It takes a lot of practice (and willingness) to become a champion of responsible spending and saving to meet your long-term goals. If you’re a bit out of shape in the financial department, don’t try to change everything overnight. Instead, embark on a financial evolution that fosters the kind of behaviors that will improve your financial standing over time. Here are three fundamentals to embrace as you evolve to a new financial you in 2015.
1. Be more aware. Paying more attention to your finances can make a big difference when it comes to achieving your long-term financial goals. You may overspend because you don’t have a handle on your budget and you’re not exactly sure how much you can afford to spend. Move into the new year with renewed focus on your money—where it comes from and where it goes. You may want to try forgoing the use of your credit card and only spend money on things you can afford through your bank account. Also, make it a habit to review your bank statements each month so you can see where your money is going and make adjustments if necessary.
2. Reinforce the good. Don’t underestimate the power of your inner self and how emotions drive your financial behaviors. For example, you may dread paying bills or saving money because it makes you feel deprived or anxious. Borrow from the field of psychology and use conditioning and rewards to reinforce behaviors you want to repeat. Start by practicing positive self-talk to help align your heart with your head. Then sit down to pay bills with your favorite music playing and a favorite snack or beverage as refreshment. Use a notebook to record your successes and mentally thank yourself for completing the task. Over time, you may start to look forward to the positive feelings now associated with keeping your finances in order.
3. Add and subtract. Changing how you behave financially involves subtracting behaviors and adding others. For every “bad” financial habit you want to eliminate, identify two or more smart financial habits to take its place. For example, if your goal is to stop accruing late fees, identify new actions that will help you succeed, such as opening bills immediately to be aware of due dates, programming alerts in your calendar to trigger payments or signing up for automatic payments. Before you know it, late fees will be a thing of the past and you’ll also have a better handle on your upcoming financial obligations.