Dave Ramsey says that “personal finance is 20% head knowledge and 80% behavior”.

In other words, you can know everything you need to know in order to succeed financially, but if you don’t actually do these things, you won’t achieve financial peace.

I see this ALL the time.

Someone knows exactly what they need to do to fix their financial mess, but they don’t actually do it.  Instead, they keep engaging in the same bad habits, like overspending or ignoring their budget.

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Why do people do this?!

Most of us live on autopilot.  When we aren’t intentional with our finances, we do what’s familiar.  We engage in the same patterns and bad habits over and over again.

When we try to break these bad habits without understanding why we do them in the first place, we fail.

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Why We Have Bad Habits

Our brains are wired to avoid pain and pursue pleasure.  This isn’t always a bad thing.  Our aversion to pain is what keeps us from doing harmful things, like putting our hands on a hot stove or walking in front of oncoming traffic.

Avoidance of pain keeps us alive.  The problem is that our brains don’t understand the difference between physical and emotional pain.  Whenever we feel emotional pain, our brains try to avoid it…even though this is unnecessary and actually makes things worse.

Brooke Castillo, founder of The Life Coach School (I highly recommend her podcast!), created a model that helps to explain how our feelings drive our behavior.  The model looks like this:

Thoughts -> Feelings -> Actions -> Results

Brooke theorizes that bad habits are rooted in a desire to avoid negative emotion.  We engage in the bad habit to attempt to dull or lessen an unpleasant emotion that we are feeling.  Remember that your brain sees negative emotion as a threat and wants to avoid it.

Think of someone who is an emotional over eater.  Whenever that person feels lonely, sad, anxious, frustrated, or [insert any negative emotion here], she over eats.  She does this because she thinks she’ll feel a little better is she eats.  It dulls the negative emotion she’s experiencing.

We do this ALL the time and we’re usually not even aware of it.

This is at the root of many bad habits, such as binge drinking, being addicted to social media, overusing our smart phones, overusing Netflix, overspending…we engage in these behaviors to try to escape from our negative emotions.

Bad Money Habits

Let’s look specifically at overspending.  If you try to stop overspending but you don’t understand why you do it in the first place, you will probably fail.  You need to address the root cause of your overspending problem.

The root cause is your thoughts, which determine your feelings, which create your actions, which lead to your results.

Let’s say you are trying a spending ban, but you are having many negative thoughts about it.  You might be thinking “This is too hard.  I don’t want to do this.  Everyone else gets to have fun and spend money.  Why can’t I have what they have?”

If these are the thoughts you’re having, you may feel frustrated, jealous, and deprived.  You don’t like feeling these negative emotions, so you will be tempted to engage in a behavior (possibly overspending) that will help you to dull the unpleasant feelings.  The result is that you don’t stick to your spending ban.

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Changing Your Thoughts

In the example above, if you want to break your bad habit (overspending), you need to work on changing your thoughts.  Instead of thinking “I’m so deprived”, you could try thinking “I have everything I need”, “getting out of debt is my top priority right now”, or any other thought that will create a positive emotion for you.

If you feel a positive emotion, such as gratitude or motivation, that will drive you to stick to your goal and get the results that you want.  Remember that changing your thoughts from very negative ones to more positive ones won’t happen overnight.  It will take some time.

Our brains like to be efficient, so they get stuck repeating the same patterns.  If you’re used to thinking negative thoughts, that’s what your brain will default to.  Pay attention to what you’re thinking.

Objectively observe it, understand why you’re thinking what you’re thinking, and then you can begin to work on changing it (if you want to)…which will require some time and patience with yourself.

Feeling Your Emotions

Let’s look at an entirely different scenario.  Perhaps when you overspend, you aren’t having negative thoughts about money.  Maybe your negative thoughts are about something else.

For example, maybe you had an argument with your spouse and you feel angry.  Perhaps you had a bad day at work and you’re feeling unappreciated.  Maybe someone you cared about moved away and you’re experiencing loneliness.  These negative feelings may drive you to try to cheer yourself up with overspending.

I saw an example of this on the TV show Tidying Up With Marie Kondo.  A woman had accumulated insane amounts of clutter (mostly clothing) because every time she and her husband had a fight, she’d go on a shopping spree and buy new clothes.

How to Stop

If you find yourself engaging in bad financial habits for reasons like this, Brooke Castillo would recommend that you learn how to experience your emotions without reacting, resisting, or avoiding them.  (Of course, you can also change your thoughts, which dictate your emotions).

How does this work?  Follow these steps:

  1. When you experience a negative emotion, name it.  An emotion is one word, such as “anger”, “sadness”, or “anxiety”.  If you start describing it with numerous words, that’s a thought you’re describing, not an emotion.  Say to yourself “I’m feeling [insert emotion here]”.
  2. Next, notice how that emotion feels in your body.  If you’re feeling angry, you might have a flushed face or a clenched jaw.
  3. Experience the emotion.  Don’t try to escape it (by engaging in a bad habit) or resist it (in the example of anger, “resisting” could mean yelling at someone).
  4. Move on.  When you allow yourself to truly feel an emotion, instead of resisting it or avoiding it, you will probably find that the emotion isn’t that bad and it will pass.

Breaking Bad Habits

In short, we engage in bad habits because of our thoughts (which create our feelings).  We do our best to dull our negative emotions with overspending, overeating, over drinking, and a number of other vices.

If you’d like to break a bad habit, try one of these two techniques described above:

  1. Change your thoughts (which will change your feelings).
  2. Feel your feelings instead of trying to avoid them (by engaging in a bad habit).

Changing a bad habit won’t be easy and it won’t happen instantly.  When a thought has become so ingrained in us, it’ll take some time to change it.  Be patient with yourself.

You will get there!

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