How to Habit Stack Your Finances

Habits. We all have them. Some of us bite our nails, some of us can’t help but check our phones every five minutes, and some of us always forget to wash our dishes after we use them.

In this money habits gif, Squidward is trying to erase his bad financial habits and replace them with better spending habits by using habit stacking.

But what are habits, really? And why do we have them?

Simply put, a habit is a behavior that we do automatically, without really thinking about it. It’s something that’s so ingrained in our daily routine that we don’t even realize we’re doing it.

Habits are formed when a certain stimulus (like feeling anxious) triggers a certain response (biting the nail). Over time, this response becomes more and more automatic, until it becomes a habit.

So why do we have habits? Well, habits are actually a pretty efficient way for our brains to operate. If we didn’t have habits, we would have to consciously think about every little thing we did, which would be exhausting.

But just because habits are efficient doesn’t mean they’re always good for us. Some habits, like nail biting or phone checking, can be pretty harmful.

But don’t worry, it’s not all doom and gloom. There are plenty of healthy habits that we can develop to improve our lives in several ways. And one area where healthy habits can make a big difference is our finances.

Developing healthy financial habits with habit stacking can help you reduce anxiety about money, save money, stay out of debt, improve your spending habits, and even retire early.

Here’s how to start habit-stacking your finances:

1. Pick one area of your life that you want to improve. It could be anything from your physical health, stress levels, eating habits, or your finances.

2. Make a list of small, specific changes that you can make in ONE area. For example, if we were working on a healthier diet, your list might include items like “eat breakfast every day” or ” pack a healthy lunch.”

3. Identify things you already do daily. This could be brushing your teeth, washing your hands, or even scrolling on your phone before bedtime.

4. Choose one change from your list (step 2) and add it to your routine (step 3) over the next week. (Your immediate goal isn’t to stop a bad habit but to add in a healthy financial habit. ) For example, because I routinely check my e-mail every morning, I’ve habit stacked checking my bank accounts.

Once you’ve connected a desired financial habit to your routine, make it a goal to stick with that change for at least 7 days.

Image of a cell phone showing a payment of $91.07 to Dog Gone Holistic Monday, 21 June. The text above the image reads Transaction Swiping. Track what you spend. *Fall in love* with your progress.

4. After you’ve successfully completed your first week, add another change from your list and continue stacking habits until you’ve reached your goal!

So let’s take a look at some habit-stacking ideas that can help you simplify your money management.

1. Habit stack tracking your transactions

This is one is for the scrollers – the people who lose track of time scrolling social media.

Before scrolling on your phone, habit-stack a review of your spending.

Because you’re already on your phone, it’s easy to habit-stack tracking your transactions through an app like

Why review and track transactions? Knowing where your money is going makes future financial decisions easier and better when you’re aware of where you’re at and what you’ve spent.

Sure, you could do a monthly retrospective of your statements but that might not change your day-to-day spending habits like reflecting in a money app. (Also, is it just us or are paper statements for the birds?) There are a lot of great apps out there that can make tracking your spending easier than ever.

Image of income and expenses in the app. Gains include income. Expenses include groceries, healthcare, restaurants, pharmacies, and unsorted.

What we like about’s transaction swiping feature is that you can review your transactions to assess the damage financially, but also the damage it did emotionally. You’ll also benefit by learning how feelings influence your spending.

2. Habit stack organizing your money with categorization and a spending plan

Once you’re tracking your spending, try categorizing it.

As one theory by Professor Richard Thaler reveals, you’ll reap emotional and financial rewards from categorizing your spending and making a plan for it.

That’s because categories help you increase your mental accounting of money. You’ll be less likely to spend money you planned to save if you categorize what you’re saving the money for.

Here are some tips on how to implement a daily spending plan to make the most of your habit-stacked categorization:

1. Determine your income and expenses.

2. Figure out what your regular expenses are. This could include rent, utilities, groceries, and transportation costs.

3. Make a list of your irregular expenses. These are items that you don’t necessarily have to pay every month, but still need to account for in your spending plan. Examples could include clothing, entertainment, or travel costs.

4. Create a budget for each category of expenses. This will help you keep track of your spending and make sure you are living within your means.

5. Make adjustments to your spending plan as needed. This could include cutting back on certain expenses if you overspend in one area.

6. Habit stack categorizing your spending daily. This will help you make sure it is still working for you and make any necessary adjustments.

3. Habit stack your saving

Once you have a spending plan in place, it’s time to start thinking about your long-term financial goals. Do you want to save up for a down payment on a house? Do you want to have enough money to retire comfortably? Whatever your goal may be, habit stacking can help you get there.

