Habits help us do things more easily, with less effort. They cause us to automatically slam on the brakes of our car when we see a ball and small child run out into the street just ahead. Habits have helped us become right- or left-handed and do things efficiently because of better coordination.
But at the same time, habits can also hurt us. They keep us doing the same thing in the same manner we have always done, sometimes to our great detriment. Hard to change bad habits such as smoking cigarettes, or constantly complaining about everything, or driving over the speed limit, or not eating healthy can really cause problems. And what about all the bad habits we form when it comes to the way we handle money?
Let’s apply this habit-forming-process to money management. What is your habit of saving money? How much and how often do you save? If you are like 91% of all workers, you save very little and this is why 91% of all retirees are totally dependent upon the Social Security check they receive each month to provide basic living expenses. This 91% number has been steady for over eight decades. Anything lasting this long would be classified as a habit, right?
If you want to change a bad habit, experts say you must consistently do something different for at least 21 days in a row. I think with money habits, it takes at least six months or longer.
Here are some suggestions getting started with better money-saving habits:
- Start by putting all you loose change in a jar at the end of the day. With wide-spread use of credit cards, you may not have any loose change. But try it and see.
- Each month add to savings at least 1% of your income. Anyone, and I mean anyone, can find extra money to do that through tracking every soda you buy and other small expenses. And if you commit to saving 1% for two months, then make it 2% for the next two months after that. Keep this going until you are able to save 10% of your income and then see how different you feel. A habit of saving 10% of your income will add to your retirement income, and give you more options at retirement than what Social Security will provide.
You can do this! Start today. For more help contact me: firstname.lastname@example.org, or visit www.moneymastery.com.