Habits - What Are They & Why Are They Important

Have you ever found yourself desperately wanting to either break a “bad” habit or create a new one? Most of us have. In fact, most of us go through an exercise every New Year’s Eve of loudly proclaiming what we’re going to do differently in the year ahead. Our resolutions get airtime on social media, around the table with our families or in the break rooms at work…oh gosh…remember break rooms at work before COVID? There is a flash from the past! But the point is still the same. For some of us we might be able to identify that resolution right off the bat. For others, it might take hours of deliberation and self-reflection to determine what we will change in the coming year. We are good at coming up with something and making it known…we are not so good, as a general rule of making it stick. That is why gyms are crowded in January, but relative ghost towns in March. We struggle with diets and other disciplines that we wish would become new habits for us. Why is this the case? Why is it so hard to make a new habit stick or an old habit go away for good? During December I will be sharing four different blogs with you focused on habits. I’ve been reading about and contemplating this topic for a while now and while I’ve only scratched the surface, I’ve learned some amazing things about human nature and our struggles with habits. Today, I want to make sure we understand what qualifies as a habit and why habits are important.

Let’s start with clearly defining what a habit is. A habit is a routine or practice performed regularly. It is an automatic response to a specific situation. The keys here include regularity and automatically. Take a moment and visualize your day. Get into the detail of your day and if the entire day is too much to consider, then limit your focus to either your mornings or evenings. Most of us have specific rituals (aka habits) at each of those times during the day. These are the things we do without even giving them a second thought. For me, my morning habit is rising to my alarm, letting the dog outside, making coffee, feeding the dog and drinking that first glorious cup of coffee. All of those activities happen each and every morning without my brain engaging. The steps I take are all the same. I am not consciously saying to myself, “Ok, Teresa, now go grab a scoop of dog food and place it in the dog dish so that he can fill his tummy”. It just happens. Same thing with the next phase of my morning habit which is to take my filled coffee cup to my favorite spot in the house and drink it. Again, I’m not making a conscious decision to do any of those activities, I am just doing them. What habits do you follow throughout your day that do not consume conscious brain power? Do you have a morning routine or an evening routine? Maybe it’s a midday habit that is on auto pilot? Everyone I’ve ever known has at least one time of the day when their activities require no thought – just action. Those activities are habits.

Why is this important? Well, according to James Clear, author of the book Atomic Habits and founder of The Habits Academy, “Your habits can compound for you or against you.” Clear expresses his views on positive compounding and negative compounding with a few examples. On the positive side, you can be more productive when more of your tasks are automated, leaving you more brain power to focus on other areas. On the flip side, overindulging in that ice cream every night will compound and most likely result in health issues over time. Clear goes on to explain, “Habits are a double-edged sword. Bad habits can cut you down just as easily as good habits can build you up. You need to know how habits work and how to design them to your liking, so you can avoid the dangerous half of the blade.”

Take a step back now and look at life in general. I believe for most, there are four key areas where habits are present. These areas are (1) physical routines including activities and eating, (2) productivity including home, work or school, (3) mental health which covers areas like sleep, stress control, and conflict management and finally (4) economic status including all behaviors related to money. We create habits over a lifetime in each of these arenas. Sometimes, those habits happen randomly or are created as a direct result of culture during our formative years. Other habits are created intentionally as a result of a desired life change such as losing weight, becoming a non-smoker, or climbing the career ladder. What about the habits that impact our personal finances? Are we in the habit of overspending and not saving? Do we rely on instant gratification and subsequently use debt to satisfy that urge or do we live by and within a stated budget every month? These behaviors trigger habits in our lives or more importantly may become habits themselves. It is said that strong personal financial management is 20% head knowledge and 80% behavior. If our 80% is comprised of even a few habits then habits are critically important to understand.

Rachel Cruz in her book Know Yourself, Know Your Money, supports this theory when she suggests that knowing your own behaviors regarding money is crucial to good financial management. She states, “The more you understand yourself, the better you’ll be at talking about and handling your money.” I am suggesting that in order to understand yourself, you need to know your habits, where they come from, if they are creating positive or negative compounding in your life and how to change them if you so desire. Over the next few weeks we’ll dig into more specifics about habits including how to change/create them, how to stop negative habits for good, and how to avoid becoming discouraged or disengaged from the effort.

The direct impact healthy financial habits or any habit can have on our lives is huge. So too is this topic and deserving of significant attention. I hope you’ll join me as we dig deeper this month and gain a better understanding of how to live a life filled with hope in habits.