A&I Wealth Management > Blog > Families > Healthy Money Habits

In the book, Power of Habit: Why We Do What We Do in Life and Business, Charles Duhigg does a wonderful job of telling long and interesting stories about the real-life benefits of changing what we do, when we’re doing things we’re not thinking about. Mr. Duhigg quotes at length research projects both famous and benign, recent and historical, and does a fair amount of investigating on his own. In short, get the Audible book and enjoy it in the car—we did!

Money habits to start

Of particular importance to us, healthy financial habits can yield decades of benefits for you and generations of advantages for your loved ones. Consider these habits:

  • Save more than you spend. Even in retirement, as any homeowner can attest, there are always big expenditures.
  • Avoid continually looking at your investments.
  • Talk with your financial planner on a regular basis. What regular means is different for every person. Sometimes once a year is enough. For others, whose lives are in transition (always in transition?) more often is better.
  • Treat all financial news (such as economic market commentary and the like) as entertainment. Remember that bad news sells.

Simple as they are, the four money habits I wrote above, are not easy. Changing whatever habit you—or a loved one—has could be difficult!

Golden rules of habit change

Mr. Duhigg’s “Golden Rule of Habit Change” could hardly be more simple, even if it is difficult. Every habit has three parts: the cue, the routine and the reward. Often, we don’t even know what the cue is. Nor do we know the reward that we’re giving ourselves; we just know that we don’t like the routine. So you keep the cue, keep the reward, but ditch the routine.

Here is an example, nail-biting: The Golden Rule of Habit Change

Mr. Duhigg describes a person who has a nail-biting habit she’d like to change. She was able to do this by finding a new routine—however simple—to replace the unwanted (nail-biting). The psychologist had her put a check-mark on a piece of paper whenever she felt the urge to bite. With a lot of practice, she figured out what reward she was getting (physical sensation) and her cue (boredom). She reported back to the psychologist and, over time, was able to replace the unhealthy habit with a new one. Her reward? She was able to go out in public, not be ashamed of her fingers, and felt more comfortable meeting people!

How to build healthy financial habits

Although we’re not brain researchers, I’m sure that if you’ve a habit you’d like to change, your financial advisor would be happy to help you identify the routine, find a healthy money habit to replace it, and then we can work together to discover the cue and the reward—so you can break the unhealthy habit for good! Give it a shot!

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    About the author

    Karl Frank, Certified Financial Planner ®, MSF, MBA, MA, is the President of A&I Financial Services LLC, a local business that specializes in wealth management, insurance planning, and retirement planning. Karl cares for business owners and the businesses that care for them. Learn More about Karl.