We know how easy it is to lose track of your finances. There are 1000 things we need to do in our day-to-day lives, and setting up a solid financial plan can be a tough challenge.
We tend to postpone planning our finances, which quickly becomes a habit and in some cases, later might turn into never. So how do you change bad habits and regain control over your finances? We'll tell you.
Our habits strongly determine our lives because what we do every day becomes our life. Already William James said that "habits embrace a huge part of our lives." Our habits are closely related to our goals, and both guide our behavior.
Our habits are processes that often run on auto-pilot. External circumstances, such as stress, distractions, or anxiety, may diminish our motivation to achieve our goals – we quickly slip back into old habits.
Even if our habits are often subconscious, we determine them ourselves. If we become aware of our habits, we can change them and form new habits out of old ones.
With Zuper, we want to break this cycle. We've created a budgeting app that automates processes and provides you with the information you need to make better decessions.
Behaviors that we repeat turn into habits. The more often a new habit is performed, the less effort it takes, and so it becomes easier for you from time to time.
Regularity is the key.
In their book Psychology of habit, Rünger and Wood point out that "essentially, people with strong habits process information in ways that reduce the likelihood that they will consider acting otherwise."
For you, this means that the more regular your habits, the stronger they become. If you use a spending app more often, it will be easier to keep track of your expenses. Controlling your finances becomes a routine in this way.
Imagine the things you think and do form many small paths in your brain, the more often you go one way, the faster that path turns from a short trail into a highway.
The fastest way to do this is with joy.
You probably know this from your own experience; the more you enjoy doing something, the faster you learn it. It's the same when it comes to managing your money.
When you perform or experience a positive interaction, like saving money or reaching one of your goals, your brain releases dopamine.
Dopamine acts as a reward system in your brain and plays an essential role in forming new habits. You can train yourself to associate certain experiences, like reaching a financial milestone, with a positive outcome, therefore creating a positive feedback loop.
An easy way to do this is to celebrate even the smallest of successes. They are and will remain successes. The important thing is that you associate your finances with positive feelings – only then will it be easier for you to deal with them.
"Re-learning" things we've already learned can be very challenging. The highway we have perhaps deepened over the years, can now lead us in the wrong direction.
A key aspect is that environmental factors and our surroundings profoundly influence our behavior. In other words, surrounding yourself with the same old triggers makes it very easy to fall back into the same old routine.
So don't let yourself be bogged down if your budget doesn't go the way you want it from the beginning. Don't give up, but stick with it. Identify what went wrong and consider that when you're setting up your next budget.
Sticking with your new habit is twice rewarding! First, you will continue to release dopamine, which is the essence of happiness, and second, you can see your finances improve, which will set you up for long-lasting success.