Financial Diets vs. Lifestyle Changes

If you’ve ever tried to shed a few pounds, you know there are plenty of diets to choose from. And whether they’re dictating how much you can eat or what types of foods are acceptable, most diets have one thing in common – they’re unsustainable.

Sure, they might provide a quick fix to get you back in your favorite pair of jeans, but they aren’t going to keep you healthy long-term. The same “diets” are common when it comes to your finances. You can set goals to save more money or cut back on frivolous spending, but long-term success will likely still be out of reach without first changing your perceptions of money.

True success comes down to lifestyle changes – altering how you view and interact with money (or food).

The Problems with Dieting:

The greatest challenge with most diets is that they’re designed to be temporary. Even “lifestyle-changing” diets usually become short-lived because, let’s face it, no one wants to go the next 30 years avoiding bread, let alone garlic bread!

Soon after you reach your short-term weight loss goals, your taste buds spring back to life, and your old habits remerge. Before you know it, you’re right back to where you started.

The same thing happens to your financial goals. Whether they’re New Year’s resolutions or goals you’re setting today, if they’re not sustainable over the long haul, they’re destined to deliver mediocre results.

What are Lifestyle Changes?

When you hear the term “lifestyle change,” you probably imagine an extravagant life transformation. Luckily, in a financial sense, it’s generally much simpler. 

The goal is to alter your spending and saving habits to improve your financial well-being. As you’ll soon discover, there are many small moves you can make that will compound into something much greater over time. 

But first, you need to change your perceptions of money – how you view and spend it.

Changing Your Outlook on Money

Financial habits don’t form overnight. Likewise, you won’t be able to completely change your spending and savings practices in an instant, either. But you can become more aware of how you’re interacting with your money and make progress daily. 

Here are a few examples of how society can shape your fiscal habits:

Saving: Advertisers spend big bucks convincing you to part ways with your money. Their goal is to keep you focused on the present – not on your future goals. Consequently, less money goes into your savings – creating more challenges down the road for the future you.

Credit Cards: Originally intended to help people cover emergency expenses and spread out larger purchases, credit cards have taken on a whole new life. Because of their convenience, they’re one of the most popular forms of payment today. Even making $0.99 in-app purchases are commonplace. But this is not how credit cards were intended, and society makes these practices seem normal. 

Debt: While loans are often helpful in achieving larger financial goals, too much debt is never ideal. And yet, it’s not uncommon for households to have multiple car loans, a mortgage, several credit cards, and student loans. The uptick in borrowing stems from the desire to have everything now instead of saving over time. 

Society plays a significant role in your monetary habits – whether you realize it or not. Taking a step back and re-evaluating your spending practices can be eye-opening. For example, how would your finances change if you only used your credit card for emergencies? 

Examples of Lifestyle Changes

Altering your spending or saving habits doesn’t have to be extreme. There are many little tweaks you can make that will have a significant impact on your finances over time.

Automate Your Savings: Use payroll deductions or automatic transfers to ensure money consistently finds its way into your savings account. Once it’s set up, you don’t have to worry about it again. It can also be beneficial to open a separate savings account to save for the goal you want to achieve.

Balance Your Budget: Creating a budget is wise – balancing it regularly is crucial. Spend 30 minutes a week updating and balancing your budget. It’s an excellent way to remain mindful of your spending and ensure you’re on pace to reach your goals.

Set Spending Limits: Finding ways to restrict how much you spend at a single time is wise. There are many ways you can do this, including:

• Card Alerts: Most credit unions allow you to set spending limits or alerts when you reach a specific dollar amount. Set up an eAlert for your Genisys account to notify yourself of any account changes.  

• Waiting Periods: Set a rule with yourself that any purchase over a specific amount requires a 72-hour waiting period. A few days to think about it might cause you to change your mind.

• Cash Allowance: Give yourself a cash allowance for the month. Once the money is gone, it’s gone. People tend to think harder about purchases when they visually see the money in their wallet disappearing.

• Analyze Trade-Offs: Every decision has a trade-off. Back to our food examples, you can eat a piece of cake now, but you’ll have to hit the treadmill for 45 minutes later. Likewise, you could have more money for your yearly vacation if you buy a cheaper car.

• Round-Up Your Payments: When making your loan payments, try to round up the amount to the closest $50 or $100. For example, if your payment is $356, make a $400 payment instead. Every extra bit will help you repay the loan quicker and reduce the amount of interest paid.

• Pay Yourself First: Make your future self a priority. Transfer money from every paycheck into your retirement accounts immediately. Then, use the remaining funds to cover your bills and other expenses.  

• Factor Hours Worked: Determine how much you make per hour after taxes. Then, use that figure when making purchases. For example, if you make $15 an hour and a new top is $60 – is it worth working 4 hours to get it?

We’re Here to Help!

Lifestyle changes pertaining to your finances don’t have to be extreme. Start slow and work to become more conscious of your spending and saving practices. Simple tweaks can lead to significant results over time.

If you’re interested in learning how to automate your savings or consolidate credit card debt, we’re always here to help. Please stop by any of our convenient branch locations or give us a call at 248-322-9800 extension 5.

 

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