24 Jan

Busting Habits


Financial habits are just as difficult for some people to make and break as any addiction or other bad habit. Yet others can change their habits quite quickly and effectively. Do those people just have more willpower?  Are they smarter? Are they somehow better than the rest of us?


In Gretchen Rubin’s book, Better Than Before, which is all about habits, she points out that there are really only a few ways that people change their habits:

  • An epiphany — an ahh ahh moment that changes everything.
  • They change their environment so that the habit is no longer possible.
  • Take baby steps toward change.

The first happens pretty rarely and typically as the result of a big life event, like a birthday.  The second can be difficult when it comes to finances.  Some people do things like freeze their credit cards to curb spending, but for the most part, we can’t go cold turkey with money.

So that leaves the third one.

Rubin argues that one great way to make baby steps towards change is to recognise when we’re making excuses.  She calls these excuses loopholes, because like loopholes in a legal contract, they give us a way to get out of living up to our new habits.

False Choice loophole – “I can’t do this, because I’m so busy doing that”

This is the loophole you invoke when you think you can’t have two things.  For example, thinking you can’t make lots of money AND have lots of freedom.  Or you can’t pay down debt AND have fun. Or that you can’t get organised with money because you’re too busy with a new baby, new job, etc.

Instead, ask yourself: “Can I have this and that?” or “Can I do this AT SOME LEVEL while maintaining my focus on my other short-term priority?”  It’s surprising how often that’s possible.

This is the key tenant in our Money Plans.  We never ask clients to give up the things that bring them the most joy in life; instead, we try to find ways to keep the things that are important to them and cut back in places that are less important.

One Coin loophole – “What difference does it make if I break my habit this one time?”

One of the most insidious of loopholes — because it’s absolutely true.

This loophole acknowledges the paradox: any one instance of an action is almost meaningless, yet the sum of those actions is very meaningful.  Whether we focus on the singular event, or the cumulative effect, that focus will shape our behaviour.  For example, one visit to the gym is well meaning, but the habit of going to the gym is invaluable.

Saying “it’s only once” is to deny a conflict between our values: we’re not choosing between French fries and healthy eating habits.  Eating one French fry is an insignificant act, but when we consider the accumulated effect of the French fries, the conflict looks different.

People often think this when they’re looking at savings. They think that the $50, $100, or even $500 they’re putting into savings each month isn’t that big of a deal, so they use the excuse to spend it “just this once.”  They are ignoring the compounding effect of saving over time (not to mention compound interest!).

‘This doesn’t count’ loophole – “I’m on holiday” or “it’s the weekend” or “it’s for the kids”

Clients often use this excuse when they’re trying to break a bad spending habit. For example, they have a habit of buying lunch every day, or buying more new tools because they’re on sale, or a pair of shoes every time they’re feeling down.  Even if their intention is to give up these spending habits, they’ll rationalise a slip up by saying, “it’s a special occasion…”

Unfortunately, everything counts and it’s the same money being spent whether you’ve had a bad day, did something good and ‘deserve’ a treat, or your kids are begging for it.

How knowing your loopholes can help you close them

Once you know which loophole your subconscious brain is likely to use, you become instantly more aware of them.

I found I became more aware when I was using them in my own life. It disrupts the automatic nature of the habit and allows you that moment to question — is that really true?  That momentary disruption is all you need to start breaking those habits that aren’t helpful and replacing them with new and better ones.

If any of this has struck a chord with you and you would like to find out more, we are happy to listen and help.  Drop me an email or click here to find a day and time that suits you to have a chat with me; I’m really very friendly.  Best of all, it’s absolutely free!

This blog was précised from an article by Mindy Cray, read the whole article here