There’s an old myth floating around that says it takes 21 days to form a new habit, financial or otherwise. If it were that simple, we’d all be expert budgeters and savers by now. The truth is, it can take a lot more than that and there’s not really a good way of knowing ahead of time how long you have to keep at a behavior to make it stick. (One study actually found that it actually takes an average of 66 days to form a habit and anywhere from 18 to 254 days for a behavior to feel automatic.)
The time frame to form a financial habit will vary a lot depending on the person and the specific financial goal. But the truth is that all money management habits start with day one, and require constant work.
Whether it takes two weeks or two months for a behavior to feel habitual doesn’t really matter—what’s more important is that you can pinpoint bad money habits you need to break, figure out the good money habits you want to develop, and have a clear roadmap of how you can work on this every day.
Why Good Spending Habits Matter
If you’re not strictly accounting for every penny that you make, it can be easy to start spending money on auto-pilot. When you do this, you may be making ends meet, but by overspending you’re likely losing out on an important planning opportunity, says Phoebe Story, M.S., a financial advisor at Northwestern Mutual.
“When you develop good habits around money, you’re allowing yourself to have a long-term plan,” Story says. Being intentional with how you spend and how you save will ensure that you’re working toward your goals, both short- and long-term.
Good money habits ultimately put you in complete control to make thoughtful decisions.
“Not having good money habits leaves people vulnerable to basing most financial decisions on their impulses at the time, rather than with what is in their long-term interests,” says Hersh Shefrin, Ph.D., behavioral finance expert, and professor of finance at Santa Clara University’s Leavey School of Business.
“Sound financial decision-making involves being well balanced, and overreliance on impulse buys typically produces a lack of balance.” Good habits can help keep your bank account more in balance by keeping you from acting on impulse and instinct, Shefrin explains.
How to Break Bad Habits
Of course, many of us not only lack good money habits, but are also guilty of some bad ones. Breaking those has to happen first so that you can establish new ones in their place.
The first step is to recognize what you’re doing, says Shefrin. The second step is to figure out what triggers the bad behavior. The third step is to find a better habit for your financial situation to replace the old bad one. “Then it’s practice, practice, practice. You just keep doing it until it becomes automatic, without becoming discouraged by failures along the way,” says Shefrin.
For example, say your bad money habit is that you spend all of your extra money after paying bills, instead of putting money into savings or building an emergency fund, says Story. “I normally recommend a budgeting exercise to highlight where money is going, how it is being used, and what benefit we are seeing from it. This tends to bring a lot of clarity to the individual because they realize that there is an opportunity to utilize money in more efficient ways.” By simply recognizing the bad behavior and how it’s impacting your financial life, you can discover which good habit should take its place.
4 Easy Steps to Form Good Habits
Specific tactics for forming a habit will vary depending on what exactly you’re trying to do, but there are some best practices you can follow to make a positive change in many money-related habits. It all comes down to choosing a positive behavior or habit, laying out how you can implement it with a set goal, and checking in on yourself regularly to keep tabs on your progress and make changes when needed.
Here, Story shares a few behaviors that can help you on your way toward better money habits:
1. Set a monthly budget
“Planning out all of your monthly expenses and knowing when they are owed is critical to your success with good money habits,” says Story. Account for any recurring expenses first, like student loans, credit card debt, housing, cell phone bills, etc. Then you can build your budget around the required spending, like groceries. Laying your set expenses out first is key to building a complete budget.
2. Build savings into your budget
Even if you only have $5 to save every month at first—every little bit you can put aside is worth it. One of your first money goals should be to build this up to 3 to 6 months of expenses, says Story. “Savings accounts are for emergencies and the goal is that those dollars aren’t being touched. We want to ensure no matter what life throws your way, you can bounce back,” she adds.
3. Plan ahead for large purchases
If you know ahead of time that you have a big trip planned or need to make an expensive purchase, then start planning early on to make sure you save enough by the time you need it.
4. Track your spending and your progress toward your goals
For example, if you want to save a certain amount of money for the year, you’ll want to check in every month to make sure you’re on target. If you’re tracking your progress, you can see when you’re off and make needed adjustments.
Also, a little positive reinforcement can help along the way until the habit becomes second nature. Shefrin encourages giving yourself some special treats and rewards—like permission to buy your favorite expensive coffee on Friday if you’re on track—for a little extra encouragement to keep at it.
Read more: 5 Habits of Financially Successful People
Be Kind to Yourself
The truth is, you’re not going to be perfect all the time. So expect mistakes (you’re only human, after all) but work to minimize them, says Shefrin.
When you do slip up or make impulse purchases, recognize it and figure out how you can either make up for it or move on (or both). For example, if one month you spend too much and don’t save enough, try to save a little more the next few months to catch up, says Story. If you’re having a hard time holding yourself accountable, she suggests working with a financial advisor.
Remember to have some self-compassion. Don’t beat yourself up, says Shefrin. Get up, brush yourself off, and keep moving forward. How old you are and how long you’ve had bad money habits will factor into how hard it is for you to break them and build better ones. Developing good habits as early as you can will help set you up for financial success for years to come.
Disclaimer: The opinions expressed by the interview subjects are not necessarily those of Earnest.