Financial habits are the patterns of behavior or practices that we follow when managing our financial resources.
Some of us are very strict with our budgeting, others are very disciplined with their savings, while others are very skilled at 'free-styling' and letting the chips fall where they may.
Humans are creatures of habit and what you choose to turn into a personal financial habit will eventually determine how healthy your personal finances will be.
The fact that we are creatures of habit means that we tend to follow the same routines, patterns, and habits in our daily lives.
This can be helpful in that it allows us to function efficiently and predictably, but it can also be limiting if we become too stuck in our habits and struggle to try new things or adapt to changes.
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Breaking a habit can be a challenging process, but it is possible with patience, determination, and a plan. Here are some steps to help you break a habit:
Identify the habit(s) you want to break: Start by clearly identifying the habit you want to break. This will help you focus your efforts and make it easier to track your progress.
For example, you may want to stop making impulse purchases, identifying this as one of your habits is the first step.
Understand your triggers: Determine what triggers or cues are causing you to engage in the habit. This could be a certain time of day, a particular location, or an emotional state.
Understanding these triggers can help you anticipate when the habit might occur and find alternative ways to cope.
For example, if your daily walk along River road after work is what triggers you to buy everything that appeals to the eye, you could try a different route home altogether.
Create a plan: Once you understand the triggers, create a plan to break the habit. This might include finding an alternative activity to do instead of the habit, setting reminders or alarms to help you stay on track, or seeking support from friends or a professional.
It takes a lot of personal effort and discipline to follow through with a plan, but it is usually worth it in the end.
Practice self-awareness: Pay attention to your thoughts and feelings as you try to break the habit. This can help you identify any negative self-talk or beliefs that might be sabotaging your efforts.
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Be patient: Breaking a habit takes time and effort. Don't get discouraged if you slip up or struggle along the way.
Celebrate your small wins and keep working towards your goal. We have all fallen once or twice but that's not what is important, getting back up and going for it again is what separates the winners from the losers.
Seek support: If you're having trouble breaking a habit on your own, consider seeking support from friends, family, or a professional.
They can provide encouragement and accountability as you work to break the habit.
Now that we know of ways to stop a habit, the next step is to identify worthwhile financial habits that we can try out in 2023.
It is generally believed that it takes about 21-66 days to form a new habit. However, this can vary greatly depending on the individual, the difficulty of the habit, and the consistency with which the habit is practiced.
Some experts believe that it may take longer for more complex habits to form, while others argue that habits can be formed more quickly with the right techniques and strategies.
Ultimately, the process of forming a habit is a highly individualized experience, and the length of time it takes may vary significantly from person to person.
Here are 5 Financial Habits to Try Out in 2023;
It is important to know exactly where your money is going each month in order to make sure you are living within your means.
You can start by writing down all of your income and expenses for the month and see where you can cut back or save more.
Whether it's saving for a down payment on a house, paying off debt, or building up an emergency fund, having specific financial goals will help you stay focused and motivated to make smart financial decisions.
Make a conscious effort to save more money each month. Start by setting aside a small amount each paycheck and gradually increase it over time.
Be mindful of your spending habits and try to eliminate unnecessary expenses. Look for ways to save money, such as shopping sales, using coupons, or negotiating bills.
If you have any high-interest debt, focus on paying it off as quickly as possible. Paying off debt can help improve your credit score and free up more money for savings and investments.
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Other good financial habits you could consider trying out in 2023 are:
Paying bills on time: Late payments can result in fees and damage to your credit score. If you can avoid late payment fees then that is obviously the way to go. If there is no logical reason to delay a certain repayment then don't. It really is that simple and it could save you a tonne of money down the line.
Staying organized: Keep track of your financial documents and records to ensure that you are making informed financial decisions. You could try having a personal finance excel sheet or a ledger book (if old school is your thing) where you get to constantly keep track of your money.
Seeking financial advice: Consult with a financial professional to understand your financial options and make informed decisions about your money. As much as most shy away from it, seeking financial advice is not a sign of weakness, if anything, it shows that you are serious about your money.
Being mindful of spending: Avoid unnecessary purchases and consider the long-term value of each purchase before making a decision. You can use the 'do I need it now' question to help you decide if the item in question is a top priority or not.
Investing: Consider investing some of your money to help it grow over time. Look into viable investment opportunities and chamas, and also consult with qualified people that you trust in this regard.
Having a plan for the future: Consider creating a financial plan that outlines your long-term financial goals and how you will achieve them. The more specific it is, the easier it becomes to hold yourself accountable in the end.
Being patient: Avoid making impulsive financial decisions and take the time to research and understand the consequences of each financial decision you make.
It never hurts to take a step back and evaluate all the possible ramifications of a financial decision before taking it.