But first, you may be wondering why it’s so hard to save without habit stacking getting paid with automated savings. The problem with saving is that most people rely on their willpower. This means after doing their daily chores, paying their bills, and working, they’re supposed to spend mental energy to transfer money to their savings account. Build saving into your routine with habit stacking.

Image shows three different colors representing different types of savings: green = emergency fund-80%
orange = wedding-75%
blue = new puppy-50%
The text at the top reads Auto Saves We'll help you take the stress out of saving.

Automation might be the ultimate cheat code for financial habit stacking.

You could have payroll directly deposit the funds into a separate savings account or you could schedule your automated saving to come out the same day you get paid. Either way, automation is like the ultimate cheat code for financial habit stacking, because once you set it up, you can forget about it.

Want to start really building your wealth and your net worth?

Apply automation it to your investment accounts for retirement. This may feel daunting, but it’s actually pretty simple.

There are plenty of beginner-friendly investment options out there, like index funds and ETFs. And once you get started, you can start reaping the rewards of compound interest.

Just like with budgeting and saving, many apps and websites can help you automate your investments.

4. Tackle your feelings and financial anxiety with habit stacking

Did you know that worrying about money can actually lead to poorer financial decisions and cause you to miss out on opportunities to improve your finances?

Image of the app's mindset check-in intended to get the user to look deeper at the "why" behind what they do. The text at the top reads Daily Check-in Understand the why to feel better about your money. The on-screen text reads Anything to add to the why? Followed by user text expressing issue with holiday hours at their job.
Use the money app to schedule worry time, improve your relationship with money, journal and practice mindfulness daily.

But what if there was a way to worry less and reduce your anxiety about money? What if you could habit stack and set aside a specific time each day to worry about your finances, and then the rest of the day you could focus on other things?

This is called “worry time.” And it’s a strategy that can help you improve your financial decision-making and reduce stress.

Here’s how to make managing your feelings about money a habit:

First, set aside a specific daily time to worry about your finances. This can be first thing in the morning, before bed, or anytime in between. The important part is pick a time you can stay consistent with it.

During this worrying time, focus on your financial concerns. You think about what you need to do to improve your finances and devise a plan of action.

Once your worry time is up, you must let it go. You can’t keep worrying about money all day long. This means no more checking your bank balance obsessively, no more worrying about whether you can afford that new car, and no more stressing out about your credit card bills.

Instead, you focus on the present moment and the important things to you. This can help you feel more calm and more relaxed, and it can also lead to better financial decision-making.

Speaking of better financial decision-making…

What habits should you avoid?

Checking your investment accounts daily

While it’s important to stay up-to-date on how your investments are doing, checking them every day can actually do more harm than good. This is because it can cause you to become too focused on the short-term ups and downs of the market, rather than thinking about your long-term financial goals. It’s important to remain calm and rational when making investment choices, as emotions can cloud your judgment and lead to poor decision-making.

Image of a man holding his head up by his temples with his elbows on a desk, eyes closed, obviously stressed out. The overlaid text reads Why we freak out with market fluctuations (and why we shouldn't). The read now button links to the article Why We Freak Out with Market Fluctuations (And Why We Probably Shouldn’t).

This is a habit that can lead to anxiety and even panic. If the markets are down, you may be tempted to sell everything and get out. Or, if they’re up, you might feel like you’re missing out and need to buy more.

Measuring your success against others

Picture of YourRichBFF Vivian Tu. The text underneath reads Podcast | Vivian Tu, How keeping up with the Joneses could cost you, YourRichBFF. The caption below reads Check out this episode of the Money Podcast, where Viv talks keepin' up with the Joneses. The picture links to the Podcast episode featuring Vivian Tu.
Check out this episode of the money podcast, where Viv talks keepin’ up with the Joneses.

Constantly comparing your own financial situation to that of others is a recipe for disaster. Not only is it likely to make you feel unhappy and inadequate, but it can also lead to impulsive spending in an attempt to “keep up with the Joneses.”

Not talking about money

Have you mastered the art of pivoting the conversation? Yes, money is a taboo subject for many people, but it’s important to be open and honest about your finances with your partner, family, and friends. Doing so can help you avoid financial problems down the road.

Making impulse purchases

Impulse buying can be a major drain on your finances. Whether it’s a new pair of shoes or the latest gadget, take a step back and ask yourself if you really need it before making any purchase.

There you have it, four financial habits to stack for a healthier financial future. Start with one and work your way up. Soon enough, you’ll be on your way to financial success.

Learn the financial benefits of scheduling time to worry about finances
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