How to break bad money habits

Of money and habits

It’s probably not a surprise for most people to read about money and habits. In recent years, especially with the developments of behaviourism, habits have received quite a lot of attention. From body (or bio) hacking, right through to psychometric tests, we all want to understand our own behaviour better, optimise ourselves for greater efficiency and results, and get rid of bad habits.

But before we can launch into the money side, we need to get a grip of what a habit actually is.

Habits 101

A habit is, boiled down to its bare essentials, a pattern in your behaviour. It is also necessary to distinguish between routine and habits. Forming a routine may be a habit, but not all habits are routines. For instance, for some individuals forming a routine may come easy and without much planning or effort. 

The behaviour of forming a routine is well-habituated and forms a predictable pattern. However, there are individuals who struggle to form routines. Even with conscious planning, immense mental effort and lamenting their inability to form routines, the habit is not mature, and therefore the predictable pattern is… a general absence of routine.

All habits need three things: 1) a stimulus (or cue), 2) a response which is repeated, 3) a sense of reward/avoiding danger or loss after the behaviour has been demonstrated. The more we show a certain behaviour with a certain cue or stimulus preceding it, the more mature the habit will become over time. When an action is well-habituated, you can even show physical responses to the cue, without actually showing the specific behaviour! Fascinating stuff! 

For instance, did you know that your body will “rev itself up” by just smelling coffee (you don’t even have to consume it) if you are a regular coffee drinker? That’s why the smell of freshly ground coffee can be a “pick me up.” It’s riding on the wave of the actually deeply ingrained habit.

Money Habits

You have habits relating to money, and probably a lot of them. “Money” is also a very unspecified blanket term. More specifically, you have a ton of habits relating to 1) Spending cash, 2) budgeting, 3) grappling with data about investments (or not), 4) inhibiting spending and purchases (or not), 5) emotional financial decisions, 6) who and what to trust… the list goes on.

When people are in a financial pinch, most people don’t actually have money problems. You most probably have habits that drove you into a situation that you can’t ignore anymore. A different way of putting it, but that’s actually what it boils down to.

Changing unhelpful money habits

Habits are sticky. The reason why they tend to stick is to maximise brain capacity. Your brain is constantly “looking” for patterns which it can optimise and “hardwire.” Why? Because it frees up

your thinking capacity to do other stuff. Remember when you first learned to drive your car? Was it tiring, nerve-wracking, or stressful? Did it require your full attention at first? And then? It got easier, smoother, and now many of us drive around without even remembering that you took that off-ramp. That’s habits at work. Wonderful stuff.

The basics of changing a habit

Until they get you in trouble. As I said, habits are sticky, and changing any habit (or more specifically, learning a new habit set which eventually becomes your preferred habit) can be tough. There’s a lot that has been written about habits and changing them, but the basics are:

1. Understand the cue. For instance, do you overspend when you are upset? Do you go grocery shopping when hungry? Understand your cue well so that you recognise it.

2. Don’t try and rely on willpower. Here’s the hard truth. Willpower is a great thing, but it’s actually in short supply. Willpower gets you going, but relying on it is not sustainable. Habits will, eventually ALWAYS override willpower.

3. Change your environment. Cues and stimuli come from your environment. If you overspend when you are upset, don’t go to the mall. Rather do something else instead. “But what?” you might ask… remember what I said about habits being sticky? They are automatic and don’t require much thought… Jip. This is where the hard part comes in. You have to think and design new ways of dealing with the cue.

4. Use veto power. Veto power is your brain’s ability to be aware that it is being cued, and at that moment use veto power to take a different route that is dictated by the habit. Veto power is cool, but like will power, is in short supply. Use it in a pinch, but ultimately, change your environment.

5. Don’t go at it alone. Social support can make all the difference when changing a habit. Maybe telling a friend to keep you accountable is an option. Maybe joining a club or group where topics relating to the habit set are discussed will help you. There are always more options available to you than you can think at first (again, habit at work there!).

6. It gets easier the more you do the new habit. Remember that. Habit inertia is a real thing. It will be tough at first, but the flywheel effect will happen quite naturally. Give it time.


Ultimately, managing ourselves as we relate to our finances, money and other resources is the task of self-mastery. It’s a life-long journey, with quite a lot of frustrating bits in between. However, it can (and will be) immensely rewarding and is definitely worth the effort.

Author: Dr. Jan Niemand

Jan Niemand is a neurocoach at Rescript coaching and holds a PhD in Arts (old testament studies)

email: [email protected]