Why it’s hard to fix financial habits

By Alice Boyes

January 26, 2021

Dr Alice Boyes is author of the books The Healthy Mind Toolkit (2018) and The Anxiety Toolkit (2015).

Although many people would like to improve their money habits, there are some psychological reasons that this is hard. When you understand these, you can set yourself up for more success.

Confronting debt evokes pain

For example, you can’t address your credit card debt without reflecting on the decisions that led to accumulating that debt and that might invoke shame – which people want to avoid. 

Try writing about those bad situations and/or decisions. Do this for 20 minutes for five days in a row. Writing about emotional memories helps us process them. After this, it’ll be easier to experience the memories without feeling flooded with intense emotions and the desire to escape them. Try 10 minutes writing about what happened and how you felt and 10 writing a self-compassionate response.

Small changes feel too small

If you’re $30,000 in debt, it doesn’t seem important to cancel a $10 subscription you’re not using. Author James Clear makes a powerful point, “You should be far more concerned with your current trajectory than with your current results. If you’re a millionaire but you spend more than you earn, then you’re on a bad trajectory.” Conversely, from any starting point, you can be on an improving trajectory.

If your net worth is negative, to feel less overwhelmed, focus on your trajectory. With this approach, any change in your trajectory becomes meaningful. 

Perfectionists struggle

Perfectionists can feel unmotivated to chip away at self-improvement if they can’t be perfect. But we all have shirts we regret buying and investments we wished we’d pulled the trigger on earlier. 

Self-compassionate talk is a fantastic antidote to all of this. The problem? Perfectionists think they don’t deserve it. The more you remind yourself everyone makes mistakes and has regrets, the more motivated you’ll be to improve, even when perfection is impossible. 

Overthinking every decision will detract from your capacity to focus on what matters, so focus mostly on big-picture decisions.

Our future self feels like a stranger

Sound money habits are transformed into wealth through compounding. Initial results are small but the gains get huge in later years. A reason we find it near impossible to care about this is that our future self feels like a stranger we don’t know yet. So, why would we care about their security as much as we care about our needs and wants now?

Try drawing two circles, one labelled “current self” and the other “future self.” Draw how much these feel like they overlap. Imagine your future self. What does future-you enjoy? How do you spend your time? What are your habits? As you imagine your future self in more detail, see if the circles overlap more. 

Take heed and be realistic: It’s not likely your future self will magically have more self-control and dedication. 

For couples, healthy finances can’t be a solo goal

Financial goals need to be shared goals. No one is on the same page as their partner about everything. You might avoid talking about money because you want to avoid conflict. Or, you might feel your partner is sabotaging your financial success.

Rather than avoiding, act constructively. Take self-responsibility to the extent you can. Be the role model you’d like to have. Experiment to see what approaches help you become more united in your money goals.

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