, ,

Practicing Mindful Finances: Begin by Watching Yourself Make Choices

Woman practicing mindful finances

Say you’ve resolved to curtail your wardrobe spending or set $100 aside each month into a rainy day account. Financial resolutions, like diets or work out plans, start out strong as our enthusiasm gives us a top-of-the-mind kind of commitment. But then… life gets in the way. We experience an unexpected disruption (or two). We get distracted. We get discouraged. We begin to hedge our original goals…until we have slid back into our old ways.

As it turns out, changing your habits isn’t as easy as merely just really wanting to.

Financial experts know that personal finances come down to individual human behavior. As Morgan Housel recently wrote, “investing is not the study of finance. It’s the study of how people behave with money.”

That’s why, when it comes to improving your financial situation, whatever knowledge you have of the stock market is likely to be less useful to you than a profound understanding of your own behaviors around money.

Simply said, the more you know about why, when, and how you make financial decisions, the more you can improve them. But that doesn’t mean successful change requires that you be even harder on yourself. In fact, a first step to changing your behaviors can begin with a much more compassionate approach than you sometimes think.

That’s where mindfulness comes in.

Stated simply, mindfulness is the state of being conscious or aware of something—anything. It can also be the practice of maintaining a nonjudgmental state about your thoughts, emotions, or experiences on a moment-to-moment basis.

Meditation and other mental exercises help you to hone your nonjudgmental awareness. Turns out, the more you learn to just watch your behavior, the greater intention you naturally put into your choices.

How to practice mindful change

Below are some simple ways to learn how to watch yourself change a behavior–and not one of them has to do directly with your finances! In and of themselves, they may not improve your financial wellbeing. But they will improve your understanding of how you make decisions, including those about money.

Later, you may choose to apply these skills directly to your finances. Maybe you will set yourself a timeline for a self-imposed “spending ban.” Maybe you will pause before each expenditure to consider what really makes you happy. Even just cultivating greater mindfulness when making a purchase will help you to identify the tactics companies use to influence our behavior.

Become disciplined

For folks who need to manually set aside money each month or are struggling to stick to a new budget, that kind of behavior can feel a lot like dieting—all sacrifice no reward.

The good thing about cultivating greater discipline is that self-control begets self-control. The more you watch yourself successfully change a behavior, the more confident you will feel about your ability to change any behavior.

EXERCISE: Resolve for one month that, if a task takes 2 minutes or less to complete, you will do it then and there.

  • Return the socks you just folded to their drawer.
  • Rinse your dish and set it in the dishwasher.
  • Take everything you brought into the car back out of it when you exit it.
  • Sort the mail and recycle the junk before you set it aside.

The 2-Minute Rule will raise your awareness of when you know something needs to be done…and when you skirt around doing it. The more you tackle the small things, the more control you’ll feel about the big ones.

Be present

Maybe your desire is to cultivate the strength to say “no” to the latest trend flashing on the side of your iPad screen or keep yourself from grabbing those extra items while you wait in the checkout line. Curtailing impulse buys requires you to take the time to pause, breathe, and consider each choice within the larger context of your life goals—the opposite of impulsive behavior.

Roy Baumeister’s research suggests the more decisions you have to make, the more your self-control will be compromised. There’s something about a controlled environment when the need for decision making is at its lowest that allows us to find a flow and deliberateness that we cannot access when distracted, overstimulated, or multitasking. What’s more, retailers use this tactic to sell you things.

EXERCISE: Set a timer when you need to focus.

  • Next time you want to zone out in front of the TV instead of writing those thank you notes or are putting off cleaning the kitchen before going out with friends, set a timer for, say, 15 minutes, and just do the task at hand. Turn off your mind for a set period of time. When the buzzer goes off, tell yourself that what you have (and haven’t) accomplished is enough.
  • When your entire house feels like a tornado went through it, it can be hard to know where to start with the cleanup. If you notice yourself feeling too overwhelmed to begin, set a timer for 30 minutes and just start—anywhere. Don’t think about what’s next or what else needs to be done. Just do the thing in front of you. No matter what you tackle first, by end of the time period you’ll have made a real dent in the work.

Decisions take energy, and choices distract people. Learn to focus on what you need instead of what you want or could have instead.

Practice nonjudgmental watching

Before being able to really change your behavior for the better, you need to understand why you make the choices you do. When it comes to impulse buying or other “shameful” financial behaviors, having to own up to the circumstances and reasons why you do what you do can feel daunting.

But if you resolve to change a simple behavior—any behavior—you can more comfortably learn the ways you skirt around issues. It’s a safe way to start accommodating the ups and downs of habit changing without beating yourself up for the bad days.

EXERCISE: Change one simple habit for 3 months.

Commit to doing one small thing differently every day for the next 3 months and keep a calendar to mark the days you succeed with a green pen and those you don’t with red.

  • Do 10 sit-ups.
  • Stand on one leg while brushing your teeth (alternate sides each day).
  • Walk around the block before finishing each work day.
  • Update a gratitude journal before calling it a night.

When you remember you are supposed to do that thing, just watch your decision without judgement. What circumstances prevented you from doing it one day? What reasons led you to do it another?

Notice how the practice of making a small change builds your self-esteem and gives you confidence to tackle further changes.

Just as with mindfulness and money, the act of watching yourself make decisions will cause your decisions to be “more reflective of what’s important to you.” Regardless of the change you wish to make, the first step is to unravel your feelings around it so you can understand why you make the decisions you do.