Spending habits: understanding and changing

When it comes to understanding spending habits, people often forget that they are just that: spending habits. What is a habit?

• an acquired behavior pattern
• that is followed regularly
• so that it is almost involuntary

Examples of spending habits

Spending habits are often contextual. You spend the same way with the same set of conditions. Because it’s a habit, it may be so natural and involuntary that you don’t even realize it.

• You always spend a lot of money right after you get paid. That might mean taking your family out to dinner every payday.
• You always give to charity at the end of the year.
• You have a habit of spending on souvenir T-shirts on vacation.
• You always wait until the last-minute to buy a plane ticket.

How do spending habits form?

Where do our spending habits come from? It varies, but we are largely influenced by what’s around us. This includes:

• Observing and following the spending habits of our parents or other significant people around us. If your mother always brought flowers when visiting a relative, you may do that too. However, you may not even realize it’s not what everyone does.
• Our culture and society. Different cultural norms dictate what spending habits are normal. One culture may always spend lavishly on a wedding while another culture may not spend much at all. An Asian culture may see spending in different ways than a Latino culture. Someone raised in great wealth may have spending habits that are very different from someone raised poor.
• One’s religion and spiritual beliefs. As a facet of culture, religion can have a strong shaping force on spending habits. For example, to tithe and give money to one’s church becomes a natural spending habit. Many religions reinforce giving alms or donating to charity.
• Our own unique personalities and experiences also play a role. Two siblings raised in the same environment may have very different spending habits. One might be a hoarding saver while the other may be a free spirited spender. This includes other forces such as gender and the gender roles one sees and perceives.
• The media also has a role in how we spend and save. Think about the spending habits of the characters you saw on TV as you were growing up – and today. Did those characters eat out often? Did they often go shopping? Did they forgo what they wanted in order to save for retirement?

Why is it hard to break spending habits?

Imagine the path a river wears into the earth. Every day the river follows the same path. It takes a dramatic or catastrophic event to change the course of the river. In much the same way, we habituate ourselves to how we spend and save. Over time, it becomes more and more difficult to change a habit because that habit has become more and more natural. The challenge of changing your spending habits is creating a “new normal.” That involves behavior change. People often try to change their behavior. One of the most common behavior changes people seek is dieting. If you’ve spent years and years eating the same way, it is very difficult to change that pattern. That’s true even if you want to change, know you should, and even if you understand what the new pattern would be.

Better understand your spending habits with Money Habitudes

An important part of the behavior change process is not just understanding what you spend; it’s also important to understand why you spend the way you do. It means not just doing a budget and recording your spending. It also means examining all the factors above to put your spending habits in context. You can’t change what you don’t understand. Money Habitudes helps people understand their money habits and attitudes because:

• It makes it fun and easy to understand how we spend, save, invest, go into debt, give to others, etc.
• Is hands-on. Whether it’s financial education for adults or teens, no one likes to just sit at a desk and listen to a lecture. Same thing goes for worksheets and PowerPoints. People find many typical learning and assessment activities to be boring. Money Habitudes isn’t.
• Is nonjudgmental. One thing that makes people so hesitant to think about their spending and to talk about the way they spend and save is that it often feels judgmental. With Money Habitudes, there is no right or wrong answer. Instead, the goal is for people to feel comfortable discussing and explaining how and why they spend the way they do.
• It helps people see spending patterns and the motivations behind them. Often people discover that they spend with restraint when out with one friend but spend with reckless abandon when out with another friend.
• The versatile financial activity can be used on one’s own, with a spouse or partner, or as part of a financial education group, class or workshop.