Why spending habits are the easiest to change

Life is made up of habits; some good and some bad. But regardless of whether we should or shouldn’t have them, they make up a big part of our daily routines. A habit is something that happens automatically, we don’t need to think about it. We do it on autopilot.

The New Year is often the time when we decide to stand up against our bad habits. We cut them out, and swap them for better ones. Or perhaps meet somewhere in the middle.

Let’s get Christmas out the way first…

Why always in the New Year? It’s a compromise with ourselves, I think. We all know our bad habits, it’s not as though we only discover what we’re doing in January, but we have the habit because we like the habit.

Lifestyle changes can require amending a number of habits. Getting healthy can involve breaking the takeaway habit and replacing it with a run.  Or finally trying out green tea and stopping with the sugar!

Trying to change spending habits is a big one for a lot of people. And for good reason. It’s can make a real difference to your life; both in the present day but potentially even more so in the future. Bad spending habits can come in many forms; putting lots on a credit card, not shopping around to compare prices, or just buying a coffee on your way to work each day.

The 21 day myth

So, with January upon us lots of people will be well into their new routine. There’s a phrase that I hear a lot – a habit is formed in 21 days. So, 3 weeks of repetition and supposedly the action will become automatic to you.

This stems from the research of plastic surgeon Maxwell Maltz, and the best-selling book he published in the 1960’s, “Psycho-Cybernetics”. He observed that patients took around 21 days to adjust to their new look or situation and this led him to write that it took “a minimum of around 21 days for an old mental image to dissolve and a new one to jell”. This phrase evolved into the much more positive idea that “it takes 21 days to form a habit”. And after all, who wouldn’t want to know that change only takes 3 weeks!

However, further research has concluded that it actually takes on average 66 days for a habit to be formed – measured as the point at which the automaticity of an action plateaus.

So, unfortunately, it might take a little longer than you had expected for your habit to form. But remember, it’s never going to be an exact science and any time frame quoted is just an average. It’s not specific to you. Whether or not you can break a bad habit or manage to start a good new one is ultimately down to you.

If you’ve already started, don’t give up now. And if you haven’t, don’t wait until 2016!

Take up the challenge

Going back to the earlier example, a £3 coffee each morning might seem pretty insignificant, but add up it over a year and you’ve got a reasonably sum of money. Making a coffee before you leave for work or waiting until you get there might be a little more inconvenient, but balance it against the cost.

Take the £50 you would spend each month and set up a direct debit into a savings or investment account instead.

The great thing about a direct debit is you can avoid the hurrah of actually having to form a habit. Setting up a direct debit for a monthly investment can be done in 30 minutes and it means you don’t have to think about it or remember to do it each month. Your spending habits of the rest of the month are dictated by the fact you’ve already put your savings away.

Much like the cost of a daily coffee, your savings account can grow a lot quicker than you might think. Why not take up the challenge now and see the difference it could make.

Changing your spending habits can be a key way to help organise your finances. Knowing how much money is going in and out gives you a much clearer picture of your financial circumstances – and what’s in your power to change – and it allows you to identify how much you’re actually able to save each month. Putting yourself in this position now can give you a spring board for taking control of your finances this year, and for years to come.


Other content you might find interesting:

  1. Can you afford to keep holding cash?
  2. Investment growth and the hindsight of “what if?”
  3. The cost of investing: how much is your time worth?


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