Remember inertia? In high school science, we learned things tend to continue in established patterns. A body in motion stays in motion.
The same principle applies to personal finance. Once we get into the habit of saving money, it’s easier to keep doing it.
Unfortunately, the reverse is also true. When we’re in the habit of frequent splurges and daily treats, it’s much easier to continue in that vein than to change.
Because of inertia’s power in our lives, researchers have been trying to figure out how to form and maintain habits, so we can create and stick to ones that will help us, not hurt us.
Here’s how we can use the principles of habit formation to change our behavior around money and better handle our finances — meaning, we’ll have more money to spend on the things we actually want to spend it on.
The Habit Loop
First, we have the trigger. This is what cues your brain to kick off a habit.
For example, leaving the house and heading to work might segue into stopping at Starbucks to buy a cup of coffee. Stepping outside is the trigger for a daily coffee purchase.
Next comes the routine, the habit itself. In this example, the routine is spending money on coffee.
The third step is the reward. This is the reinforcement that encourages you to continue with the habit. As any coffee lover will tell you, the reward of this habit is the caffeine, but it’s also the taste and the ritual.
Now that we’ve dissected how habits are formed, let’s look at how to change them.
Do a Swap
When you look at your habit loop, focus on the reward.
Duhigg gives the example of going out for drinks with coworkers. The reward here is spending time with your colleagues and the relaxing effects of alcohol.
So how can you get similar rewards without spending money? How about replacing the drinks with a potluck or other low-cost activity? Or, invite your favorite coworkers to go on a lunchtime walk to get out of the office.
You’ll get the social interaction you’re after — and, in the case of brisk walk, the relaxation from physical exercise — from a different (less expensive) activity.
As you form a new habit, remind yourself of your goal throughout the day. Financial writer Cheryl Lock recommends making the habit part of a mantra you come back to throughout the day.
Try something positive and specific, like, “Eating out just once a week saves me $100.” To remind yourself, Lock suggests setting the mantra as the background on your phone or posting it somewhere you’ll see it throughout the day.
Chances are, you probably already have a few good habits under your belt. Recent research shows stacking one habit on top of another can help reinforce good behavior.
In the study, participants tried to floss more regularly. The more successful group was told to use the cue of setting down their toothbrush to remind them to floss. By lining up flossing with another positive behavior, participants were able to maintain their new habit more successfully.
Choose a good habit you’ve already got down, and then add on.
Maybe you’re awesome at packing your lunch each night but you’d like to cut out your morning trip to Starbucks. Once you’ve finished packing your lunch, consider prepping your coffee for the morning, whether that means grinding the beans for your French press, setting the timer on your coffee maker or just checking that your K-Cups are at the ready.
Taking the brainpower out of decision-making is the ultimate way to maintain a good habit.
If you never actually get around to saving for retirement, automate it! If you keep forgetting to pay off your credit card, automate it!
If you don’t have to actually take action to make a positive financial change, you’re winning the game.
You Do You
You know how people say it takes 21 days to form a new habit? That’s not actually true.
The time to form a habit varies widely from person to person, according to a study in the European Journal of Social Psychology. Habits stuck after anywhere from 18 to 254 days, depending on the person.
So if it’s taking you a while to get in the habit of checking your budget each week, don’t despair. And don’t give up either. Keep at it, and eventually you’ll form a new, positive habit.
Your Turn: What financial habits are you working on? What strategies do you use to make a new habit stick?
Lyndsee Simpson is a writer and editor living in Washington, D.C. She’s got so many habits to break and so little time.