3 Simple Steps to Help Change Bad Money Habits [Infographic]

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AlamyBy Anna Williams

Humans are creatures of habit — probably more than we even realize. In fact, researchers have found that almost half of everything that we do in a day isn’t a decision, but a habit that we formed somewhere along the way.

And that includes a lot of the money “decisions” that we make on a regular basis essentially on autopilot, which has the potential to wreak serious havoc on our wallets. Case in point: You always head to Costco (COST) for your weekly grocery run, where you end up supersizing everything on your list — even though you’re a household of two.

If you’re aware that such habits are impacting your own finances, but you just can’t seem to shake them, the good news is that change can be possible!

We’ll walk you through three simple steps that you can take to help rewire your brain — and then you can use our handy infographic below to personalize your own plan of action to help turn those wallet-busting bad habits into money-saving good ones.

Step 1: Identify Your Trigger

Start by pinpointing the cues that set off your bad habits, says LearnVest Planning Services Certified Financial Planner Katie Brewer. In other words, figure out what’s sparking your money decision. After a long day at the office, do you habitually fend off stress by doing some online shopping? Or do you find that whenever you go to dinner with your foodie friend, you somehow always end up ordering the steak? Whatever your vice, you’ll have more control over your bad money habit once you know what’s prompting the behavior.

Step 2: Determine Your Real Reward

Once you’ve identified your trigger, you’ll need a substitute payoff. Maybe your nightly, stress-relieving ritual doesn’t end with a purchase from Amazon.com (AMZN), but a phone call with a friend instead. So you still have a means to decompress — but you’ve redirected that urge into a healthier habit for your money.

Brewer also recommends focusing on a long-term reward — your ultimate money goal — every time that you feel the need to partake in a bad habit. Write down that goal (“a two-week vacation in Costa Rica” or “being debt-free by age 40”) on an index card and then put it in your wallet. This will serve as a reminder how the little things that you spend on everyday are redirecting funds away from that big-picture reward.

“When you’re feeling the urge for that bad habit — and you have an angel and a devil on each shoulder — you can pull out the card to help refocus on your long-term goal,” Brewer says.

Step 3: Create a New Routine

The final step is to reinforce your new routine by writing down clear instructions for what to do when you feel the urge to spend unnecessarily. Studies show that this is one of the most powerful ways to establish a new habit.

“It’s just like getting into a new workout routine. Instead of focusing on ‘I want to lose 30 pounds,’ you focus on ‘I’ll go to the gym twice a week,’ ” Brewer explains. “If you treat habits in this way — and focus on what the small step is that you can accomplish each week — then you’ll really make big progress in helping to conquer those bad money habits.”

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