Time to read : 5 Minutes
When it comes to upholding good habits, we all have our weaknesses – and that applies to our money, too.
Whether you’re a sucker for Uber Eats or you love a late night skincare haul, there are all kinds of ways our financial behaviour can catch us out. Seemingly small amounts add up over time, and leave a big hole in our bank balance. But you don’t have to be a victim to your vices. Here’s how you can bust your bad habits with just a little bit of focus.
What’s your financial weakness?
The first step to busting your habits is identifying what’s tripping you up. You probably have an idea of your financial weakness. It could be:
takeaway
clothes / fashion
homewares
skincare
op shop treasures
shoes
fitness equipment
afternoon sweet treats.
It helps to comb through your bank statements and see where money is really going. You’ll soon see the areas you’re spending more than you’d like.
What is a habit challenge?
The idea of a habit challenge involves isolating one singular category of your spending to focus on reprogramming that habit.
Rather than trying to optimise all areas of your finances in one go, you focus entirely on one aspect of your financial behaviour, like Uber Eats orders or shopping online.
This gives you the space to understand why you spend in that area, why you cave in, and how you can tweak the behaviour to better align with your financial goals.
I recently completed a one year challenge of not buying any clothes, and it was quite life changing. By isolating my spending behaviour in that one category, I was able to step back and see what was making me want to buy clothes and the cycles of behaviour I was stuck in.
I was able to redirect the money I’d have otherwise spent, to things that mattered most to me, and reduce my reliance on that behaviour. When you get used to living your life without those vices, you break the cycle of reliance and free up money for use elsewhere.
Kate Browne, Compare Club’s Head of Research agrees, so it’s over to Kate for a bit…
Kate's fashion challenge
I’ve been following Emma’s content for a while now and really identified with the spending habits she talks about, particularly with shopping for clothes.
I recognised I was often shopping online quite mindlessly, or shopping to cheer myself up. So since the new year, I set myself a challenge to try and not buy any new clothes and it’s mostly been a success. I confess that I’ve bought a pair of jeans (after my teenage daughter ‘borrowed’ my last pair and never returned them), and I’ve bought a jacket for when I went to Japan in winter, but I’ve mostly stopped hitting “add to cart.”
For me it was important not to feel guilty or like I was being deprived, as I love clothes and viewing fashion. So I continue to look but also tell myself there is some leeway there if I really, really want to buy something.
What’s been interesting is I now understand where the triggers come from. I’ve found that while I still enjoy looking at clothes the urge to buy them is a lot less. And if I really want to scratch that itch I’ve followed Emma’s advice to look at platforms like Pinterest for inspiration, for using what’s already in my wardrobe without the retail element. Much to my surprise I find by doing this I still get the dopamine hit without the hit to my credit card.
Now, it’s back to Emma on how you can get started with your own challenge and break those bad spending habits.
How to create your challenge
Ready to set your own habit challenge? Here’s how to do it.
1. Set the parameters
Choose your category of spending and set your parameters. Will you abstain from the spending behaviour altogether like me, or will you set a limit on what you can spend?
For some people it works best to completely eliminate the behaviour. Others prefer to set a limit, for example buying only five items of clothing per year, or one Uber Eats order per month. Choose carefully, in a way that challenges you, but feels achievable.
2. Set your time frame
Decide how long you’ll make this commitment for. You might want to start with a one month mini challenge, or you might choose to dive into a longer challenge upfront. It’s your call.
If it’s your first time and you want to test the waters, it’s perfectly ok to set a short term goal – you can always go from there.
But making sure your challenge is time bound is critical to holding yourself accountable and giving yourself room to interrogate your behaviour. Plus, it’s far more manageable and easier to stick to.
3. Set up your environment
Next, set up your environment for success. This requires you to look at when and how you’re currently engaging in this habit, and setting yourself up to be able to change it.
This step is all about increasing friction between you and the behaviour you’re trying to change, and decreasing friction between you and the desired behaviour. The trick is to make it easier to do the right thing, and harder to do the wrong thing.
Start with things that increase friction. For example, if you’re ditching food delivery, consider deleting the apps from your phone. If you’re trying to kick your online shopping habit, put a site blocker on your browser to stop you from checking out. If you find you’re always grabbing snacks using Apple Pay, remove your cards from your phone.
Then, consider what would need to happen for you to succeed. If you’re not buying in a certain category, what are you doing instead, and how can you make it easier for you to do that?
When I gave up buying clothes for a year, I spent time making outfits with the clothes I already had and cataloging them with photos in my phone. This made it easier for me to wear what I already had, because I couldn’t tell myself I had nothing to wear when I had an album full of outfits!
If you’re ditching skincare spending, you could gather all your existing products and make it your project to use them up. If you’re saying no to convenience foods, you could try a new recipe each week to encourage you to cook at home – and it could save you money too.
4. Choose your margin for error
A margin for error gives you a better chance of success by making failure less likely. Rather than allowing one mistake to mean you’ve ruined the challenge, setting a ‘good, better, best’ margin can take the pressure off.
For example, your ‘good’ target might be buying five items of clothing this year. Your ‘better’ target might be buying three items. Your ‘best’ target would be buying none at all.
Be aware: planning a challenge is always more exciting than actually doing it! A margin for error can help you stay the course when resistance or temptation sets in.
5. Get started and measure your progress.
Now you’re ready to get started and track your progress. It can help to set a savings goal at the same time, to keep you motivated. For example, documenting the amount of money you have saved that you’d otherwise have spent on your weekend takeaway order.
Bottom line
Throughout my year without buying clothes, I saved around $5,000 compared to previous years. I discovered the clarity around my spending habits translated to other areas too.
I spent less on makeup and skincare without even trying, and my husband unexpectedly ended up finishing the year without buying any clothes either, so it was a double win for our household’s bottom line!
Are you ready to take on your own habit-busting challenge?!
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Financial disclaimer
The information contained on this web page is of general nature only and has been prepared without taking into consideration your objectives, needs and financial situation. You should check with a financial professional before making any decisions. Any opinions expressed within an article are those of the author and do not specifically reflect the views of Compare Club Australia Pty Ltd.
