How to Break Your Bad Money Habits

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This article is reproduced with permission from NerdWallet.

Some bad habits affect our physical health, such as smoking, biting our nails, or eating too much junk food. But others weigh on our financial health.

How do you know if you have unhealthy financial habits and what can you do to develop better ones? Follow these three steps.

1. Deepen your relationship with money

Relationships with money are complex. It is not always easy to identify financially unsound behavior. But there are signs you can look for. Common problems include spending more money than you earn, neglecting to build an emergency fund, and not saving for retirement.

Answering a financial health questionnaire can be a good first step towards detecting weak points. However, our struggles don’t always reflect bad habits or poor decision-making. Many experts say it’s important to consider the role that systemic issues can play in shaping financial health.

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“Not being able to get a living wage, not having medical insurance, having student loans in a career you can’t find a job for. The fact that there is nowhere in the country where someone living on minimum wage can rent a two-bedroom apartment. These are all systemic issues,” says Saundra Davis, founder of Sage Financial Solutions, a San Francisco Bay Area-based organization that focuses on providing financial services to low-income communities.

If you’re dealing with these kinds of systemic issues, focus on seeking support. United Way’s 211 service can put you in touch with resources if you’re struggling to pay your bills or meet your basic needs.

On the other hand, if your income should be enough to cover your expenses but isn’t, that’s when you should look at your behavior, Davis says. What choices do you regularly make and what do you have the power to control?

Look for models. Maybe you shop online when you are bored or upset. Or you ignore your debt because it is overwhelming. Maybe you tend to spend on windfalls instead of using money intentionally because your family didn’t stress the importance of saving growing up.

To verify: How this 38-year-old man went from “deep poverty” to a millionaire

Emotions and experiences can have a major impact on our financial habits. This is why it is also possible to develop unhealthy habits if you are in good financial health. For example, a person who pays all their bills on time and has a lot of savings may still feel anxiety about spending or argue about money with a partner.

“A lot of times there’s this story of financial scarcity and loss somewhere in their background that isn’t resolved, leading to them not being able to fully connect to the fact that they’re actually financially secure. right now,” says Ed Coambs, Certified Financial Planner and Financial Therapist. in Charlotte, North Carolina.

Also see: Have you received student loan debt relief? Know the tax consequences

Once you better understand what’s behind your unhealthy habits, you can begin to fix them.

2. Set personal goals

Ask yourself, “Where are you trying to get to?” And where are you right now? And then how do you bridge that gap? Davis said.

Setting financial goals can put you on the path to healthier habits. Your goals can revolve around specific dollar amounts, such as being debt-free or saving three months of expenses in an emergency fund, Davis says. Or, the goal may be to change your mindset about money, such as becoming more mindful of your spending or getting comfortable discussing money with others.

Create a plan that supports your vision for financial health. Suppose you want to increase your emergency savings or make credit card payments on time. Automating these transactions can help. You can transfer a specific amount from your checking account to savings each month or set up minimum credit card payments through your issuer’s website.

Coambs suggests checking your finances once a month or every two months. Review your budget and behavior to determine if you’re on track to meet your goals.

3. Rely on resources

Breaking financial habits can be difficult. But you don’t have to do it yourself. There are people and activities you can turn to, “whether it’s journaling or having a conversation with your partner or any other way to help you feel safe around you again. about money,” says Coambs.

There are also many professionals who can offer advice. A financial therapist, for example, can help you unpack your financial relationships.

“We all have a history of money. And if your financial history is one where there’s a lot of emotional pain and chaos related to money, then often times those issues from your past need to be treated like any other type of trauma,” Coambs says.

You can also choose to work with a financial planner or seek free advice on managing your budget, credit, or debt from a nonprofit credit counseling agency.

Read next: Credit card debt will get more expensive – here’s how to pay less interest

Along your journey to improving your money habits, learn to stand up for yourself, says Davis. “What it can do is reduce or eliminate the shame of going for help where you need it. If it means public benefits, if it means family and friends, whatever it means to you,” she says.

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Lauren Schwahn writes for NerdWallet. Email: [email protected] Twitter: @lauren_schwahn.

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