8 Ways To Teach Yourself Financial Discipline and Break Bad Habits

Just like anything good in life, learning how to be smart with money comes down to our habits. Thankfully, not only is it possible to break bad habits, it’s also possible to become financially disciplined with the right strategies in place.

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Here are eight expert-recommended ways to go about it.

According to Nischay Rawal, certified public accountant (CPA) and founder of NR Tax & Consulting, one strategy that works well is setting clear, attainable goals.

“I advise clients to break down their financial goals into smaller, manageable steps. For example, instead of saying ‘I want to save more,’ specify ‘I’ll save $200 a month,’” he advised.

He said this approach not only makes goals less daunting but also provides a psychological boost as each milestone is achieved.

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Budgeting is another effective tool, said Rawal.

“I often recommend clients to review their monthly income and expenses to pinpoint areas where they can cut back.”

He recommended using tools like budgeting apps to track your spending habits and adjust accordingly.

“I’ve witnessed clients who initially struggled with overspending find success by setting spending limits in specific categories, like dining or entertainment, and sticking to them,” he said.

A powerful technique Rawal uses involves accountability.

“Sharing your financial goals with a trusted friend or advisor can help keep you on track,” he said. “During consultations, I emphasize the importance of discussing progress and challenges openly.”

He said this method has led many clients to develop better habits by receiving regular feedback and encouragement, reinforcing their commitment to change.

“Setting up future-dated transactions for nonessential purchases is one method that I frequently suggest,” said Angelo Crocco, CPA and owner of AC Accounting.

For this, he advised planning ahead seven days before making any nonessential purchase. “You now have some breathing room. You may discover that the impulse to buy subsides during that week.”

He explained it’s not about saying no forever; it’s about giving yourself time to think it over.

“This minor adjustment can encourage more deliberate spending by breaking the pattern of impulse buying,” he said.

Establishing a “no-tech zone” to make financial decisions is another helpful strategy.

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“Make a commitment to discuss or decide on any purchases without your computer or phone in front of you,” said Crocco.

This pushes you to think more clearly and helps you take a step back from compulsive internet shopping.

“Using this time to manually record your expenses can also help you become more conscious of your spending patterns. It’s a simple way to break the habit of mindless spending.”

“Often, overspending is driven by guilt from depriving ourselves,” said Crocco. “I propose opening a ‘guilt-free’ spending account as a solution to this. Put down a tiny portion of your monthly income — perhaps 5% — into this account.”

In this manner, he said you can indulge in a little retail therapy without breaking the bank. The knowledge that you have set aside a certain amount for enjoyable purchases will lessen the desire to overspend elsewhere.

“It gradually encourages a more balanced approach to spending.”

Crocco advises clients to maintain a money stories journal. “It can be really enlightening to go back on your early memories and beliefs regarding finances,” he said.

Consider asking yourself, “How do I feel about spending?” or “What did I learn about money growing up?” By writing these thoughts down, Crocco said you can identify any limiting beliefs that might be holding you back.

“For instance, if you’ve always thought ‘I’m bad with money,’ challenge that narrative by saying, ‘I’m learning to manage my finances better every day.’”

Developing a new perspective might help you break negative habits more effectively.

Crocco refers to this tactic as financial environmental design, and he said it can have a significant impact. It entails modifying your environment to support you in making wiser financial decisions.

For example, he said you might want to remove your credit card information from online shopping sites.

“This little step might complicate the purchasing process and cause you to second-guess your decision to hit ‘purchase,’” he said. “For daily expenses, you may also try paying with cash to feel the real effect of your spending.”