Habit of saving money based on the book The Power of Habit 

In order to understand how to create the habit of saving money, it is essential that you know what a habit is.

Habits are behaviors or actions that have become automatic.

Because they are automatic, we repeat them frequently in our daily lives, either consciously or unconsciously.

Creating and maintaining habits is essential because it saves mental energy by performing routine tasks automatically.

So, today we’re going to talk about how you can create the habit of saving money so that you don’t have to think about it and can do it naturally.

How habits work

Only 60% of the decisions we make each day are real decisions.

In this way, almost half of all our decisions work on a kind of autopilot.

As mentioned above, this is done so that our brain can save energy.

For example, if you know how to drive, let’s consider the moment you started.

It took a lot of your energy to make decisions related to driving, but you repeated and persisted in those actions and driving became a habit.

Today, you do it naturally, something that makes driving require less of your energy and effort.

Understanding what habits are and how they work can be a determining factor in changing our lives, especially when we talk about the habit of saving money.

Those who are able to save money can achieve great financial dreams.

To help you with this mission, let’s take a look at the 3 fundamental parts of creating a habit:

Habit loop to create the Habit of saving money

A cue, a routine and a reward.

Through these 3 points, you can create habits in your life.

First, the cue is a trigger that sets off a signal in the brain to start an activity.

It can be an object, a feeling, a person or something that turns on the key to the habit.

For example, if a person who works from home enters their home office, the office itself serves as a cue, as it turns on the work habit switch.

Note that it’s not just a location, but other aspects.

Continuing with the example, if the person doesn’t have an office, but works at the same desk every day, when they approach their place of work, the place itself already acts as a cue.

Therefore, the next step to create the habit of saving money would be the routine, which can be defined as the activity that is always carried out when you come across the cue.

Following the example cited, when you approach your workplace, the person works.

Finally, we can talk about the reward, which acts as a kind of prize or feeling for having carried out the task.

The better and more pleasurable the reward, the greater the desire to repeat the routine, which will stick in the memory.

All this reinforces the link between the cue and the reward, creating a habit.

Following our example, at the end of their working hours, they always treat themselves to one of their favorite meals.

In this way, they are more likely to repeat the habit at work.

Example of successful habit creation in the financial world

To help you understand that habit of saving money is possible, we’ll give you an example below:

In the 1900s, only 7% of Americans used toothpaste.

To solve this issue and increase profits, Pepsodent decided to apply the principles of the habit loop.

At the time, yellowed teeth were not seen as a bad thing.

In fact, it was common for everyone to have such teeth.

But the company came up with the perfect cue: making teeth white and shiny was more beautiful and hygienic.

In this way, it became routine for Americans to brush their teeth.

Interestingly, chemical ingredients were added that didn’t make the teeth cleaner, but gave the mouth a refreshing, slightly burning sensation.

This sensation was used as a reward because it became strongly associated with cleanliness and hygiene.

This is exactly why, when our teeth are dirty, we miss the freshness in our mouths and automatically think of brushing our teeth.

Although it sounds simple, this strategy has brought great success to the brand, as 10 years later, the figure had risen to 65% of Americans using toothpaste.

PepsoAdi was so successful because it got Americans into the habit of brushing their teeth.

Another curious fact is that the company followed the line of offering rewards to customers by adding another element that changes absolutely nothing in cleaning: foam.

Making the toothpaste foam was another strategy to reinforce the idea that teeth would be cleaner.

How to create a habit of saving money

With this in mind, you decide to save money and increase your income.

We’ve just realized that the secret lies in the idea of creating a strong connection between the cue and the reward.

You can use different factors to create a clear cue, such as a specific day in the month when you will organize your finances.

When that specific day arrives, you know that you have to do your monthly planning in order to save as much money as possible during that period.

As for the idea of increasing your income, you can define which days you’re going to sell sweets to your work colleagues in order to have more money.

Remember that the cue is not limited to the day, it involves other factors.

For example, you might do a previous activity that signals to your brain that you really want to do the task.

Then the next step to create a habit of saving money is to make it a routine.

In the case of monthly financial planning, you can’t do it one month and then try to change the whole system the next.

Stay consistent until the moment comes when, on a specific day of the month, you organize your money naturally.

To ensure that this actually happens, reward yourself for insisting on keeping your finances organized.

If, in the first semester, you are able to save money and make extra income, go out to celebrate in a restaurant, as long as you don’t spend too much.

Have a picnic with friends or family, or buy a product you’ve always dreamed of.

You see, if you really want to develop a habit of saving money, you shouldn’t focus on the routine.

Focus on the strong connection between the cue and the reward.

How to change a habit

The golden rule is the same:

You will indeed need an extra dose of discipline, always taking advantage of the desire for the reward at the end of the loop.

Let’s say you want to stop spending impulsively.

Of course, the desire to buy won’t just go away.

So you should continue to fulfill the desire, but in a financially healthier way to create a habit of saving money.

Instead of going out one day a week to shop for items you don’t need at the mall, use that time to spend with your family.

Use this time to start a financial project like reading a good book or a personal one like exercising.

Don’t get stuck inside your house to avoid impulse buying, reward yourself in some healthy way!

Angle habits

These habits are capable of triggering a sequence of positive changes in our lives.

For example, a person who starts practicing physical activity on a regular basis achieves good results in other areas of their life.

They start to value a good diet, take care of their sleep and get rid of drugs and alcohol.

The reason why an angular habit works is that it provides small victories, small feelings of success that are easier to achieve.

So the final tip is that if you want to develop good financial habits, start with something simple.

From small financial victories, you will have great financial success!

Daniel 2 de May de 2024