Ever find yourself with a great plan to pay down debt or increase your savings but after a good couple of weeks of making progress, your old habits kick in and you start sabotaging yourself? Pursuing any financial goals requires good money habits and the discipline to keep up with these consistently through time. 

Even in busier times or, you know, when a global pandemic hits, or when there’s a draining historical election going on, or whatever craziness life throws at you, it’s still crucial to show up and keep performing certain habits in order to continue making progress with your finances, or at least to avoid backtracking on that progress. That’s why it is so important to put in place simple ways to stick to good money habits. 

Utilizing some of the best habit design advice

Through the last decade, I’ve experimented with my habits in order to find ways to manage my money with simplicity. I was inspired by many various habit design resources that have helped me greatly along the way. We’ve been through tough times throughout those years and were still able to keep up with at least some of our basic and essential good money habits thanks to optimizing our logistics around money through trial and error.

I’ve been fascinated by the habit design since I was a teenager. I would read the blog Zen Habits by Leo Babauta way back in the late 2000s and just loved everything he wrote surrounding implementing good habits. When describing how habits are formed, Leo emphasizes the importance of using trigger-habit combos to help create a more automatic go-to habit through repetition and the helpfulness of using positive feedback and motivation through accountability to make the habit stick.  

Another habit design resource is my favorite book on the subject : Atomic Habits written by James Clear. He refers to a practical framework we can use to design good habits and eliminate bad ones as the Formula of Behavior Change . The four laws of this formula are to make it obvious, make it attractive, make it easy and make it satisfying. 

Let’s see how we can apply these in simple ways to stick to good money habits. 

Make it obvious

This is what Leo Babauta referred to as the trigger-habit combo. Essentially, we want to identify an action that becomes the natural trigger to the good money habit we can implement. What we are looking for here is a cue that leads us to initiate this behaviour. 

Here are a few ways I’ve used to trigger some good money habits:

As soon as I see my computer clock showing a new month, I update my networth in my trackers. I’ll then add a note in my agenda to review my spending of the last month that week. It’s a bit subtle but this has worked for me. One trigger is simply being at my computer and seeing the date on my desktop, while I stack my next trigger which will be my note in my agenda to cue my next good money habit of tracking my spending. 

I have set up my Mint account to send me a weekly spending report. So every Saturday morning I get this email which triggers the action of going into my Mint account and making sure every transaction is categorized appropriately. It’s much easier for me to recall the purchases of the last week and categorize accordingly while they are fresh in my mind. It’s also turned out to be a helpful tool to notice any weird transactions and take action quickly. 

Other ways you can use the “make it obvious” rule to stick to good money habits can be:

• To set up some debt payoff or savings goal coloring charts in a place that you will see them when you are at your work desk to remind you to check what your progress has been every Monday.
• You can set up a calendar notification to help you remember to take action. For example, you can have one set up at every payday in order for you to review your accounts and send money to debt repayment or to your investments or savings if that is not automated. 

Make it attractive

Now this and the last two laws fall into different variations of what Leo Babauta described as using positive feedback and motivation through accountability. The main goal is to help you enjoy performing the habit and develop a craving for it. 

One way to make a habit attractive is to, as James Clear refers to it, bundle habits. You combine something you want to do with something you have to do. I use this technique a lot! For example, whenever I review my last month’s spending, I’ll have a nice cup of tea and some dark chocolate on hand. Whenever I plan my grocery shopping or am at the store, I get to listen to my favorite podcasts. 

Another way I’ve found to help make good money habits attractive is to surround myself with communities where those habits are encouraged. Being part of the personal finance twitter or facebook groups like the Choose FI Quebec, Choose FI Canada, Women’s Personal Finance, Canadian Ladies Money Club or other similar communities helps make those good money habits feel more like the norm. It also falls into the first law of making it obvious as you are more likely to come across topics reminding you to perform some of your good money habits. 

Other ways to make the action of sticking to good money habits attractive could be:

• To have an accountability partner with whom you meet up to talk about your financial goals, so there is motivation to keep progressing to update positively.
• Maintaining a blog on the subject can make hitting special money milestones attractive in order to share on the blog ;). 

