It’s easy to reminisce on what might have been. However, for some, staying stuck in the past might actually be keeping you from creating your ideal future. While this might mean clinging to old relationships or versions of yourself that no longer exist, it’s also particularly true when it comes to your finances.
Are you ready to let go of your old money habits and start creating new patterns that better serve your life? Let's talk about why letting go will help you move forward and just how to do it.
Do your money habits have you stuck in the past?
It’s easy to get used to old habits that might have served us well at one point in our lives. But your relationship with money changes throughout your life. Goals alter, new priorities pop up. And, with any luck and hard work, the amount of money you’ll make later in your career will grow.
Unfortunately, it’s easy to stay stuck in the same mindset about money. Maybe you use an outdated or time-consuming budgeting process. Or maybe you’re focused on financial goals that don’t align with your new reality.
Whatever the causes, staying stuck in the past can impact your financial well-being. Let’s look at how you might be holding yourself back by holding on to these old views and find actionable ways to move forward.
How being stuck in past habits might be impacting your success
Here are a few of the most common signs that your financial habits might be outdated and need to be reviewed.
1. Being stuck in the past is taking up too much of your time
We’ve all heard the phrase “time is money” and while it might be a little bit cliche, it’s actually true. Successful individuals know how much their time is worth. They might even have an idea of how much they should be making per hour. Maybe you spent three hours every night watching TV when you were in college, but does that make sense for your life now? Maybe one of those hours could be spent preparing for the next day. Or perhaps even reading to brush up on a new skill that will make you money later.
You might even have outdated financial habits that are taking up too much of your time. Maybe you budget, but the way you budget takes up hours of your week. Automating some of your budgeting habits can streamline the way you think about money. This in turn can free up time for other productive tasks.
2. Your past habits are keeping savings goals low
If you have savings goals set and are actively working towards them, you may think you’re on the right track. And while you should be applauded for continuously setting and reaching your financial goals, it’s worth considering if they’re too short-term or low. Maybe you’re saving to pay down small debt payments. But do you have a plan to repay student loans, save for a home down payment, or grow your emergency savings?
For instance, do you have a retirement savings plan? And if you do, when was the last time you revisited your contributions or calculated what your savings will look like in 20 years? It’s easy not to think about retirement too closely when you’re in your 20s, but as you approach your 30s, 40s, and 50s, retirement becomes a much more important financial goal. And the truth is, most of us aren't on track with retirement savings.
If you don't have savings goals, you may need to look for ways to boost your income. It's also a good idea to curb non-essential spending and start building savings. Reviewing your budget and cutting expenses where possible can help you find additional money to begin funding savings goals.
Don’t let past thinking prevent you from creating the future you want. Boost your retirement contributions or add retirement savings into your long-term goals as soon as you can. I recommend writing down a few long-term financial goals you’d like to accomplish and then creating a savings plan to make those dreams happen.
3. Staying stuck in the past is costing you money
If you’re a creature of habit like me, you probably have at least one bank account that’s been open for more than a decade. And while it’s great to stick with the same bank if they continue to offer you great service, chances are there are savings rates or free banking options you’re missing out on.
While you don’t have to fully switch banks or jump ship, it’s worth exploring what else is out there. For example, while I stick with the same traditional bank I’ve been using for over ten years as my main bank account, I also have a high yield checking and savings account that I use to keep my freelance income, tax money, and short- and long-term savings goals.
Be sure to also explore budgeting and savings apps, investing and retirement platforms, and other digital financial tools that can help you make the most of your money.
Here’s how to avoid staying stuck in the past
Now that you better understand what might be holding you back, it’s time to pull yourself out of your financial rut by developing new money habits. Here’s how:
1. List any habits you want to change
Identify any habits from above that you want to change. For example, maybe you want to spend less time manually paying bills or work towards loftier savings goals. Whatever they are, compile them into a list or spreadsheet.
2. Attack one challenge at a time
Choose one habit you want to change to focus on. If you spend too much time weekly managing your budget, for example, maybe this is the obstacle that’s the most painful to your life and holding you back. Decide where you want to start before moving on to the next step.
3. Do some reading
Now that you have the one habit you want to focus on first, begin researching ways to improve this habit. Reading books are a great way to learn and stay focused. For example, if you have a budgeting hurdle, you can read about different budgeting methods. This knowledge can help you figure out why your method is taking so long and come up with ideas for reducing your time.
4. Begin practicing new habits
Next, it’s time to begin practicing new habits to replace your old behavior. Take the solutions you found and turn them into actionable next steps by practicing them regularly. This is the most important step and might take a month or two to become routine. Keep in mind that it can take up to 66 days on average to form new habits.
Repeat these steps for every habit you want to change.
5. Stay adaptable
Your money needs are going to change over time, and you might need to adjust your habits again. Stay flexible and revisit your financial processes regularly, so you can determine if there are any changes you should make in the future.
Get ahead by pulling yourself out of the past
It’s easy to get stuck in the past without even realizing it. Holding onto a bank account you opened with your parents might cause you to pay monthly fees that another bank might not charge. Not revisiting your savings goals could prevent you from building up long-term savings.
While there’s no one solution for better managing everyone’s finances, it’s important to take time to reflect on what habits are holding you back so you save time and money now, and stay on track for your future plans.