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Habits play a massive role in shaping our lives. Even if we aren’t aware of it, habits influence everything from our health and success to relationships and overall happiness.
Habits are great when they are positively influencing our lives. Unfortunately, most of us have habits that aren’t — often influencing us in negative ways that can be difficult to break.
Let’s take a look at how habits form and the steps you can take to build new healthy habits for your financial health.
The habit loop
Charles Duhigg, author of The Power of Habit, explains that habits consist of three basic components:
- Cue: the trigger that prompts your brain to start building a habit.
- Routine: the action you take in response to the cue.
- Reward: the benefit your brain receives, reinforcing the habit.
For example, with smoking:
- Cue: seeing other people smoking.
- Routine: smoking a cigarette.
- Reward: nicotine and/or social interaction.
This same loop applies to both good and bad habits. The difference is, negative habits often offer instant gratification — but with positive ones, like exercising or saving money, you may not feel the instant rewards.
Strategies for building better habits
Understanding the habit loop is key to forming better habits. Here are six tips to help make positive changes stick.
1. Get clear on why you're doing this
When starting a new habit, particularly one that offers delayed gratification, it's important to know why you're doing it. Whether it's becoming debt-free for financial freedom or exercising for better health, having a clear "why" will help you stay motivated. Write down your reasons for forming your new habit and revisit them when you need encouragement.
2. Start small
Small, manageable actions are the foundation of habit change. If your goal is to write a book, start with a paragraph a day. Want to reduce meat consumption? Begin with one vegetarian meal a week. For financial goals, setting aside a small amount each month, towards debt or savings. These small steps build momentum and make it easier to stick with the habit.
3. Remove friction
The easier it is to perform a habit, the more likely you are to stick with it. For example, if budgeting feels overwhelming, try using an app like Quirk or Emma to automate and simplify the process. These tools reduce the effort required to build a budget and will help turn a challenging task into a consistent routine.
4. Tie new habits to existing ones
Linking new habits to established ones helps them stick. For instance, if you already have the habit of brushing your teeth, you can tie flossing to that routine. Similarly, if you frequently check your phone, use a habit-tracking app like SnapHabit or Habitica to remind you to perform your new habit.
5. Tell people about your goals
Sharing your goals with others can keep you accountable. When you announce your goals to friends, family or even publish them on social media, you create healthy social pressure to succeed. Apps like SnapHabit allow you to share progress and celebrate milestones with a community, which can really help you stay motivated and on track.
6. Celebrate Progress
According to behavioural psychologist BJ Fogg, celebrating small wins is key to building habits. Celebrate at three points — the moment you remember to do the habit, while doing the habit, and after completing it. This will create positive emotional associations with your habit. Whether it’s a mental fist pump or imagining a cheering crowd, celebrating these moments reinforces the habit and motivates you to continue.
Ready to form your first financial health habit?
Habits shape a large part of our lives, and understanding how they work is the first step in changing them. By applying cues, removing friction, and celebrating small wins, you can build habits that improve your health, success, and happiness. Keep the focus on small, consistent changes, and remember to reward yourself along the way.
If you’re ready to start paying off your debts and forming healthy habits for your financial wellbeing, log in to your online account with your 6-digit reference code today to explore your repayment options.
