency.
As such, I really do love their stories. For some reason they’re exciting and invigorating, even though I’m glad I never was and hope I never will be in debt myself.
When I take a step back and look at my own life, it’s pretty bland on the financial front in comparison – in this case that’s a good thing. While my parents aren’t financial wizards, they did a good job of teaching me a few basic money principles, of which saving was by far the most important one.
“Get yourself a summer job and make sure you save half your salary”, I remember my dad telling me when I turned 16. I listened obediently and did as instructed.
Somewhere along the way my father’s words stuck with me. Saving 50% of my income soon turned into a habit rather than a conscious effort, a perk which I reap the rewards of to this very day. I have found that these kind of habits have given me a huge edge or advantage over many of my peers.
But what is a habit exactly and what does it do?
If you were to open any ol’ dictionary you’d find something like “a repeated and regularly recurring routine of behaviour” following the lemma “habit”. Obviously that definition doesn’t even cut it close. For example, habits are also hard to change.
In fact, habits become so ingrained in our own being over time that we often aren’t aware that they exist let alone influence our actions. Indeed, almost all people practice a handful of routines outside their conscious judgement. Like a pilot flipping on the auto-pilot during a long transatlantic flight, so does your brain deal with recurring patterns of behaviour.
Many habits have mastered the art of stealthiness to the point that the large majority of our actions are governed by internal or external stimuli without us even being aware. Just think, for example, about your morning routine before you set off to work. Chances are that you perform the same tasks in the same order day-in, day-out without giving them the slightest thought.
That’s because habit formation teaches your brain not to think anymore.
And that’s how performing automatized tasks unconsciously could very well give you a competitive edge, an evolutionary advantage if you will, over your fellow man. It’s true! Doesn’t it feel pretty good to know that you’re able to leave for work without even applying a fraction of your enormous brain power to a series of actions to get you there?
As usual there’s also a downside to this huge potential, namely the fact that automaticity of a series of actions in a consistent environment could lead to a lack of awareness, strong unintentionality or even uncontrollability. All bad of course, because your morning routine might start with seventeen cups of coffee simply because your habit is programmed that way rather than out of nutritional necessity.
As such, the key in succesfully leveraging habits and routine formation lies in developing habits that offer you competitive advantages in life.
And the sooner you start, the better! Children are quick to form habits, especially so-called keystone habits, which influence the formation of other habits. Just take a look at the outcome of the Marshmallow experiment conducted by Walter Mischel at Stanford University, in which children that were able to self-impose delayed gratification were considered more succesful later on in life as opposed to children who couldn’t.
Another, rather anecdotal example from my own childhood is to be found in the video game RollerCoaster Tycoon. Not only did I play the theme park builder to death, to this day I believe it is the main reason why I’m so debt averse. Dialling down the in-game loans turned into a habit early on in my life to the point that it pays dividends even now that I am an adult – legally at least.
Maybe you’ve experienced something similar? Habits are formed out of past actions, after all.
Now, don’t worry if you’re not a six-year-old anymore! Although bad habits are harder to get rid of when we’re older, it’s not impossible to reprogram our brain cells.
You see, I was taught to try and save as much as possible, but that doesn’t mean I was a natural born talent. I had to teach myself the habit of saving, just like I had to teach myself all about investing and getting into the habit of not worrying about market gyrations.
Although I still track my income and expenses rigorously, I do so not to keep tabs on my budget, but more for the sake of the data itself – gotta love data analysis. That’s because through habit formation in the past I no longer have to consciously think about when or how to spend my money. Living frugally now comes naturally to me.
My brain simply turns into one lazy grey mass when I think about buying something. My brain power turned the act of spending into a frugal habit, like an automatized process in the back of my head. And that’s exactly what you want.
Find out which financial practices apply to you and really make them your own. After a while you’ll find that you won’t have to pay attention to them anymore at all.
According to research it will only take you 66 days to form a new habit, which is nothing compared to how long you’ll reap the benefits of good money habits. So why not give it a try?
Remember though, even with all the advice and tools in the world at your disposal, it will take a lot of willpower to deactivate, reactivate or form a new habit. And as we all know, willpower comes from within ourselves, as beautifully illustrated through the Marshmallow experiment mentioned above. It takes perseverance to make such an endeavour a success.
Good money habits don’t come out of nowhere, but even if you’re currently a spend-it-all, you can adopt them if you apply yourself. The three bloggers previously mentioned in this article have shown as much.
Are there any money habits that you apply without even thinking twice? And do you feel like they give you an advantage over people who don’t apply them?