Make it easy: 

“The purpose of a habit is to remove that action from self-negotiation. You no longer expend energy deciding whether to do it. You just do it.”

Kevin Kelly, founding executive editor of Wired Magazine 

I believe this is the whole idea behind making the habit easy : you want to remove that self-negotiation. The transition needs to be quick and smooth from inaction to taking the right action. There’s also the idea of reducing the negative feedback of doing the habit, to avoid it becoming an action you dread. 

On that subject, these last few months I’ve procrastinated increasingly with doing my monthly spending review for the simple reason that one of my cards now refuses to link up with Mint. I therefore have to enter those transactions manually which I dread. I’ve tried to make it easier by limiting the number of times I use that card to keep the number of transactions to enter manually to the minimum. 

Otherwise, through the years I’ve used this law for behavior change by aiming for repetition rather than perfection. I break down a bigger step into plenty of smaller and easier action steps. I then aim to perform the next smaller steps on a regular basis. 

For example, when I started contributing to my TFSAs back in 2011, I started with a one time 50$ deposit to figure out the steps to do so. I then set up 80$ contributions from every paycheck through an automatic savings plan which helped make those steps even easier. My next action step was to start researching what different investments were possible with the money I was accumulating in my TFSA savings account and researching which account or provider might be the best for my needs.

Each week, with a little more research on this topic, I increased my knowledge and comfort with taking action and then finally investing that money. I also always wrote down simple steps to come back to indicating the “instructions” to invest my money just to return to in case I got nervous again. 

Other ways to make sticking with good money habits easy could be:

• Use automatic bill payments or automatic savings functions through your bank.
• Utilize spending trackers that automatically categorize your spending like Mint.
• To flip this on its head, you can also make spending your money more difficult by adding verification steps to use your credit card or your paypal account for online spending. You can also create a rule that you must have found three different prices for any item you want to buy before making the purchase at the best price out of the three. 

Make it satisfying

Our brain tends to prefer instant gratification rather than delayed gratification. Unfortunately good money habits are mostly linked to goals that require plenty of delayed gratification like investing enough money to someday be able to take a one year sabbatical for example.  That’s why you have to be creative in order to find ways to reward the good money habits.

As Jame Clear puts it in Atomic Habits : 

“it is important to select short-term rewards that reinforce your identity rather than ones that conflict with it. Buying a new jacket is fine if you’re trying to lose weight or read more books, but it doesn’t work if you’re trying to budget and save money. Instead, taking a bubble bath or going on a leisurely walk are good examples of rewarding yourself with free time, which aligns with your ultimate goal of more freedom and financial independence.”

One way I reward myself for reviewing my last month’s spending is that I “get” to update my numbers in Mad Laboratory by MadFientist. This free tool projects out when we should be hitting our FI number and what income we would need in order to sustain our yearly expenses based on our historical data. On spendier months it might not be as fun but it can serve as a motivator to reduce my next month’s spending and thus help me want to reduce negative feedback by being more mindful with my spending. 

Here are some other ways to help make sticking with your good money habits satisfying:

• You can send the money you decided not to spend into a savings account specific for a fun future purchase (like for a future trip once this pandemic is over). 
• You can share with an accountability buddy that you completed your spending review in order to get a high-five and some praise. In fact any type of community-related praise can serve as an excellent reward which brings us back to surrounding yourself with those inspirational communities. 
• Using those debt payoff or savings goal coloring charts can also give that quick dopamine spike.

Conclusion 

There are so many ways to utilize the best habit design advice to find simple ways to stick to good money habits. As you try these out, you may find that one thing works really well for you while others not so much. 

It’s important to proceed with trial and error to figure out the most optimal approach to help you keep performing those good money habits. If you feel like you’re failing with implementing one specific habit, just take a moment to reflect on one thing you could do differently to try to make sticking with that good money habit obvious, attractive, easy and satisfying.  

What are some simple ways you’ve used to help stick with your good money habits?