Nope. But That’s How You Acquire Financial Habits!
Wouldn’t it be nice if you could get something you need simply by exposure, like a cell does by osmosis?
But ever try getting fit by hanging out in a gym? You walk in, wearing your gym shoes – breathe in the smell of sweat – and watch people lifting weights and running on treadmills. Did it magically transform you into an athlete? Nope.
Financial fitness works the same way. You make money, spend money….you may even have a 401(k), dabble in stocks and dress like an investment banker – but that doesn’t make you a fiscal hardbody. Money can still be a huge stress in your life.
However, your financial habits? Now, those you do absorb like a sponge from your surroundings – especially during childhood! For better or for worse.
And just like you won’t achieve peak physical condition through osmosis, you won’t get financially fit without putting in some work. It’s all about building the right habits and flexing the financial muscles that actually get you where you want to go.
Let’s dig into how to examine your financial habits, make conscious choices, and—because I like to keep things fun—I’ll share some of my personal challenges with financial habits along the way!
The Habits We Inherit
Your early experiences shape your financial habits, often without you realizing it. So say many experts – and most of us intuitively know that to be true.
Some of these habits can be helpful, but others may be holding us back. Without thinking, we may be repeating patterns. We never made a conscious choice – its just what we’ve always done and we don’t really know why.
Then there’s the heavy stuff—financial trauma. If you watched your parents lose a house, file for bankruptcy, or divorce over money problems, you might be carrying some deep-seated financial anxieties. Professional help might be called for in such instances.
As for me, I got my bumpy nose and business sense from my father. But I got my mom’s smile and flair for impulse buying!
But those are just the surface level things. But turns out, there is much more I subtly picked-up about money as a kid. Uncovering unconscious thoughts, beliefs and biases about money can be surprising.
Like the time I was chatting about money with my mom – and found out I’d rather be dead than broke. That unhealthy thought was buried deep and the result of a complex mixture of experiences.
But don’t worry – I don’t think that anymore.
Habits From Our Environment
It’s not just your family that influences your financial habits—your environment plays a huge role too.
Are your friends big spenders, always suggesting pricey activities? Or do they value frugality and simplicity? Do your friends ever talk about money, or is it a secretive topic?
Where you live and work impact your financial mindset, too. Perhaps to fit in these places, you have to have a new car in the driveway, or be wearing a new spiffy outfit.
Whether you realize it or not, you’re absorbing cues from everything around you now, just like you did from your family growing up.
I used to work for an investment firm, where the parking lot looked like a luxury car dealership. Co-workers went out for lunch every day, took lavish vacations and were always frantically seeking recommendations for a new maid, nanny or contractor.
Prior to going to work there to answer phones – I was a school social worker.
At first, I was just in awe of the fact that there was always paper in the supply room! But after a few years, I was convinced my old, reliable Honda was an embarrassment and dreamed of having someone clean my house! Classic case of environmental osmosis.
You are what you eat, the company you keep – lie down with dogs, you get fleas. (Insert whatever aphorism resonates with you here.)
Luckily, I found the Financial Independence Retire Early movement before I sold the Honda, and made due with a robovac.
How To Examine Our Habits
So, how do you begin examining your financial habits? The key is to dive deep into your financial patterns and behaviors, understand where they come from, and figure out if they’re serving your current goals. Here’s some things you can do to help you get started:
- Track Your Spending – Start tracking every penny you spend. You can use an app, a spreadsheet, or even an old-school notebook—whatever feels easiest for you. The goal here isn’t to judge yourself but to bring awareness to your habits.
- Identify Emotional Triggers – Keep a money journal to help you spot money habits that are actually driven by emotions. Which is most of them! Start paying attention to how you feel when you spend or save.
- Look at Past Financial Decisions -Think about purchases, investments, or even career moves that had a financial impact. Were those decisions made based on solid financial planning, or were they reactive? Then, evaluate the reasoning behind each one.
