It’s been said time and again that our lives are the sum of our habits. As it is with other things, so it is with your finances. Building good money habits is the goal, or at least it should be. Building habits isn’t easy, but it is possible. The framework here can be used for building habits in any area of your life, but we will focus on using them for your personal financial habits.  So how do we go about building good money habits?

Start with why

The first thing you need to figure out is why. Why does this habit matter to you? What will it mean for your life?  Here’s the thing; your mind needs reasons to do things. The same applies to your bad financial habits. There are reasons behind them, and it is worth your time to find out why they exist. In most cases, the reasons have nothing to do with money. When you want to build a good money habit like saving every month, the motivation is beyond having money, it is the options that having money provides.

Then why not

Now for the hard part. If this habit is indeed good for you, then you’d be doing it already if there weren’t something standing in your way. So it is more likely than not that something is standing between you and this habit. The “why not”. What has stopped you from practising this habit in the past? The answer to this will help you see some of the obstacles in your way. Maybe saving money has been difficult for you because you don’t earn enough money. Perhaps saving is difficult because you have expensive hobbies. Whatever it is, part of your plan to create this habit should address the things that have stopped you from doing it in the past.

Define the habit

So far, we’ve discussed saving more money as a habit, and I’d like to use that example again. What is saving more money? If I asked 100 people this question, I’m likely to get at least 10 unique answers. Besides being a general statement, saving more is ridiculously nondescript. How much more? How often? What will you do with the saved money? It’s common knowledge that the more defined a plan, the easier it is to follow and, therefore, the more likely it is to happen. So be clear about the habit. Define it to the very last detail. Save an extra 50 dollars per month and keep it in your emergency fund. Save 20% of your monthly income and invest 10% while placing the other 10% in a high-interest savings vehicle.

Break it down

An important part of defining a habit is breaking it down into its steps. Yes, we want to save 50 dollars more than we have before, but we won’t get there by dumb luck. We need to be deliberate to achieve this, and being deliberate involves looking at the details. So yes, we will have to introduce that dirty word; budget. While the word budget is more commonly associated with restrictive spending plans in finance, a budget is really just a plan. It sets out how you intend to use money. A budget’s goal is to ensure that resources go where they are supposed to, especially when dealing with limited resources. And money is almost always a limited resource. So before setting out to save 50 dollars extra, make sure there are 50 extra dollars to save.

Follow up

Habits are continuous behaviours, and the great thing about continuous behaviours is we can track them. While many people look at tracking as something that comes after an event, it goes further. To keep track of something requires us to think about how best to measure and therefore track it. So this makes us think deeply and closely about the task at hand. So your follow-up is more than just checking to make sure you’ve done it. It’s looking ahead to make sure you will be able to do it.

Combine habits

I learnt a great tip from the exercise world, particularly strength training. The term for it in the circles is supersets or giant sets. When using weights for training, a person will combine multiple movements, curling a dumbbell upwards and then pushing it up. This means you get twice the work in a single motion. The same principle has been applied to High-Intensity Interval Training (HIIT) which combines multiple movements to get more out of limited workout time. Your habits work best when they come together with other habits. People who tell you that investing is better than saving don’t understand that doing both is best. Make sure your habits are both complementary and congruent.

Finally, habits are about consistency, not just performance. You can save more than 50 dollars this month, but it only matters if you were able to save at least 50 the last month and will be able to save 50 the following month. In the context of this habit, of course. Work on being consistent.