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How often do you notice how your behavior influences your finances? Behaviors may seem like small decisions but they build up over time. Our default thinking makes a big difference in whether you are able to reach your financial goals. On this episode, Mike and Chad explore how the choices you make in 5 distinct areas can improve the way you go about making financial decisions.
Automate your financial systems
According to the book Thinking Fast and Slow , your brain has two systems. One system is automated, and the other is for deeper thought. What does this have to do with your finances, you ask? If you have ever tried to make a financial choice you could get to the point of analysis paralysis with all the options. One way to make decisions easier is by limiting choices. You can get overloaded by having too many choices. If you set things up to automatically happen, like an automatic withdrawal to savings or an IRA this can really help ease your financial decisions.
Be aware of where your money is going
This seems so easy. Of course, you are aware of how you spend your money. But are you really? Studies have shown that simply having an expense tracking app on your phone makes you more conscious of the way that you spend money. Whether you compare your receipts to your budget each month, track your spending with an app, or simply take a moment to process what you just spent on that ice cream, take time to be aware of your financial choices.
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Small wins do matter
The power of momentum can get you over big financial hurdles. It can seem that some financial goals are completely unattainable when you’re just starting out. This can feel incredibly frustrating and make some people give up hope of attaining their goals. Rather than focusing on the big picture, focus your energy on achieving small goals. If you can get some small wins under your belt this can help you achieve the momentum you need to achieve your financial goals.
Accountability works wonders
There is power in accountability. This may be the most powerful tool that we mention on this episode. It’s important to have a human accountability partner rather than a technological one. If you rely on an app to help you with accountability, it’s easy to turn it off. A human is harder to ignore. Having a friend or financial counselor can help you achieve your goals. When you have an accountability partner helping you with your financial decisions, this could be the most effective way to reach your goals.