- Examine Your Family’s Money Messages – Think back to what your parents or caregivers said or did around money. Did they openly discuss it, or was it a taboo topic? Were they savers, spenders, or somewhere in between? What was the atmosphere around money in your home growing up?
- Evaluate Your Social Circle’s Influence – Look at the people you spend time with. What are their financial habits? Do they align with where you want to be? How much peer pressure is shaping your financial choices?
Habit Chopping Block
Once you have a clear picture of your habits, let the squid games begin!
Start by writing out your habits. Are there some that feel like you picked them up like toilet paper on your shoe? Now that you’re aware of them, it might be easy to let them go. Flush them down the toilet if they’re not serving you.
Next, look at the ones that feel deeply ingrained in your sense of self. Then laugh at them!
They are just thoughts and behaviors. They can be used when appropriate, dropped when not – changed and manipulated to suit your needs.
Maybe not always easily. But they do not define you.
Shifting behaviors and building lasting habits is possible. My favorite resources on how to do this is James Clear’s Atomic Habits.
School Time
Also during this process, you will have undoubtedly identified some areas where you lack the financial knowledge to decide if your habits and behaviors are good or not!
If you don’t know what’s in your 401(k), whether your credit card interest rate is excessive, or if stuffing cash in your mattress is actually a good way to go – you probably lack financial knowledge.
Rectify that! Seek out and educate yourself on basic financial literacy topics.
Or get professional help. But first, learn enough to tell a professional from a swindler. Make sure its about making you rich, not them.
Set Your Financial Goals
Once you’ve got a handle on your habits, its time to reflect on your financial goals. Are your current goals as environmentally adopted as your habits?
Now, I’m a firm believer that everyone should have an emergency fund. Beyond that, your personal finance goals should be personal, well examined and intentional.
What are your current financial goals? Deep down, do you suspect you just give lip service to them because that’s what you feel is expected of you?
Buy a house, retire early, travel the world – what is really worth it to you? So worth it you’re willing to change your financial habits and behaviors?
Initially, your goal may just be to not feel stressed out about money. But eventually, as your money muscles get stronger, you will see a world opportunities open to you. Look around and see what really motivates you.
Make sure your goals are your goals, not someone else’s dream.
Habits Will Get You There
With awareness of your triggers and habits, you’re in a great position to make decisions that support your goals. Marry that with strong motivation, and you have a recipe for success.
For me, my goal was to leave my job and travel the world. Excruciating meetings with Larry from Marketing were both an impetus and barrier. After one of these meetings, I would be tempted to stop for take-out on the way home – just like mom used to!
But, I had my financial goal! I’d done my research, knew how much I needed, and had been investing regularly into appropriate, well considered investments to achieve it.
Expensive take-out would not get me to my goal – especially because I’d have to have a drink at the bar while I waited for it.
So, on those days, I would make sure I had something yummy in the fridge waiting for me at home. And I’d schedule – for zero cost – a call with my work bestie to bitch about him!
Skipping take-out one time did not suddenly make me rich. But doing it enough, along with 1000 other little things over several years – I did meet my goal! And I never have to sit through a meeting with Larry again.
Work Required
So, no, financial fitness doesn’t come through osmosis, but the good news is, once you’re aware of them, you can consciously choose your habits to build the financial muscles you need to succeed!
Building new financial habits isn’t about overhauling everything overnight. Start with small changes that align with your personal goals, and over time, those changes will add up—just like regular workouts lead to physical fitness.
How about you – did you just realize a habit you pick up from childhood that isn’t serving you? Have you fallen into the keeping up with the Jones’ game? Do you have a personal finance goal?
Flex those fiscal muscles, and start transforming your finances today.
Live a Life You Love
Tired of feeling stuck? Let’s create your escape plan. Schedule your free session today.
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Filled with inspirational quotes, thought provoking questions, and a habit tracker – it’s a great companion on your way to a truly prosperous life.
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