How habit stacking can smooth away your financial worries

• Habit stacking allows you to combine your current habits with new habits.
• You can excellently manage your finances after identifying new habits to address your financial concerns.
• You will gain financial liberty sooner.

Brushing your teeth, doing a run, and making your bed are all your habits. They are part of your daily activities, so you will not realise how a particular activity can go more way than simply achieving your goals. You will be habitual in brushing your teeth every morning. This is your habit, but you can determine to graze at night before going to bed, too. Other examples include:

• You awaken up for 10 minutes after you awaken up.
• You do your workout before sipping your coffee.
• You write your to-do list after taking a bath.

Tips on ways to stack your habits to improve your finances

The following knowledge can assist you improve your finances by developing new habits:

• Identify your current habits

Before getting into a new habit, you should assess what financial habits you already have. For instance, you might be paying yourself first every month, but now you should start building a retirement account. You can also think of contributing a higher sum to your monthly savings account.

“Some habits will be regular while others will be occasional,” said Peter, a financial advisor of EasyCheapLoan. “Review if any transformations are to be made. For instance, you might be footing the takeaway bill every week and keeping tabs on your expenses only after running out of money.

“You can trim down your weekly dine-out budget and start tracking your expenses weekly. This is how you can tweak your habits and regain better control over your finances,” he said.

• Think of new habits to start

Starting new habits is not a cinch, as you will have to get out of your comfort zone. At the outset, you may find it a bit difficult to take it in your stride, but the key is to “push the envelope”. Grab a piece of paper and a pen, and then note down what new financial habits you think you should make to be in the driving seat. Here are a few habits that will work out:

Plan your purchases

“Instead of rushing to buy a few items here and there,” said Peter, “you should make a list of items you want to buy, as it will prevent you from overspending.”

Pay yourself first

You can increase the contribution limit to your savings account. When you get a hike, make sure the apportion goes towards your emergency cushion. You can use an auto-debit mode if you miss transferring funds on your own.

Save your bonus cash

Have you got a tax refund? Or have you got a windfall? You can get into the habit of transferring unexpected obtainment of cash to your savings accounts. You can even allocate this money to a big purchase you have been planning for months.

• Stick to your new habits

It is paramount to stick to your new habits to ensure you achieve your financial goals. “I have seen many people adopting new things out of excitement,” said the financial advisor, “and then they eventually get out of them. This will take you nowhere. There is no point in doing too much hard work to understand and inculcate new financial habits when you do not want to stick to them.”

You will feel a burden sometimes or feel like giving it up once and for all. That sort of frustration is natural, but you can deal with it by keeping yourself motivated.

• Appoint someone who makes you accountable and guides you when you are off the track.
• Improve your financial knowledge. Sometimes you face problems due to a lack of knowledge.

For instance, you should know how small loans work differently from long-term loans. The “Easy and cheap approval” term can be eye-catching, but no lender can guarantee approval unless you put in the loan application. Half-knowledge often results in bad consequences.

• Join your new habit to a current habit

By force of habit, you will not stop brushing your teeth or having your cappuccino. Merge your daily activities with your new habits. For example, you should check your previous day’s spending when you are having a cup of coffee. You will find it easier to adopt your new habits.

Steps to implement to use habit stacking to improve your financial situation

The following steps you need to follow to adopt new habits easily:

• Be aware of your finances

You should gain an insight into your true financial picture. Figure out where you stand and where you want to be in years to come so you can set a plan that aligns with your goals. Understanding your finances is crucial to think of new habits to include.

• Learning personal finance

You should improve your knowledge of ways to improve your financial condition. Savings are not just enough to be in the saddle. You will have to start investing money as well. Understand the importance of creating a diversified portfolio. Finance books can help you improve your knowledge of personal finances. Take help from a financial advisor if you need it. Visit also yourboxpackaging.com

• Explain what you know

You should be able to explain what you have learnt. You have not comprehended it if you cannot explain it. Chat with other people to ensure you understand everything correctly. You will also get a chance to learn from their knowledge.

The bottom line

Getting into new habits will help you take better control of your finances. Combine these habits with your older habits so you do not find it difficult to take them in your stride. You will feel more confident by keeping a tight rein on your finances. Making big decisions and achieving your financial goals will be much easier. You just need to acquire a few habits, such as tracking your expenses, paying yourself first and understanding the basics.