There’s nothing like a good habit keep your life in order. We need them to keep our brains from thinking too much.  The less time we spend actively thinking, the more energy your brain has to focus on everything else. Picture your morning habits such as brushing your teeth or making your bed. If you had to analyse and process each and every individual task, you would need a nap before lunch. So when it comes to saving money-saving habits, why not make it a habit too?

Below is a diagram of the habit cycle – how it can be applied to your personal finances and how you can trick your mind into turning a habit into a money-saving technique.


Lesson 1: Habits work in 3-step loops

To start, much of this logic comes from the book The Power of Habit by Charles Duhigg, a highly recommended book that focuses on habits and routines. This article will apply those rules to saving money. We first look at what is a habit and how they are formed. Namely, a habit comes in the following 3-step loop:power-of-habit-loop How To Build Money-Saving Habits

A common guilty habit. Image via The Power of Habit.

The Cue

In the above example, your habit will always start off with a cue.

Sometimes, it is very noticeable, such as your phone vibrating notifying that you have a message. Other times it can be less subtle, such moments after a stressful situation. These cues are the trigger for everything that is to follow. They can be easily avoided, such as muting your phone, but it is not always that easy. This is because of a craving, something you need to satisfy.

The Routine

The routine comes next, aka the mistress in this love triangle. It’s generally the “doing” part of the habit. In the above example, it is the action of you checking your messages. Once the cue is triggered, your routine has to be completed in order to satisfy the craving. Often, routines can be great, such as running after work to feel better and ultimately get into shape.

However, we often find negative routines to make ourselves feel better.

For example, ordering KFC after a hard day of work as a sense of accomplishment. You see, the reward can often be the same, but it is your routine that will need to change.

You need to replace the routine of handling your finances in order to change your habit.

The Reward

This all leads to the reward. In the example, it is laughing at a good joke that someone sent you. Much like a gambling addiction, we have a craving that isn’t met until this reward has been achieved. Keeping in mind, this isn’t always something obvious. With gambling, it might not be the reward of winning a few thousand at Emporers Palace, but it rather the escapism. The whole trip, being away from everything, just being able to forget your work. That is usually the true reward. Our rewards are often intended to be good, however, it is the middle, the routine that needs to change.

Doing this loop over and over again creates a habit. Whether it is making a cup of coffee, driving to work or getting ready for bed. These are all habits that consist of these 3 steps.

Lesson 2: You can change your habits by substituting just one part of the loop, the routine

“Most people spend some money, pay their bills and save what’s left”

Now often you will see many blogs out there with titles such as “10 best habits to save money”. But these appear mere tips. One needs to understand the bad habits and change them into good ones. It might seem easier said than done, but it’s not impossible. You need to replace the routine of handling your finances in order to change your habit. In order to do this, we will break down the cue-routine-reward loop for a few habits we do most often. Included below is a simple habit that will use the habit loop:

saving-money-habit-loop How To Build Money-Saving Habits
Most cases of the 25th of the month.


It’s the 25th of the month (in some cases the 1st), and you receive your salary, the best day of the month. Now many times you might be wanting to buy something that has just gone on sale. Thinking that if you spend first, you won’t feel guilty not buying groceries for the rest of the month.

A habit here is to swap the way you first spend your money at the beginning of each month.

The Cue

That notification from the bank saying your wallet is now a little thicker triggers a craving to spend it as quickly as possible. Some of us are better at resisting this craving than others.

The Routine

Going out and spending as quick as you can. The faster you do it, the less time you have to worry about “should I?/shouldn’t I?” later in the month.

The Reward

New items you have been wanting for ages. Now you have the whole month to focus on saving. “Most people spend some money, pay their bills and save what’s left,” says Nancy Butler, a Certified Financial Planner. “And that’s backwards: You should be saving for your financial goals first, paying your bills and then consider spending the money you have left over.”

After you have paid your rent, tax and other bills, saving seems to be the last thing on your mind. But when it comes to saving for retirement (or even just a new TV), do it first rather than later. Not saying put R10,000 into your next investment, but anything, before you go out shopping, will help.

So, the trick in lesson 2 here is to trick your brain by substituting the routine. And, the more often you do this, the more embedded in your brain it becomes. The author of the book, Charles Duhigg puts it like this:

The trick to changing a habit then is to switch the routine and leave everything else intact.

saving-money-habit-loop-2 How To Build Money-Saving Habits
Swap the routine by saving first.

Lesson 3: Your most important habit is willpower

Swap the routine of spending all your money in one go, and put some money away first. You might not get the gratification straight away, but you will get there. Each and every month you stick to this new habit. This is not easy at all, especially if your budget is already tight.

That is where willpower comes into play. There are a few ways of training up your willpower, but the easiest way might just be finding challenging projects and working your way down from there.

Exercise is one that is always recommended, but many people shove that one off. I would recommend sticking to a budget using an app like 22seven to make it easier. This in combination with your newfound habit will help ease the change.

The Power of Habit is recommended for anyone wanting to be more productive, as the author provides useful anecdotes to drive home the lessons above. Perhaps this habit won’t be your first one to be changed, but hopefully, this article helped in realising the way we can trick our brains into doing something useful in our personal finances.



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