Having Trouble Saving? The Secret to Better Financial Behavior

By Markets Fool.com

I am depressed because whether I am to live a very short time or relatively longer time depends [...] on whether or not I can learn to be the kind of person I am not and have always detested. -- James Agee

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Hopefully your own behavioral adjustments don't require depression.

Are you a bad saver? Hate details and accounting? Always choose dinner out over a dinner in?

You might say that all of these descriptions are just part of your personality (guess where this list came from), but in reality, our personalities are a lot more malleable than we think. Essentially, the more you tell yourself that you "are" something, the more you will be that something -- whether it's a baseball enthusiast, an honest person, or a total loss when it comes to keeping the books.

In other words, in order to become better with money, it's as simple as changing the way you view your personality.

The strategy of identity
The author Gretchen Rubin describes this as the strategy of identity for habit change. By adopting a particular behavior as an element of your personality, you become more likely to readily engage in behaviors that support that habit -- after all, it's part of who you are.

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So, telling yourself that you're terrible with money management, useless at fiscal responsibility, or otherwise inept with keeping a budget is actually doing more harm than good. Instead of adopting a mind-set to become better at these activities, you're essentially telling yourself that a) that isn't who you are, and b) that it's pretty much useless to try and change that.

Instead, what if you, starting right now, decided that one of the things you want to be is someone who is good with money -- someone who takes responsibility and can manage their finances effectively for their family?

Incorporating new identities
This doesn't require a wholesale personality change, a new wardrobe, or a different career. It just means adding on a skill and a source of esteem to your existing identity.

Of course, just saying the words won't make it happen. However, the words are important: We all have an idea of what good financial management means and what kinds of behaviors are included. Those words, then, can help you guide your behavior. When faced with any kind of financial decision, then, you're bypassing all of the usual self-criticism that makes any situation more stressful.

You can simply stop and think this: "I am someone who makes good financial decisions. What is the right decision, here?"

Over time, that process becomes easier as the identity of financially responsible or fantastic saver gets incorporated into your mind. And it is, as Rubin points out, extremely effective if you tend to balk at rules, budgets, limits, or other constraints (welcome!).

Maybe it sounds a bit wishy-washy right now, and it's obviously a much more conceptual strategy than downloading Mint onto your phone or withdrawing cash for the week's expenses. But try it: Using the framework of identity has helped me with everything from financial management to exercising.

What can it do for you?

The article Having Trouble Saving? The Secret to Better Financial Behavior originally appeared on Fool.com.

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