Article
Monday, July 18, 2016

Many of us have established bad financial habits. Breaking financial patterns can be made easier with some tried and tested behavioral modification techniques.

1.  Prompt yourself at the point of decision-making.  Put a sticky note on your debit and credit card saying “Do you really need to buy this?”  This will prompt a conversation in your head about whether or not you need to purchase this now or can put it off for a day, a week, a month.  Also, you can grapple with whether to pay cash or charge the purchase or service.

2. Identify your incentive to change your financial behavior. Articulate your motivator, write it down, and post it on your fridge or mirror so you regularly see it.  For some this may be an extrinsic incentive like saving up for a major purchase that’s important to you. For others this may be an intrinsic incentive like feeling better about yourself simply because you are “doing the right thing” by reducing your daily spending.  

3. Compete with a friend to see who can reduce your spending first.  Everyone likes a good competition, so find a friend or two to commit to paying off debt or reducing spending.  Make a personal spending reduction commitment and get your friends together for a friendly challenge.  Set the dates for the challenge and “weigh-ins.” Determine how to measure success.  Choose a prize. 

4.  Alter your default choice. Don’t do without; just do something that costs less.  If you regularly buy a latte, modify your selection to a cup of coffee.  If every Friday night you go out for a sit-down dinner with friends, suggest you get take-out or have a pot luck.  

5. Self-monitor with a debt reduction thermometer.  We’ve all seen fundraising thermometers - use the concept for debt reduction. Each time you knock off a portion of your debt, you colour in a piece of the thermometer.  Consider marking the notches with pay off amounts of percentage of the total debt.