Your Money

Money focus: How can I change my money habits?

- February 7, 2022 5 MIN READ
How to change your money habits

Each week we ask a question to help you focus on an area of your finances that might need a closer look. This week: How can I change my money habits?

Planning, setting goals and tracking where our money goes are all valuable tools, but they’re nothing if we don’t action them. You can have as many financial goals, budgets and aspirations as you like. But if you don’t change your behaviour, you’re simply mucking around with spreadsheets.

Attitude is important, but changing our everyday behaviour is what will ultimately help us build our wealth. And the key to lasting behavioural change is focusing on habits.

“What we repeatedly do, each and every day, ultimately forms the results we enjoy and the goals we achieve,” says leading habit-change expert, James Clear. “Change your habits, change your systems, and you’ll transform your life.”

Our habits are the representation of the choices we make, embedded over time. Daily choice becomes ritualised activity, becomes the things we do that we don’t even have to think about. This works in our favour when our habits are ‘good’, but makes it really hard to ‘break’ habits that aren’t serving us well.

Let’s take a look at what ‘good’ money habits are.

Develop good money habits

More on this: Try focusing on good money habits instead of financial goals

No surprise, that ‘bad’ money habits are basically anything that stops you from carrying out the good habits.

Ditch bad money habits

Follow the steps in the recipe to get the results

It’s not rocket science. We know what we’re doing or not doing to support the financial future we think we want. I say ‘think’ because it’s one thing to plan a rosy rich future, and quite another to take the steps to get there. Those steps are your habits; one step, then another, then another, and another until it’s done. It can feel like a very long road and you have very short legs, but patience is key if you want to change money habits.

Clear likens it to following a recipe to make a cake. You need to follow all of the steps if you want the end result to be a cake.

“I’m not a fan of doing the same thing over and over again when it doesn’t work. (If it’s a bad recipe, why cook it twice?),” he says. “But there is a big difference between a bad recipe and an unfinished recipe. The truth is… you and I often change course halfway through the recipe and never give ourselves the chance to see results.

“You have to be patient enough to finish the recipe if you want to see the results. Give your success time to cook. Follow the recipe and finish something.”

How to build the steps of habit change

In his book, Tiny Habits, BJ Fogg describes how behaviour occurs when three things happen in the exact moment:

  1. Motivation – The desire to do a behaviour
  2. Ability – The ability to do the behaviour
  3. Prompt – The prompt to do the behaviour

You want to change money habits, but why? Because it will help you save more money? But why do you want to save more?

When you think about it, “save more money” is a pretty abstract concept. Even if you went all SMART-goal and wrote down an actual amount and date to save by. “Save $2,000 by 28 June” is a nice specific, measurable, achievable, relevant and timed goal, but, er, what does it mean exactly?

Instead, focus on your values, or the things that underpin your reasons for wanting to save more.

Things like:

  • “I want to provide more opportunities for my children.”
  • “So I can afford to buy my own home.”
  • “I want financial security in my old age.”
  • “I don’t want to owe money to people anymore.”
  • “I’m desperate for a holiday.”

Only you can know what your true motivation is for wanting to create better financial habits. Dig deep, write down your core reasons and keep them top of mind as you work to change.


This is a relatively easy one when it comes to changing financial behaviours because everyone has the ability to spend less so they can save more. Even if it’s just a couple of dollars a week.

That’s a good point, actually: start small. You don’t need to be making lofty promises of becoming a completely different person overnight. No matter what habits you decide you want to add or subtract, you’re still going to be you.

So, start small.

Starting small will also help because another aspect of ‘ability’ according to Fogg is how conducive your environment is to supporting your efforts. Clear talks about his too:

“Environment is the invisible hand that shapes human behaviour. We tend to believe our habits are a product of our motivation, talent, and effort. Certainly, these qualities matter. But the surprising thing is, especially over a long time period, your personal characteristics tend to get overpowered by your environment.”

Clear outlines three steps to designing an environment that supports habit change:

  1. Automate good decisions: design an environment that has already made the good decision for you. For example, you could schedule 10 per cent of your salary going into a savings account every month on pay day. Or set up a micro-investing account and invest money you’ll hardly notice is gone.
  2. Get in the flow: design your habits so they fit the flow of your existing life. For example, make it a habit to check your finances on the same day you get paid each month.
  3. Subtract negative influences: eliminate the unnecessary. For example, if you find it hard not to impulse spend, avoid the shops (both physically and online).

‘Prompts’ are BJ Fogg’s word for what many psychologists call ‘triggers’. Prompts or triggers tell you to ‘do your habit now’. They often come from our daily routine – for example, bedtime prompts us to brush our teeth or heading into work triggers us to grab a coffee.

It works both ways, of course. Often we’re prompted to overspend simply because we’re at the shops and we see something on sale. Boredom can be another unconscious trigger for overspending. Similarly, we can be prompted into good money habits by things like working in an office where everyone brings their lunch; or taking camping holidays with a group of like-minded friends; or carpooling with your eco-conscious friends.

Identifying the prompts in your daily life that lead to good and not-so-good financial habits can really help you change them.

Instead of blindly spending your money, write down what you spent it on, how you felt at the time and whether you think it was a good purchase or not. This can be enough to break the influence of the prompt or trigger and help you stop the behaviour.

More resources to help you change:

Find the rest of our Money Focus series here.