Spend enough money, and you'll quickly learn the definition of a bad money habit. Few people need to be told not to overspend on credit or debit cards or to curb impulse shopping. You know you shouldn't, even if you always do. What you need are solutions.
But solutions are hard to come by, says Ramona Pearson, a certified public accountant and personal financial advisor in Detroit. She has been advising clients since 1984, she says, and from what she has seen, these bad habits are often practically baked into our brains.
"Money habits are formulated at a very young age for most people," she says. "I think how money works and what it means is deeply ingrained in our psyche."
Shelly Smith-Acuna, dean of the Graduate School of Professional Psychology at the University of Denver, agrees. She says if you have a really bad money problem, therapy might help. "Sometimes a problem is a pretty simple fix, but other times, money represents something deeper, maybe comfort or security in a deep way. Therapy can help you explore and understand some of the meanings behind why you spend your money," she says.
Whatever your problems with money, you can change -- but it's going to take work. After all, you're trying to break lifelong patterns. Start with these strategies:
Set realistic goals. Smith-Acuna treats many patients with money problems. The issue especially comes up during couples' therapy. Naturally, a lot of her patients try to fix how they manage their finances, and Smith-Acuna believes a primary reason people fail to change a bad money habit, "or any habit, really," is that they fail to set realistic goals.
"A lot of people set themselves up for failure because they have a mindset of either indulgence or deprivation. So if you try to deprive yourself of too much, where you spend almost nothing, then you end up giving up, and you indulge, and then you overspend," Smith-Acuna says. "So if you have an unrealistic plan, you're probably going to lose control."
That was the thinking behind Martin Grunburg's free app, "The Habit Factor," available on Apple and Android devices. The San Diego-based entrepreneur's app is designed to help people create good habits, and it sends reminders on certain dates, enabling users to remember to complete the tasks they want to start doing regularly.
"Good habits happen when planned; bad habits happen on their own," Grunburg says.
Change your mindset. Your bad financial habits may be something you're hard-wired to do, but if there is one particular vice you're trying to fix, you may be able to change the wiring easier than you'd think.
Smith-Acuna says she had a couple in therapy who constantly quibbled about what she feels has become a monetary cliché: "They would always argue about how much money they were spending at Starbucks."
Smith-Acuna says the wife loved capping off each workday with a gourmet drink, much to the chagrin of her husband, who disliked the $4.50 she was dropping so regularly.
Ultimately, the wife ended up quitting her Starbucks habit without too much trouble. The secret was drilling down and figuring out that her daily fix was important to helping her unwind from work. So instead of replacing her drink with nothing, she got something else, something free, in return. After work, her husband played with the baby and gave her 15 minutes of downtime instead.
Change how you spend your money. Even if you only test this out for a week, or a day, it may help you slow down your spending if you switch from paying for merchandise and services with a debit or credit card to paying with cash. It's easy when you're using plastic to mindlessly swipe and fall into a pattern of not thinking or noticing how much you're actually spending.
"Cash is tangible and can make one feel [more aware] when money is leaving the household, thus making one more spending-conscious," says Jeff Fishman, founder of JSF Financial Services, Inc., in Los Angeles.
Pearson endorses this approach, too. "You can divide up your money and put [it] into envelopes, marking down on the envelopes what each pile of money is for. That can make it easier to see where your money is going," she says.
Track your spending. Try doing it for a month, suggests Mark Kantrowitz, publisher of Edvisors, an informational website about planning and paying for college. Kantrowitz has seen many college graduates struggling with student debt while learning to juggle new expenses, such as auto loans, credit card debt and mortgages.
That's why he suggests becoming anal-retentive about your money for an entire month. "Get a receipt for every purchase, and if a receipt is not available, such as purchases from vending machines, write down the amount, date and description in a small notebook. Each night, transcribe the expenses into a spreadsheet or a free program like Mint.com," Kantrowitz says.
He suggests breaking up your expenses into categories like food, clothing, housing, medical care and so on, but also labeling each expense as a need or a want.
"Be realistic as to what is really necessary. A need is something where you would die or go to jail if you didn't spend the money," or ruin your credit, Kantrowitz says. "At the end of the month, total up all the categories."
Do this, and you'll be more educated about how much money you actually have, and how much you have left over for fun stuff, Kantrowitz adds.
Reward yourself. There is probably a reason you developed bad habits, which are often adopted on the road easier traveled. So if you're suddenly balancing your bank account every day, or you're regularly putting money into an emergency fund, plan to give yourself some sort of prize. Nothing too crazy, of course. You don't want to undo all the progress you've made, but maybe you can buy yourself a new pair of shoes, download some music or go to the movies.
"If you set a challenge for yourself, and you can do it for two weeks, then you deserve a reward," Pearson says.
So treat yourself. If, for the past two weeks, you've been saving money or spending it more wisely, you can probably afford it.