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Like many other areas of life, when it comes to money management, a lot of the issues that many of us have are related to the bad habits that we have fallen into. You may be an over spender, or perhaps you’re the kind of person more likely to stick your head in the sand than deal with the red letters landing on your doormat. Either way, negative money attitudes are simply behaviour patterns that have been picked up over the years – and that means that they can be altered. Sometimes, the easiest way to take the first steps towards changing those patterns is to trick your brain into leaving them behind.
One of the easiest ways to keep overspending and wasting money is through ignorance. If you have no idea what is coming into your account or going out then you don’t really know how much you’re spending or what anything costs. Many of us don’t want to think about our finances – especially if times are tight – but a lack of awareness of your money matters only makes things worse. Get into one new habit and spend some time every day going through your finances. Just five minutes a day logged into online banking or noting down yesterday’s purchases will give you an awareness of income and spending, and that’s the first step on the road to tricking yourself into better money management.
Many of us, when we set money goals, will often simply apply ‘whatever is left’ at the end of the month to those goals, rather than defining a monthly savings amount and making that one of our priority payments. Whether you’re paying off debts, putting aside cash for a new bathroom, saving for a deposit for a house or the holiday of a lifetime, making that financial goal a priority. Setting up a standing order every month and transferring the cash out into a separate account will trick your brain into learning to manage without the amount of the payment, rather than making do with a few pounds at the end of the month when the rest has been spent.
If you have a smart phone then there are lots of useful apps to help you begin better managing your money. You can set reminders for yourself when payments are due, set up alerts when you’re about to go into overdraft or miss a payment and use the various calculation features to see how much you’d need to put aside per month to reach a particular goal. Just make sure that you position the app somewhere on your phone where you’re likely to see – perhaps next to another favourite app, such as Twitter or Instagram – so that it doesn’t sit there unused. Apps can help trick your brain into feeling like your finances are a game that you need to win, rather than a drag that you need to tolerate – sometimes that element of competition is all we need to focus.
Yes, you may have a pretty significant overall goal, whether that’s buying a house or paying off a student loan, but the key to avoiding boredom and disillusionment is to start with much smaller goals. Trick your brain into forgetting the larger sums and the sacrifices that may be needed to achieve them and start with small, achievable targets that will give you a sense of satisfaction every time. With each one completed you’ll feel more motivated to move on to the next.
Whether you’re forgetful, easily distracted or just prone to spending your cash on things that you shouldn’t, if you automate your payments then you trick your brain into believing that the money tied up in those payments isn’t even available to be spend. Time your payments so that they are taken out when you have cash in your account (for many people this is straight after payday) and then work with what you have left. Time it so that rent or mortgage, savings, debt repayments, household bills and monthly costs are all paid before you even have time to wonder whether you’d prefer to spend the money on something more fun.
It’s just as easy to get into good habits as it is bad habits and once you’re in a routine then it becomes second nature. Get into the habit of checking your finances every day (as suggested above), doing your budgeting once a week, reviewing your bill payments once a month and setting financial goals every six months. Set a calendar reminder for yourself and treat it like just another task and soon your bad money habits will be long gone.
Solution Loans aims to help you take control of your finances and our website includes a lot of information and some tools that can help you do this.
Oliver Jones has written for Solution Loans since 2015. His passion for personal finance comes through in the 150+ blog posts he's written since that time. His talent for explaining all things money means he's covered topics as diverse as...Read about Oliver Jones
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