How Autopilot Shapes Our Financial Habits

What habits do we have, or wish we had? In business or our personal lives, most of our daily actions are completed out of habit without giving them much thought: our morning routine, our drive to work, our bedtime ritual. Have you ever caught yourself driving and asking yourself, Did I stop at that stop sign back there? Did I close my garage door as I pulled out of my driveway? Did I lock my car door after parking it? Those actions have become so familiar that they have become habits that you do without thinking about them. You’re on autopilot. The same is true with money, and building better financial habits often starts by understanding how much of our behavior runs on autopilot.

Nose Blindness and Why We Miss Our Money Patterns

Our brains are wired for survival, which is why our brains ignore the familiar in order to focus instead on what’s new and different. That fact is referred to as “nose blindness.” A few years ago, I designed a workshop called Behavior Change Bootcamp, and in it, I helped my audience better understand nose blindness with the following example. Think of the last time you entered a room and smelled baking cookies, or homemade bread, or some other favorite aroma. Minutes later, your nose didn’t detect that aroma anymore. Yet if you left the room and came back into the room again, you would smell it again. That is an example of how nose blindness works: your brain ignores the familiar so it can focus on the new and different instead. It is that exact understanding of how our brain works that we can leverage in both our personal and professional lives to our advantage.

How Small Steps Help Build Better Financial Habits

Take personal finance, for example, since it applies to all of us. If you can do things so routinely that you don’t think about them, voila! You have a new habit! So how do we leverage our brains to help us create good personal financial habits? To avoid the feeling of overwhelm, we need to take James Clear’s advice from his book Atomic Habits and think small. His advice is to break our desired habits into 2-minute actionable steps. By focusing on the system in place, one small step at a time, you ultimately achieve the overall goal.

A Simple Way to Build Better Financial Habits One Step at a Time

Let’s use my wish for all women to walk through an example. I wish every woman had a list of her financial resources. I call it My Net Worth Summary. It reminds you, all in one place, of your blessings and perhaps your challenges. And once it is complete, it also serves as your homework list. If you tie your 2-minute actionable step to something you enjoy, you will get further faster. I enjoy a cup of coffee, so setting out to complete your Net Worth Summary, in 2-minute sittings, can be very doable even if finances aren’t your favorite thing to deal with.

Using Your Net Worth Summary to Create Financial Clarity

For example, the first section is Cash, which generally means all accounts at banks or credit unions (or in the freezer or under the mattress!) that are not at risk in the stock market. As you sip your coffee, you fill in the first column with the types of accounts you have, one per line. If you have a checking account at the local bank and one at a credit union, for example, you will write Checking on two lines.

Keep sipping, and the next column has you list the titles of each account, i.e., joint, trust, or your name only, and where they are located. Here’s where, if you don’t know for sure (don’t guess!), you may take a few minutes to look up that detail on a statement or online.

Then, surprisingly, there is a beneficiary column. You can name a beneficiary (called a POD, Payable on Death) on checking, savings, money market, and CDs at the bank. Perhaps that becomes a homework item for another 2-minute session.

Lastly, finish your coffee as you fill in the Value column with the current approximate balances of the accounts you listed. No math needed, as the worksheet will tally it all for you at the end of the 4 pages. Yeah, one section of eight is done!

Free Tools to Support Better Financial Habits

Now you can tackle the next section tomorrow! Or sometimes you find that wasn’t so bad and decide to make a little more progress faster by sticking with a small step longer than 2 minutes. Your call. Any progress is further ahead than before you started! I also provide a free video workshop (available on demand) to walk you through filling out the entire worksheet and to help you understand the importance of getting the account titles and beneficiary designations correct and complete.

Making Better Financial Habits Stick With 2 Minute Check Ins

I encourage you to think of every financial task or project in the same way. Just a 2-minute tackle until you complete it over time. Or some healthy financial habits, like reviewing your bank transactions online (for fraud detection as well as reminders of your spending habits), can be done regularly for just 2 minutes at a time, while sipping coffee if you are me!

What financial projects could you or have you broken down into small tasks? What financial habit could you do regularly for two minutes? And what enjoyable activity could you tie it to (or reward yourself with)? Let’s have a discussion.

Marie Burns is a Certified Financial Planner, Speaker, and Author of the bestselling Financial Checklist books. Find Marie on Facebook or contact her at Marie@MindMoneyMotion.com.

This article was first published at 60 and Me – a community that helps women over 60 live happy, healthy and financially secure lives.