Like most things in life, being good with your money is about making sustainable changes to your lifestyle and mindset.
Here’s my latest video where I talk about just that:
I hope you’ve realised by now that my main focus is to help you make simple, sustainable changes in your spending and saving to help you to improve your ‘financial fitness’. It’s no accident that loads of my stuff feels more like it’s coming from a fitness trainer than a financial advisor.
The link between financial and physical fitness
When it comes to fitness, the ONLY way to be fit and healthy long-term is to have a sustainable and consistent lifestyle that incorporates a balanced diet and exercise.
You can try all the quick-fix fad crash diets you like but ultimately you’re going to pile the weight back on because what you’ve done isn’t sustainable and no fundamental change has happened within your brain.
The same goes for finances.
FinTech meets wellness – MoneyComb
I spoke to Cat de Montjoye, co-founder of MoneyComb – a financial wellness platform developed at Duke University that helps people get started budgeting to find out more about some of the science of personal finance.
Cat says that instead of going for quick fixes, a simplified and gradual approach towards your financial goals is more sustainable and effective in the long run.
“What we have found works best is that even just tracking one category of your spending is better than sitting down to plan your yearly budget and debt-reduction plan.”
I’m sure that some of the no-spend style initiatives, challenges and ideas come from a genuine place of wanting to kick start people in to being better with their finances and sometimes an intervention is a good starting point.
The problem comes when unsustainable things are touted as the solution to the problem.
Cat and behavioural researchers at Duke University, including world-renowned behavioural economist Dan Ariely, found that action is crucial to achieving financial fitness. But not just any action.
According to Cat:
“In the long run, what really improves habits is confidence, a sense of self-efficacy and, contrary to public belief, flexibility. If you start too broadly and too aggressively you will most likely get discouraged very easily.”
“Using the fitness analogy, you don’t start lifting 100kg if you have never lifted in your life. It’s all about small, sustainable challenges that will build confidence over time.”
Spending is like sugar
As a rule, I try not to eat very much ‘bad’ sugar during the week. By which I mean sweets, chocolate, fruit juice etc. Some weeks I notice I’ve let myself get a bit off track and the best way for me to bring myself back to this routine is to go completely cold turkey on sugar for one day. YES, just ONE!
For me, it resets my body in to realising that I don’t actually NEED the sugar to function and that it’s a treat rather than an everyday part of my diet.
Sometimes I do this for my finances too. If I notice we’ve had takeaways every weekend for the past month I’ll suggest we cook for ourselves one week. If we had a blow out for a special occasion, we cut back a little more the month after (and/or before).
What makes someone good with money?
It’s all about small changes, like the simple techniques I use to get myself back on track.
I naturally make regular decisions that are better financially but it’s the fact that they turn into habits that has the biggest impact.
That doesn’t mean I’m some sort of money expert though, sometimes I get it wrong. Here’s some ways I’ve wasted money in the past few months that I could have avoided:
- Eating out at least three times when we could have cooked at home
- Buying a new pair of jeans because my old ones didn’t fit me very well and I hadn’t returned them on time
- Throwing away a half-eaten pot of cream cheese because I didn’t check the sell by date in the yellow sticker section and it went off
- Forgetting to bring a bottle of water out with me and having to buy one
- Getting the more expensive cat food because the box was in the wrong section on the shelf and I didn’t double check
These things happen, that’s life! Accept it, learn and don’t dwell on it.
On the other hand here’s a few examples of things I’ve done in the last month or so that have either made or saved me money:
- Having a clear out in my loft and selling some of it to friends on Facebook
- Renegotiating my Fiancée’s mobile phone contract
- Using a spare hour in town to go hunting in charity shops for bargains to sell on eBay
- Driving around the block twice to use a free car parking ticket someone had given me (it was full the first time around)
- Closing an ISA that dropped to 0.5% interest and moving the money to a 1.5% current account
The thing is, I can give you all the tips, tricks and advice in the world but if you aren’t making small, achievable, sustainable changes it’s just not going to last.
It really is that simple.