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How Your Ability to Form Habits Influences Your Relationship with Money

How Your Ability to Form Habits Influences Your Relationship with Money


If you haven’t browsed the personal growth section of Barnes and Noble lately, let me bring you up to speed: books on habits are IN. As a self-described personal development junkie, I’ve enjoyed learning more about habits. One of my favorite books on this topic is Better than Before, by Gretchen Rubin, which focuses on mastering habit in our everyday lives. This book has been great not only for helping me take inventory of my habits, but also look into how habits tie into certain areas of my life, such as money. This book is on my list of 10 Books You Should Read Before Starting Your First Job - click here to read the full post! 

Habits are described by Rubin as the “invisible architecture” of our lives. This is most evident by the fact that we repeat about 40 percent of our behavior almost daily! For every ten things you’ll do today, four of them are things you do regularly. That sure does take the fire and excitement out of day to day life, but it also shows the importance of cultivating strong, healthy habits. 

A second key point of the book is that there are four tendencies that people subscribe to when creating and executing habits. You can take a short quiz to determine what type you are, see HERE. There are four types: upholders, obligers, rebels, and questioners. Each type has distinctive characteristics, which I will go through along with how your tendency informs your habits with money.

Four Tendencies

If you’re an upholder, you easily respond to outer and inner exceptions. You’re the type of person that keeps your New Years Resolutions - hats off to you! You have a fairly easy time forming habits and rarely let yourself or others down.

Upholders have no trouble sticking to a budget, setting long-term goals and reaching them, and following the advice of experts. You save well and have a solid plan, but perhaps you followed some money advice that wasn’t sound. Think about if the habits you’re forming and expectations you are meeting are going to propel you forward or keep you stagnant. Another point to be aware of is that you need clear, articulate inner expectations in order to meet them. Run through what personal finance goals you want to reach and make them concise - try writing them out and focus on the details.

If you’re an obliger, you can meet outer expectations but struggle to meet those that are self-imposed. If your boss tells you to do something, you can do it, but you have difficulty finishing your personal passion projects.

Accountability is most important for obligers, whether it be in the form of deadlines, accountability partners, consequences, etc. You would do well with tackling budgets with a friend or getting a financial planner. If you set a goal not to spend more than $100 on dining out for the week, you probably won’t succeed on your own. However, if a partner, superior, or person of authority tells you that you can only spend $100 a week on dining out, you’ll meet that expectation. Be careful of the influence from other people, since not everyone who imposes expectations on you has good intentions. 

If you’re a rebel, you resist all expectations. You do life your own way (aka you do you!). Your key values include authenticity and self-determination.

The best way for rebels to form good habits is to develop an inner identity, because executing on habits that parallel your identity mean being true to yourself. Identity is the key to forming beneficial habits for rebels. If your identity includes having a sound understanding of personal finance, developing strong money habits will be no problem for you.

If you’re a questioner, you question everything, satisfy inner expectations, and only meet external expectations if you think they make sense.  You push back against all expectations and hate doing anything arbitrary.

To cultivate positive money habits as an obliger, it’s important to recognize why you are doing something. In addition, you have to find experts who you can trust in order to positive respond to expectations. If you set your mind to paying off your debt, spending less on frivolous items, or other money goals, and you understand how it may lead to less stress or greater financial freedom, you’ll succeed with the follow through.

I challenge you to think about what tendency you fall into and how your money habits align with the patterns of your tendency.  If you know how you respond to making and shaping habits, it is easier to side step pitfalls and ensure that you’re successful in building positive habits. Habits are an important key to success, especially when it comes to money - so think wisely on what habits you want to make up 40% of your day to day! 

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