How to Break Unhealthy Spending Habits and Build Better Ones

SHOW NOTES

Hard Habit to Break

• Unhealthy spending habits can hold you back and keep you feeling stuck. On this episode of the Get Ready For The Future Show, we’re talking all about how to break those bad habits and build better, healthier ones.
  • We’re also going to be joined later in the show by Ben Newman – performance coach for Alabama Football, author, and Business Leaders & Athletes Top 50 Speaker 2020.
• According to researchers at Duke University, habits account for about 40 percent of our behaviors on any given day.
  • Consider your take-home salary. If unhealthy habits account for 40% of your money, how much money are you wasting each year?
  • Even though most consumers (74%) say they have a budget, 79% of them fail to follow it. {Source: CNBC}
  • On average, Americans spend $18,000 on nonessentials {Source: USA Today}
• When it comes to a budget and building better habits, people often feel restricted. But usually, the opposite is actually true.
  • “The people who don’t have their habits handled are often the ones with the least amount of freedom.” – James Clear, author of Atomic Habits.
• So, where do our bad habits come from? What causes you to go on an unplanned shopping spree or put off saving for retirement?
  • Often our unhealthy habits are caused by stress/fear or boredom.
    • We get stressed so we go to the store and buy things we don’t need to get some instant gratification and feel better.
    • We fear what the future might hold, so we make excuses like I’ll start saving later or I don’t have enough to start investing in my future.
• We’ll dive into how to break your bad habits and replace them with better ones a little later on in the show, but first, we’re joined by Ben Newman! 

Interview: Ben Newman

• We know you have a history in the finance industry. How did you end up as a performance coach for some of the top athletes in the world?
• Ben, you have a rather unique perspective given what you do now and your former career as a top financial advisor. What is the difference in people winning financially as opposed to those who have either mediocre results or those that struggle from a financial standpoint?
• One of the quotes from your book Own Your Success says, “You work toward goals. Results are an expectation, of which we have little control over the outcome.” How vital is this shift from focusing on results to focusing on the process as our listeners work to build better habits with their money?
• What do you think is the most important aspect of cutting through the personal and professional pressures we face in order to experience daily victory?
• One of the coaching principles you use in mentoring athletes is purpose, process, reframe. Can you tell us a little bit about that?
• In the mentoring work you’ve done, how have you seen feelings play out as either inhibiting or helping break bad habits and replace them with better ones?
• How can people follow you or get in touch with you?
  • Follow Ben on Twitter
  • Check out his website

Breaking Bad (Habits)

• How do we eliminate unhealthy responses to fear or boredom (and start to build better habits in their place)?
• Cut as many triggers as possible
  • If you know you overspend when you go to a specific store, choose an alternative. Or, if you have to go there, make a list and a time limit so you cut down on extra purchases.
  • If you know you overspend when you’re going out with friends, opt for a night in and have everyone bring something.
  • If you know thinking about your future intimidates you, set up a meeting with someone who can help you walk through the process.
    • You aren’t expected to know everything, just to trust someone to help you through it.
• Grab a partner
  • If you’re attempting to break a bad habit on your own / without telling anyone, you’re far less likely to succeed.
  • The best partner you can have to walk with you as you work toward financial independence is a trusted financial advisor. Our job is to help you build a plan, adjust it as needed, and work toward your goals!
• Overcome negative self-talk
  • While it’s important to accept the truth of where you are now, it’s also important to recognize the change you’re making and where you’re going.
    • “I’m living paycheck to paycheck” BUT “I’m working toward financial independence so that isn’t a reality for me in the future.”
    • “I’m not prepared for my future” BUT “putting it off will not benefit me any, so I’m committed to start now.”
  • Where you come from isn’t where you’re going.
    • Where you come from is an unchangeable fact, but it does not and should not dictate where you’re headed—or what you’re capable of.
  • Ben Newman’s 5 Key Factors for Attaining belief in yourself:
    • Accept the truth
      • Realizing the person you are today is key to becoming the person you want to be.
    • Speak the truth
      • Talk with a trusted friend or professional – avoiding past behaviors and habits you regret only serves to amplify the pain and make us feel like victims.
    • Breathe through the truth
      • Even if you’ve built up bad habits, odds are they haven’t been a part of your life forever. Just because the habit is bad doesn’t mean you are bad.
      • Treat yourself lovingly rather than acting from a place of pain or anger as you work through changes.
    • Process the truth
      • Believe confidently and wholeheartedly that making these changes will prompt you to develop a stronger foundation, but realize that this will take time.
    • Create a plan based on the truth
      • Don’t expect things to be perfect right away. You can’t simply flip a switch and have a new life.
• Choose a substitute for your bad habit
  • You need to have a plan ahead of time for how you will respond when you face the stress or boredom that prompts your bad habit.
  • If you don’t have something already in mind for a replacement behavior when you get into a stressful situation, you’re likely to continue the bad habit.
    • It’s harder to make better, more logical decisions when your emotions are high.
• What’s the plan?
  • Emotions and finance don’t mix very well. It’s important to have a plan to help keep you on track toward the goals you have.
  • If you’re ready to get started with a personalized plan on paper, on purpose, click here. 

Build Me Up, Buttercup

• You can’t just eliminate bad habits. You need to replace them with better ones.
• The first step toward building better habits is making it so easy you can’t say no.
  • Don’t rely on motivation. Some days you will have none. So, make your new habit so easy you don’t need the motivation to do it.
• Increase your habit in small ways.
  • Habits have a compounding impact.
    • 1% worse every day for one year 0.99³⁶⁵ = 00.03
    • 1% better every day for one year 1.01³⁶⁵ = 37.78
  • Over time your willpower and motivation will increase as you slowly build up your habit.
• Having a plan in place is the best accountability to check your habits.
  • Do you know specifically what your goals are?
  • Do you know why you are working toward those goals / are you connected to your purpose?
  • Are your daily behaviors going to get you closer to those goals?
• Through the GenWealth Ready to Retire Process, we work with you to create a personalized plan on paper, on purpose.
  • Personalized:
    • The first step of our process is you share your needs and desires.
    • What’s the purpose of a plan if it isn’t built around your needs and desires?
      • At best, it’s a generalized guideline. At worst, it could have you working toward the wrong financial goals for what you want in life, in retirement, and after you’re gone.
  • On Paper:
    • You are 42% more likely to achieve your goals if you write them down. {SOURCE: Study, Dominican University in California}
    • Your plan – your binder – isn’t something we pull off the shelf. It’s a living, breathing document and the result of collaboration with you. And it’s something you can refer back to when you’re making decisions that could impact your future.
  • On Purpose:
    • You don’t want to run out of money before you run out of time.
    • Buckets
      • Buckets are 5 years each – why?
    • Your plan helps you keep your why in mind.
      • Why are you breaking bad spending habits and building better ones? Likely to build toward financial independence for yourself and the legacy you want to leave.