Financial Behavior Modification
Financial Behavior Modification isn't easy, but it isn't impossible either.
This article explores how to modify behavior to become more financially responsible.
As humans we all have habits.
Some habits are good such as consistently working hard and doing good things for others.
Some habits are not so good such as excessive spending, and constant indebtedness.
And some habits are just plain bad. They may even be addictions such as alcohol and/or drug abuse, excessive gambling and more.
Because the addictions that humans have, much behavior modification work has already been done.
We can learn a great deal from this work and apply it to other types of bad habits such as excessive spending and constant indebtedness.
Money is many things to many people. It represents wealth, freedom, power, good, evil, happiness, sadness, and much more.
It is no wonder that without the right kind of financial education in our homes and schools many people don't know how to use money effectively.
Many individuals have not been properly educated on its good and bad merits, how to save and invest it and how to use it to bring happiness into their lives.
Consequently it is an uphill battle to change behavior patterns when using money that have been poor (and sometimes dysfunctional) for decades.
The Light at the End of the Tunnel
There is a light at the end of the tunnel and it isn’t a train.
coupled with effective financial behavior modification can help people become more financially responsible.
Studying current financial behavior modification highlights some useful characteristics that can be used for improving financial literacy. They are:
1. Identify reasons for irresponsible behavior towards money.
Some common reasons are:
* Little or no financial education.
* Parents who didn’t know or care how to properly use their money
-- More is caught than taught with children.
* A sense of entitlement in life that drives irresponsible spending.
There are many other reasons.
2. Teach the basics of good money management - This includes such things as: budgeting, saving and investing. Strive to change irresponsible mindsets.
3. Help the person draft a realistic budget - Make sure emergencies and contingencies are addressed (they always occur). There needs to be strong agreement that this is a budget the person will strive to work to achieve.
4. Set up a savings program - Even if it is a small amount to start. This helps create a positive (and sometimes) lifelong habit of paying oneself first.
5. Encourage putting money away for a vacation - This assumes a person has disposable money after a savings plan. This can be a huge motivator. The carrot philosophy does work.
6. Provide books, software etc. to teach financial literacy - It takes time and energy to learn about money. There are amazing resources for every level of financial literacy to choose from.
7. Check in over time - See how things are going. Adjust an individual spending and savings program as necessary. Continue to provide positive feedback to successes and emphasize changing poor financial behaviors.
Financial Behavior Modification isn't easy,
Not everyone will change their behavior. However, when a realistic plan is put in place with rewards along the way, many people can change their behavior and become much wiser about money.
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