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Financial Habits

“We are what we repeatedly do.” ~ Aristotle

 

I am obsessed (at the moment) with habits – understanding them, creating them, breaking them, and using them to fuel my success. The Power of Habit (Charles Duhigg), Mini-Habits (Stephen Guise), and The Compound Effect (Darren Hardy) all have provided the impetus for this fascination with the powerful psychology of habits. Brian Johnson (optimize.me) and his Habits 101 (and nearly every course he teaches) succinctly and powerfully present the background and the practical wisdom for helping you identify and refine your habits.

 

In the course of actively creating new habits, it occurred to me that all of our interactions with money are likely running on habit – some of those are propelling us toward our goals (auto-saving to our 401k) and some are getting in the way (eating lunch out every time I work in the office.) Today as you go about your day habitually doing the things you do, try to be in the moment when you pull out your wallet or credit card and identify if what you are doing is habitual or consciously-chosen.

 

“Habit is a cable; we weave a thread of it each day, and at last we cannot break it.” ~ Horace Mann

 

To take it a step further, try to identify all of your financial habits and then classify them as either moving you toward your goals and dreams or pulling you away from them. This one exercise will prove very enlightening. Knowledge is power and once you have the knowledge, it is within your power to take action to break a bad habit, build a better habit, or create a new habit. Duhigg has some great resources on his website and the book is filled with great info – check your library as I’ll bet they have a copy (I was able to download one to my Kindle).

 

The real power, though, is in following Guise’s Mini-Habits advice (or as Martha Beck would say, “taking turtle steps”). Stupid small behaviors are so ridiculously easy to do that you can’t fail. His example was his workout plan of one pushup a day. So easy – why wouldn’t he do it? Boom, 3 seconds, and he has a win! What could your “stupid small” financial habit be?

 

“It’s not the big things that add up in the end; it’s the hundreds, thousands, or millions of little things that separate the ordinary from the extraordinary.” 
~ Darren Hardy, The Compound Effect: Jumpstart Your Income, Your Life, Your Success

 

Identify your habits; decide which you want to keep and which you want to ditch; replace a bad habit with an empowering habit; make it stupid small; make it a habit; win every day.

 

To your financial (habits that lead to) success!

Tana

 

Disclaimer: The views expressed herein are the personal views of Tana Gildea and are not to be construed as individual advice or the advice or opinions of Homrich Berg; They should not be considered recommendations as each person’s financial situation is unique to her; they may or may not apply to your situation. If you believe that something communicated may be relevant to your situation, Tana strongly encourages you to consult with your individual tax or financial advisor prior to taking action so that the totality of your unique situation is considered.

What Success Will You Bring to 2017?

The holidays are fast approaching and then immediately we launch into a new year. New goals! New plans! New resolutions! This year, before the hustle, bustle of the holidays gets into full swing, I am stepping back and thinking about what is important to me for 2017. I have a couple of things: 1) January is bringing a clean eating, no sugar in any form, challenge, and 2) a year-long focus on getting rid of college debt (since I will have 3 in college come August of 2017!). 2016 seemed to be the year of the house so I am sending out the cosmic message that the house stuff is done, thank you very much, and it will please remain in full working order next year so that I may shift focus.

Cosmic messages aside, I am turning my own thoughts and energies toward setting up for the successes of 2017. On the eating front, I am reading books, looking at interesting “clean” recipes and preparing myself for the biggest obstacles – no half and half in my coffee (dairy is not allowed) and no wine. I must mentally prepare to change what have been deeply engrained habits – coffee in the morning, wine on the weekend. I am trying to come up with substitutes so that I don’t lose the coffee, I just put in something else (hemp cream is a no so I will continue to experiment with other nut milks.) I need to think of what concoction will evoke the “ah, the week is done and now I relax” state that a glass of wine currently creates. Luckily, I have a few weeks to ruminate on such topics before the big launch on January 1.

Similarly, on the “pay off student loans” front, I have started to take a hard look at where the cash went in 2016. Yes, the money pit took a larger than normal bite last year (but that’s done, I say) but groceries and “stuff” could be trimmed a bit. Here was my financial review process. See if this might be helpful for you:

  1. Download the credit card transactions for the year (I use one for nearly everything so that is easy).
  2. Once in excel, sort by the payee. That way the Kroger and Target and other common payees get put together.
  3. I created some columns that were important to me. This is the most critical part – don’t get granular here – that’s what makes it so tedious. Instead, think of what categories you sense are a problem AND that you have some control over in the future. Here are my categories:
Life Groceries Unusual Dining Kids College Stuff Reimbursable Biz charity

 

I put “life” as the head of the main column because most items weren’t going to move out of that column. Cars, medical, utilities, haircuts, etc. are what they are. I just left all of that in the main column. Then it was easy to cut and paste the expenses into the right columns. I especially wanted to look at groceries, dining and stuff (clothing, books, electronics) because I do have some ability to plan around those. I pulled out the other categories just so I could see what the bottom line on “life” was. (expensive is the answer there!)

 

If you don’t use a credit card significantly, it may be more meaningful for you to analyze the activity from your checking account. If you use Quicken or mint.com or something similar, you can get to the data just be sure you are not in so much detail that it isn’t helpful for setting your goals and plans for next year. You can export the data to excel to move it around to meet your needs.

 

The main point is to see where your money is going and then decide how you feel about that. I feel that we spend way too much on groceries. Yes, I have 2 teenage boys at home but I know that I can cut that back. Dining out wasn’t that bad. I don’t love eating out so that was reasonable, but if that is a problem area for you, consider setting a limit and then only spending cash for eating out. When your monthly allowance is gone, it’s gone. I have other indulgences that I plan to pare back to make more available to throw at those loans.

 

The bottom line is that what we focus on expands in our lives. I want to focus on eating delicious, healthy “clean” food and on channeling every penny possible toward that debt. What will you be focusing on for 2017? What can you do now, mentally, physically, energetically to set yourself up for success?

 

To your (2017) financial success!