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How to Tweak Your Financial Routine Using Habit Stacking

How to Tweak Your Financial Routine Using Habit Stacking

September 15, 2021

What if you could take care of things on your financial to-do list…without even really thinking about it?

Welcome to the world of habit stacking.

The concept of habit stacking has been around for a while, but I recently became more familiar with it by reading James Clear’s book Atomic Habits. Here’s how you can train yourself to do a series of tasks on a consistent basis.

…your brain is probably very efficient at remembering to take a shower each morning or to brew your morning cup of coffee or to open the blinds when the sun rises … or thousands of other daily habits. You can take advantage of these strong connections to build new habits.

…the reason habit stacking works so well is that your current habits are already built into your brain. You have patterns and behaviors that have been strengthened over years. By linking your new habits to a cycle that is already built into your brain, you make it more likely that you'll stick to the new behavior. (Source)

Making these small changes can really lead to big improvements. In my case, I needed to improve my mornings, so I got in the habit of putting a bottle of water in my bathroom at night along with my workout clothes for the next day.  This week, I’m adding my running shoes to the pile.  Why?  Because the first thing I do in the morning is brush my teeth. After I finish brushing my teeth, I change into my workout clothes and then I start downing my first bottle of water for the day before I am even awake enough to know what I am doing. I’m adding the shoes to make it easier to get out the door and actually do the exercise that I am dressed for. 

How Can You Use This Concept with Your Finances?

 In the coming months, we’ll keep talking about habit stacking and how you can use this tool to improve your financial well-being. Here’s something to consider for Q4 2021.

October is often when we start thinking about the holidays and is usually the beginning of increased spending over the next few months.

Here’s a habit stack for you:

When you make your appointment with your family photographer or put in your order for holiday cards, pull out (or create) your household budget. This is a great time to take a look at what you’re spending and if you need to make some changes in the coming months to compensate for holiday purchases.

Like the C. Beach Brown October Online Spending Challenge, this is a good way to become more conscious of what you’re spending so that you decrease the impulse buys that often get us all in trouble – especially over the holidays.


A Note About Budgeting

I recommend the 50/30/20 budget for my clients. All politics aside, it is a good top-down way to structure a budget without having to track everything to the penny. 

  • 50% of our income goes to the mandatory account.  These are the funds that are used for paying the mortgage, taxes, electric bill, car loan, etc. 
  • 30% goes to the discretionary account.  We use this for going out to eat, shopping, etc.  When this account gets lower on funds than we would like, we go into no spend mode. 
  • The final 20% goes to savings. 

The funds are deposited to the three accounts directly from our paychecks, so we don’t even need to think about it each month.  I get an alert from my bank when the discretionary account drops below a certain level, so I know if I need to stop spending.  Otherwise, I know that we are staying on budget because we structured ourselves from the top down to be.  It’s easy and it doesn’t take additional thought power.  It only needs to be reviewed periodically. 


Making Small Changes

Remember, progress, not perfection. 

What you do want to do is be intentional instead of impulsive. You want to focus your energy and your budget on the items that are most important to you. By creating financial habits that link to the things you naturally do, you can make some small changes that could lead to big outcomes.


Cecilia Beach Brown CFP® is an Annapolis-based financial advisor who is dedicated to assisting her clients through celebratory (retirement, college planning) and difficult (loss of spouse, job loss) moments. She also works extensively with Lincoln Financial Securities to help develop companywide initiatives around Dynamic Financial Planning. CLICK HERE for more about Cecilia and to schedule an appointment.  LFS - 3766619-091621