January 2018 is soon coming to a close and by now you probably thought long and hard about your new year’s resolutions. Perhaps you pledged to call your mom more often, meditate once a day, lose 10 pounds, and become financially richer. Have you acted upon your goals?
Spending money responsibly is one of the most important goals that you could achieve. The benefits of developing good financial habits are well worth the efforts. Having your finances under control could enable you and your family to abstain from straying into debt, enable you to keep a solid credit rating and help you to attain the financing you may need to buy a new home or a car or borrow money for business ventures.
One financial goal that could save you hundreds or even thousands of dollars per year is minimizing the amount of expensive coffee you buy per week, as well as the amount of money you spend on dining out per week.
On average, coffee costs about $4.00 per cup and dining out for lunch costs about $15.00. If you were to buy coffee and dine out every weekday, you would be spending whopping $4,800 per year! – that’s the equivalent of about four vacation getaways or about six plasma screen TVs. You get the point. Conversely, If you were to just bring coffee from home and brown bag your lunch, you could save $4,800 per year and apply that money towards other bills or a savings account.
The problem is that sticking to this new year’s resolution is easier said than done. Even having an immense desire or motivation to stop buying your latte and chow mein for lunch is not enough to ensure that you will stick to this financial goal. A strong body of research reveals that motivation is not enough to attain your goals, including your monetary ones. Fortunately, there are proven methods that could help you stick to your financial goals. In the following post, I will discuss seven proven methods that could help you minimize your spending and maximize your savings. These proven methods are 1. Writing down your financial goals., 2. Attaching your new financial habit to an existing one, and 3. Modifying your environment to minimize spending.
Write down your financial goals
Over 100 different studies in a variety of experimental situations have arrived at the same conclusion: Individuals who explicitly say when and where their new behaviors will happen to have a greater probability of adhering to their goals. Heidi Grant Halvorson, a professor at Columbia University states, “deciding in advance when and where you will take specific actions to reach your goal can double or triple your chances for success.
So one strategy you could perform to become more financially wealthy this year is to implement a plan on how you could spend less money on coffee and food.
You could write down a statement such as: “If situation Y is encountered, then I will initiate goal‐directed behavior X!”).
Here is an example that applies to purchasing less coffee when at work.
“Every time I go to work, I will drink coffee (or tea) from the coffee machine at work and not buy coffee (or tea) at Starbucks/Second Cup/Timmy’s etc.”
Another example is:
“Every time I go to work, I will brown bag my lunch and not purchase lunch from the cafeteria/restaurants/fast food places/convenience stores.
You could also add the conditions in which you will purchase coffee and dine out and how much you will spend.
“I will only buy coffee (or tea) once a month on the weekends for no more than $5” and “I will only dine out once a month on the weekends for no more than $20.”
Remember write down your financial goals in advance and specifically, state when and where you will take specific action to reach your monetary goal.
Attach your new financial habit to an existing one
While old habits are hard to break, new habits are hard to shape. This is mainly because our behavioral patterns are hard-wired in our brains. The promising news is that through consistency and repetition, you could shape new neural pathways and create and maintain new habits.
If your goal is to stop dishing out money on dining out, then you could turn this goal into a habit by attaching this new habit that you wish to develop to an existing one.
Here is how you could make it happen:
Immediately after you clean up the kitchen table in the evening, pack yourself a portion of this evening’s dinner in your Tupperware for tomorrow’s lunch. In this example cooking dinner and cleaning the kitchen after dinner are old habits that you are accustomed to performing, packing a portion of tonight’s meal in Tupperware for tomorrow’s lunch is the new habit you want to acquire According to a study published in the journal, Neuron, the best way to convert “wishful goals into solid, automatic habit…[is by] being consistent.” Work toward your goal every day, even if you don’t feel like it. You can set aside a specific time each day, or a specific context. For instance, you can brown bag tonight’s leftover dinner right after you clean up the kitchen table (a specific context) or at exactly 7 p.m. every evening (a specific time). James Clear, a prominent author on habit formation states, “The more regular the behavior, the more easily your brain can convert it into a habit.”
Modify your environment to minimize your spending
Sometimes changing the environment will help kick your brain into gear and change your daily habits. According to the journal, Psychology Today, “Environmental cues are essential when it comes to habit formation, in part because the brain is excellent at connecting an environment with a specific situation”. For instance, someone who regularly buys a cup of java from Timmy’s on the way to work might find it difficult to resist one even when they are not craving caffeine. Simply seeing Timmy’s logo (environmental cues) will be enough to send them racing to the drive-thru window. “If you find yourself constantly giving up on your goals, take a look at your surroundings.” If you always buy a coffee at Timmy’s on the way to work, perhaps you could change your driving route to one where you don’t encounter a Tim Hortons. Without the environmental cues, you are less likely to crave a coffee.
On the flip side, if you want to develop a certain habit like brown-bagging your lunch or only drinking coffee from the coffee machine at work, make the habits you want to perform more visible. Place your lunch box in sight on your kitchen counter right after work and place a nice mug on your office desk. In other words, make the habits that you don’t want to perform less visible and the ones that you want to perform more visible.
In conclusion, the three proven methods that could help you reach your financial goals are 1. Writing down your financial goals., 2. Attaching your new financial habit to an existing one, and 3. Modifying your environment to minimize spending. Don’t be discouraged if you have not been able to stick with your monetary goals for this year. With the above-proven methods, you could make the changes and develop healthy money habits. The pay off will definitely outweigh any latte or burger that you consume.
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