One Financial Habit to Change
There are many financial habits to work on over your lifetime. One financial habit you can commit to changing now is to hit pause when making a significant purchase in the hopes to change a behavior. Have you ever bought gym equipment only to have it buried underneath clothes in the corner of your room? Downloaded the latest meditation app and stopped using it after a week? While your intentions may be good, your dollars may just be falling into a black hole of wishful thinking.
New Year’s is coming up where we tend to make resolutions to better ourselves. And why not? It makes us feel better and gives us a sense of accomplishment if we are showing commitment to ourselves by making these purchases. Buying the latest gadgets. Signing up for classes. Purchasing new running shoes. The problem is, just having all the gear doesn’t mean that we have changed our behavior. And this could impact our finances if we’re constantly throwing money down the drain on things we don’t wind up using.
This can be addressed by thinking about each purchase in this way:
- First, do you have space for it in your spending plan? It may be a one-time purchase, so allocating funds from a ‘splurge’ savings account might be needed or it could be an ongoing expense in which case using some of your monthly funds allocated to hobbies or purchases would be appropriate. Either way, make sure you account for the spending within your budget.
- And next, are you just starting this new hobby or activity, or is this purchase or tool enhancing something that you’re already doing? If you already walk five miles a day, by all means, buy a treadmill so you can walk at home during the winter months! If this isn’t part of your routine, does having a treadmill really mean that you’ll start walking more? Maybe not.
- And lastly, is the motivation for making this purchase more of an emotional decision to make you feel better about yourself? If you are prone to impulsive shopping, you can set rules for yourself such as leaving an item in your online shopping cart and waiting a week until you make the purchase. This helps separate out the momentum of a too good to be true advertisement and allows you to determine if this is actually right for you or just a passing thought.
If the latest (fill in the blank) actually motivates the positive change you desire—fantastic! At least be cognizant that without thinking through these types of purchases first, you might not have the desired effect and feel like you’ve wasted money. The most important thing while you’re working on this financial behavior, particularly around the new year when we all are inspired to make positive changes, is also to create financial habits that are good for you as well.