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Creating New Spending Habits

Conserve willpower when you have to make money decisions
Willpower is like energy, the more you use the less you have. What does that mean for your money? It may be easier to make better money choices in the morning. Studies have shown that willpower is depleted as it is used. For example, if you resist a doughnut at the morning meeting, forgo the great dress you saw during your lunch break and resisted the urge to gossip in the afternoon, you have probably used your supply for the day and will find it tough to exercise any willpower in the evening. The good news is you can build up willpower with practice. Just be aware as you start your new financial plan that you will have some days where you feel vulnerable to spending decisions that are not useful, so plan accordingly.

Pause before you pay
Pause throughout the day. Donít wait until your needs are screaming loud before you respond. Take a deep breath and settle your awareness in your body throughout the day; listen for the whisper of your thoughts/needs. This habit may help you reduce impulse buys.

Do a new thing
Charles Duhigg, author of The Power of Habit: Why We Do What We Do in Life and Business, offers some advice. Duhigg says that habits have three steps: the cue or the thing that triggers the behavior, the reward, or the thing that makes the behavior feel good and the routine or the cycle you always follows in launching the patterned habit. Here is how a habit might look with money:

Think about that old Johnny Kemp song - Just got paid, Friday night. In that example getting paid on Friday is the cue that triggers the reward of spending. Maybe you go to a restaurant, mall or club. Each time you get money you spend because it has become your habit. You can create a new habit by making a plan that outlines what you would like to do instead. Here is an example: try to identify the triggers that lead you to unplanned spending for example, does a bad day send you to the mall? Or does a great day send you to the technology store? If you want to cut back on your spending you can identify the cue and set up a new cycle. Write your plan here: when I have a bad day I will ___________________. My reward (payoff) will be _________________________________. Remember the reward has to be powerfully motivating so that you will stick with your new habit thus creating a more responsible spending routine.

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