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Clean up your old money habits

18 May 2020

It has been said that it takes 21 days to develop or to lose a habit, whether this is fact or fiction we have not confirmed. But what has become clear since the lockdown period is that, there is an opportunity to develop new positive habits or to unlearn old ones that were not so positive. Whether it's developing a new hobby or reigniting a lifestyle of exercise or spending quality time with loved ones, the time is ripe for change.

Change can also be realised in our finances. One can argue that with most of us under lockdown, there are several areas in our finances where we are making some savings. For example, not going into the office for work means no weekly spending on transport, no buying those several cups of coffee and lunch at the canteen which tends to add up to a significant amount monthly.

According to Behavioural Scientist, Jessica Exton, "whatever activity is relevant to you, it may be useful to take a moment to consider how disrupted spending habits might now be saving you money". What if we could use this quiet time to make some of the changes we need to our spending habits?

If this is something you want to continue long-term, Exton has some tips for helping the good habits stick:

  • Make it easy - structure your environment to make your new habit easy. For example, if you have started calculating outings and want to keep doing so, make it easy by downloading an app which will automatically record your spending, use cash so you can see how much is leaving your wallet and how much is left each day, or keep a small pen and paper in your bag so you can jot spending down as you go.
  • Follow your own rules - create rules that you can follow to support your new habit. For example, if your day-to-day spending on coffee has reduced and you want to keep it this way, don’t walk past the coffee shop, buy coffee with cash, or set a simple daily limit.
  • Make savings obvious - measure the benefits of your new habit. For example, if you are now saving an extra R350 per week due to not spending it on social outings and you want to keep this up, make savings obvious. This might be through physically putting the cash in a jar which you can see fill up or recording it in a money management app which celebrates savings milestones. Setting a clear savings goal will also mean you can see how much closer you are continually getting to reaching it.
  • Make decisions now - don’t wait until things get back to relative normality, support new habits now. If you are currently shopping once a week and finding this has reduced your spending on groceries, decide to keep doing it now and commit to it. This might require writing shopping lists to stick to what is needed vs. what looks attractive on the shelves.

The lockdown period has forced us to draw a line between what is essential and what is a luxury. The time away from the hustle and bustle and the closure of our go to conveniences has made us aware of areas where we can make a change. As a Liberty client, we believe you can take advantage of the this time to form long term positive financial habits and achieve financial freedom for you and your family.

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Liberty Group Limited (Reg. no 1957/002788/06) is a licensed Insurer and an Authorised Financial Services Provider (no 2409).