Do you ever feel like you’re stuck in a cycle of bad money habits? You say you’re not going to spend on a particular thing, then you do it anyway. You promise this is the last time, for real this time.
Money deja vu happens to all of us. We make promises to ourselves that are harder to keep than we realize; when we break the promise, shame makes us vulnerable to even worse money habits. It’s a destructive money pattern, but you can regain control.
Step one, realize that breaking out of an unhealthy money pattern is about more than willpower. Step two, read on.
How to break bad money habits
1. Get to the root of the money pattern
The patterns we develop aren’t from nowhere. They’re the result of biases, internal money scripts, and things we’ve been taught our whole lives.
That’s why trying to fix a money habit without knowing the root is a fruitless endeavor. Get to the core of what’s causing it so you can understand why it’s happening. Only then can you start taking steps to change the habit.
A common issue is turning to money to fill a void. This can lead to regularly indulging in retail therapy.
There’s also the habit of letting fear drive your money decisions. That could prevent you from doing things that could grow your money, like investing. It could even cause you to do things that might lose money, like selling investments too early because of market fluctuations.
In both cases, you might initially think that overspending or being too cautious are the issues themselves. But they’re not — the thing underneath is the issue. Why do you overspend sometimes? Why do you take caution to the extreme?
It’s not always easy to get to the root of the problem. If you find yourself getting nowhere in your search for answers, seek help from a financial therapist.
2. Break out of autopilot
Habit aren’t inherently bad. They exist so we can easily process the hundreds of decisions we make daily. As explained in Psychology Today:
“Wendy Wood … points out that contextual cues trigger habitual behavior. In other words, when you are in a rut, you have mindlessly outsourced your brain’s executive control to these cues. You run on autopilot. It is easier to respond to such cues reflexively than think about it and do something else.”
Autopilot is efficient, but problems arise when it leads to things that aren’t good for us. So how can you regain control? According to Wood, it’s to “inhibit” your automatic response to a trigger:
“Bad habits, unlike responses to temptations, are controlled most effectively through spontaneous introspective awareness and executive control. (‘Why am I doing this?’ … ’I don’t want to be doing this’ … ‘don’t do it’ … ‘am I backsliding?’)”
Put simply, stop and ask yourself “why” before you complete the action. Regular mindfulness, especially when you’re engaging in the activities that trigger your money patterns, is vital to break your money pattern. You might find that breaking out of autopilot this way alerts you to a bad money habit before you complete the act.
3. Replace your money pattern with something that solves the core issue
Even after you discover and understand your triggers, you still have to fight the impulse to act on them. Since the impulse will still happen, making sure it leads to good money habits instead of bad ones is how you can win that fight.
For example, if you have a natural impulse to spend money online after a bad day, why not switch that impulse to transferring money to a savings account instead? If you can’t seem to stop yourself (yet) from looking at items online, you could even put the exact amount of money your purchase would have been into your savings account.
This simple act could make you feel so good that you no longer want to make the purchase, thus turning a negative trigger into a positive reaction.
Let’s say you deal with a fear-based money mentality that gets triggered. Instead of slipping into a downward spiral, reach out to a financial professional you know and trust. Turn your worries into questions, your spiral into constructive answers.
Suddenly, you’ll be developing a habit of gathering information when you feel fear — a much more positive reaction than making money decisions you might regret.
4. Remember why this is important to you
In the heat of a moment, it’s really hard to slow your brain down and follow through with good money habits. When you struggle with this, remind yourself why this matters. Remembering your “why” is a key element in setting goals and attaining them.
If it helps, create a visual representation of what good money habits will give you and put it in your wallet or next to your computer. You could even name your savings account after your goal. It doesn’t matter how you do this, just that you find a way to keep the end result at the forefront of your mind when those impulses come up.
We all need reminders of why we want to do the things that are good for us, especially since it usually means we have to delay gratification. But rewarding yourself with reminders of your ultimate goal (and even visualized progress towards those goals) can help you feel that gratification you naturally desire when you need it most.
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1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 6.97% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 6.30% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at firstname.lastname@example.org, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
APR stands for “Annual Percentage Rate.” Rates listed include a 0.25% EFT discount, for automatic payments made from a checking or savings account. Interest rates as of 11/8/2018. Rates subject to change.
Variable rate options consist of a range from 3.27% per year to 6.09% per year for a 5-year term, 4.64% per year to 6.14% per year for a 7-year term, 4.69% per year to 6.19% per year for a 10-year term, 4.94% per year to 6.44% per year for a 15-year term, or 5.19% per year to 6.69% per year for a 20-year term, with no origination fees. APR is subject to increase after consummation. The variable interest rate will change on the first day of every month (“Change Date”) if the Current Index changes. The variable interest rates are based on a Current Index, which is the 1-month London Interbank Offered Rate (LIBOR) (currency in US dollars), as published on The Wall Street Journal’s website. The variable interest rates and Annual Percentage Rate (APR) will increase or decrease when the 1-month LIBOR index changes. The variable interest rates are calculated by adding a margin ranging from 0.98% to 3.80% for the 5-year term loan, 2.35% to 3.85% for the 7-year term loan, 2.40% to 3.90% for the 10-year term loan, 2.65% to 4.15% for the 15-year term loan, and 2.90% to 4.40% for the 20-year term loan, respectively, to the 1-month LIBOR index published on the 25th day of each month immediately preceding each “Change Date,” as defined above, rounded to two decimal places, with no origination fees. If the 25th day of the month is not a business day or is a US federal holiday, the reference date will be the most recent date preceding the 25th day of the month that is a business day. The monthly payment for a sample $10,000 loan at a range of 3.27% per year to 6.09% per year for a 5-year term would be from $180.89 to $193.75. The monthly payment for a sample $10,000 loan at a range of 4.64% per year to 6.14% per year for a 7-year term would be from $139.65 to $146.76. The monthly payment for a sample $10,000 loan at a range of 4.69% per year to 6.19% per year for a 10-year term would be from $104.56 to $111.98. The monthly payment for a sample $10,000 loan at a range of 4.94% per year to 6.44% per year for a 15-year term would be from $78.77 to $86.78. The monthly payment for a sample $10,000 loan at a range of 5.19% per year to 6.69% per year for a 20-year term would be from $67.05 to $75.68.
However, if the borrower chooses to make monthly payments automatically by electronic funds transfer (EFT) from a bank account, the variable rate will decrease by 0.25%, and will increase back up to the regular variable interest rate described in the preceding paragraph if the borrower stops making (or we stop accepting) monthly payments automatically by EFT from the designated borrower’s bank account.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
Offered terms are subject to change. Loans are offered by CommonBond Lending, LLC (NMLS # 1175900). If you are approved for a loan, the interest rate offered will depend on your credit profile, your application, the loan term selected and will be within the ranges of rates shown.
All Annual Percentage Rates (APRs) displayed assume borrowers enroll in auto pay and account for the 0.25% reduction in interest rate. All variable rates are based on a 1-month LIBOR assumption of 2.28% effective October 10, 2018.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3||Undergrad & Graduate|
|2.47% – 6.30%1||Undergrad & Graduate|
|2.51% – 8.09%4||Undergrad & Graduate|
|3.02% – 6.44%2||Undergrad & Graduate|
|2.69% – 7.21%5||Undergrad & Graduate|
|2.79% – 8.39%6||Undergrad & Graduate|