These tips will help you break your spending patterns before they break you.
"A lot of people set themselves up for failure because they have a mindset of either indulgence or deprivation."
Spend enough money, and you'll quickly learn the definition of a bad money habit. Few people need to be told not to overspend on credit or debit cards or to curb impulse shopping. You know you shouldn't, even if you always do. What you need are solutions.But solutions are hard to come by, says Ramona Pearson, a certified public accountant and personal financial advisor in Detroit. She has been advising clients since 1984, she says, and from what she has seen, these bad habits are often practically baked into our brains.
"Money habits are formulated at a very young age for most people," she says. "I think how money works and what it means is deeply ingrained in our psyche."
Shelly Smith-Acuna, dean of the Graduate School of Professional Psychology at the University of Denver, agrees. She says if you have a really bad money problem, therapy might help. "Sometimes a problem is a pretty simple fix, but other times, money represents something deeper, maybe comfort or security in a deep way. Therapy can help you explore and understand some of the meanings behind why you spend your money," she says.
Whatever your problems with money, you can change – but it’s going to take work. After all, you're trying to break lifelong patterns. Start with these strategies:
Set realistic goals. Smith-Acuna treats many patients with money problems. The issue especially comes up during couples' therapy. Naturally, a lot of her patients try to fix how they manage their finances, and Smith-Acuna believes a primary reason people fail to change a bad money habit, "or any habit, really," is that they fail to set realistic goals.
"A lot of people set themselves up for failure because they have a mindset of either indulgence or deprivation. So if you try to deprive yourself of too much, where you spend almost nothing, then you end up giving up, and you indulge, and then you overspend," Smith-Acuna says. "So if you have an unrealistic plan, you're probably going to lose control."
That was the thinking behind Martin Grunburg's free app, "The Habit Factor," available on Apple and Android devices. The San Diego-based entrepreneur's app is designed to help people create good habits, and it sends reminders on certain dates, enabling users to remember to complete the tasks they want to start doing regularly.
"Good habits happen when planned; bad habits happen on their own," Grunburg says.
Change your mindset. Your bad financial habits may be something you're hard-wired to do, but if there is one particular vice you're trying to fix, you may be able to change the wiring easier than you’d think.
Smith-Acuna says she had a couple in therapy who constantly quibbled about what she feels has become a monetary cliché: "They would always argue about how much money they were spending at Starbucks."
Smith-Acuna says the wife loved capping off each workday with a gourmet drink, much to the chagrin of her husband, who disliked the $4.50 she was dropping so regularly.
Ultimately, the wife ended up quitting her Starbucks habit without too much trouble. The secret was drilling down and figuring out that her daily fix was important to helping her unwind from work. So instead of replacing her drink with nothing, she got something else, something free, in return. After work, her husband played with the baby and gave her 15 minutes of downtime instead.
Change how you spend your money. Even if you only test this out for a week, or a day, it may help you slow down your spending if you switch from paying for merchandise and services with a debit or credit card to paying with cash. It's easy when you're using plastic to mindlessly swipe and fall into a pattern of not thinking or noticing how much you're actually spending.
"Cash is tangible and can make one feel [more aware] when money is leaving the household, thus making one more spending-conscious," says Jeff Fishman, founder of JSF Financial Services, Inc., in Los Angeles.
Pearson endorses this approach, too. "You can divide up your money and put [it] into envelopes, marking down on the envelopes what each pile of money is for. That can make it easier to see where your money is going," she says.
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