Originally published on Consumerism Commentary
All too often, we find ourselves stuck in financial ruts, falling back on bad habits and repeating negative patterns of behavior. Although we rationally understand the steps that we need to take to get back on track financially, we find ourselves unable to break the shackles of unhealthy financial habits.

We promise ourselves that we will make a change, and resolve to swap out our bad habits for healthy ones. We expect that our good intentions will be enough to ensure success. But far too often, just like a reluctant dieter, we try to restrict and limit ourselves without making any real changes. Or we tell ourselves “I’ll start tomorrow”. And eventually the initial excitement wears off, and we find ourselves no better off than we were before.

Change Your Context, Change Your Life

Whether you’re on a mission to lose weight, or you’re trying to save an extra $100 a month, the first step to changing any habit is to understand how and why it is happening in the first place. This means understanding the context of your behavior: the environmental, emotional, and situational factors that affect your choices and actions.

Unless you’re a borderline superhuman, sheer willpower alone is usually not enough to re-shape your habits. It is essential to change your context, as well.

For example, if you’re trying to lose weight, taking your lunch breaks with co-workers in the cafeteria is not conducive to developing healthy eating habits. Instead, plan to take a walk around the block during your break. This simple change of environment reinforces the new habits that you are trying to develop.

When we are trying to create new, healthy habits, we need to give ourselves the best possible chance for success. This means limiting negative influences and distractions, and taking it one small step at a time.

Tiny Steps to Big Change

Successfully changing your financial behaviors can be a frustrating, challenging process. Don’t expect to boil the ocean and change your behavior overnight. Go easy on yourself: don’t deprive yourself in hopes to ‘train’ yourself and wean yourself off of activities you’ve become accustomed to. This type of ‘cold turkey’ strategy will be difficult to maintain as you go about with your everyday life, since you will be tempted to revert to old patterns if you don’t change your context.

In the immortal words of the great philosopher Aristotle, “we are what we repeatedly do. Excellence, therefore, is not an act, but a habit”. Aristotle knew that with slow, deliberate choices, anything (including excellence!) could be accomplished.

The key to lasting behavior change is developing new tiny habits over time. This approach was developed by Dr. BJ Fogg of Stanford and focuses on easing yourself into change with tiny modifications. To develop tiny habits, follow these simple steps:

1. Choose three new behaviors to develop

Choose three new behaviors you would like to incorporate into your life, and focus only on those three. They should be behaviors you perform at least once a day and require little effort.

One tiny habit I would like to develop is packing lunch for the office everyday so I spend less money eating out.

2. Pick a trigger

To successfully develop a tiny habit, you need to pick a trigger that will motivate and remind you to perform your new habit. It will help automate the behavior and encourage you to sustain your habit long term. A trigger should always take place before the new tiny behavior. When choosing the right trigger, it’s critical to think about the right time and place for your new habit.

In the lunch example, I will need a trigger that takes place in my apartment in the morning since that is where I will need to prepare my lunch. So what are the activities I do every morning in my apartment that could be a trigger? Shower, brush my teeth, get dressed, blow dry my hair.

I choose brushing my teeth because my bathroom is next to my kitchen and every morning, after I brush my teeth, I will make my lunch for the day. The trigger of brushing my teeth will help me create the new habit without an explicit reminder or alarm. I will engrain in myself that “after I brush my teeth I will prepare and pack my lunch for the day”.

3. Celebrate success

One of the most important steps in the behavior modification process is celebrating every little victory. Every time you do your tiny habit, tell yourself how proud you are, physically pat yourself on the pack, or simply smile and revel in your accomplishment. By creating a positive emotional connection to your new habits, you will take greater pleasure in the habit and motivate yourself to stay on track.

Every morning, after I see my prepared lunch on my kitchen table, I will smile to myself and tell myself how great I am. It may seem a bit self-indulgent and silly, but I imagine it will become one of my favorite moments every morning.

Tiny habits can pay off big financially. When I’m able to successfully pack my lunch every morning, I will save an average of $64 a week, totally $256 a month, and a whopping $3,072 a year.

You’ve Gotta Want It

At the end of the day, the most important thing when swapping out your old habits for new tiny habits is that you need to want it. You need to crave the meaningful positive change that your tiny habits will bring to your life and understand the ways in which your efforts will pay off. So time to understand the connection between your finances and your everyday life. Set simple, attainable goals that are directly related to your financial dreams and life goals. Tying your tiny behaviors to your hopes and dreams is a powerful motivator. Soon you will find yourself developing habits that go beyond your wallet and impact other areas of your life, like your health and your relationships.

We live in a society where money is an unavoidable necessity. The trick to creating a happy, healthy, financial life is to make your money work for your life - and not the other way around.

If you want to reach a goal, you must ‘see the reaching’ in your own mind before you actually arrive at your goal - Zig Ziglar

Are you changing any habits this spring? Share your plans in the comments!

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Image Source: Funding Gates