I have been meaning to write about this for some time now and then found someone (hat tip to Mr. Money Moustache) who did a much better job than I ever could have.  In his post, “A Lifetime of Riches:  Is It As Simple As A Few Habits?,” he describes the power of habits in our daily lives:

“As it turns out, habits are little chunks of auto-pilot behavior that get burned right into your neurology – permanently. Once you develop a habit, you can never truly erase the program, even if you manage to deactivate it.

It gets even crazier than that: when your brain starts running one of its many habit scripts, a good part of your conscious judgement is shut off for the duration. The habit takes over, controls you until you get to the end of the script, and then dumps you out at the end. And this is not just a rare occurence – depending on who you ask, habits are in at least partially in control for between 50 and 90% of our waking hours.”

You read that right, 50-90% of our waking hours are controlled by habitual behavior.  If we all had good money habits that would be fine…but we don’t and as research makes clear, they are extremely difficult to change.

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Here is where the activity comes in:

1)  Ask students to write down a money habit they would like to change.  If they have a challenge with that, they can fall back on any habit they would like to change.

2)  Have them describe the habit and its components (cue or trigger, routine and reward) with a diagram similar to this:

3)  Now the hard part:  changing the habit.  How to do that….

“Find the trigger point of your habit: You do this by describing your own behavior in detail, searching for clues you might have missed before. My habit of making coffee is triggered by entering the kitchen….Take the same cue, but trick yourself into triggering a different behavior: If I wanted to quit coffee, I could give away the coffee machine and put a box of herbal tea on the countertop on its place….Try to make the new reward similar to the old one: With coffee, the reward is a warm, tasty beverage and an excuse to sit still, contemplate, or talk for a while….Reinforce habits with belief and community: This is the reason Alcoholics Anonymous works for so many people, and probably a big part of this blog’s success in changing habits as well. I tell stories of my own life to show that financial changes are not only possible, they are easy and fun to make.”

4)  Have students create a new diagram with the same cue and reward but inserting a new routine.  Have them share their successes in future classes (remember the importance of reinforcing habits with belief and community!).

Good luck!

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.