Financial Behaviors – Addressing Established Behaviors

Our finances are directly influenced by our financial behaviors. How we manage our finances and our relationship with money started when we were children, and often have become habitual by the time we reach adulthood. The Transtheoretical Model of Behavior Change points to the fact that changing behavioral habits can be challenging, and the right approach to making these adjustments is unique to each person.

It’s important for adults to understand their financial behaviors, identify those that are positive, and work on changing negative habits that take them farther away from their financial goals. Changing long-term behaviors can be difficult, but there are research-based strategies for improving one’s financial habits that help a person work toward greater financial security.

Research, Statistics & Quotes

Nearly half of Americans say their expenses are equal to or greater than their income. And for those 18 to 25 the percentage is over half, up to 54%.

Study by the Center for Financial Services Innovation as reported by CNN Money

People tend to respond to immediate stimuli without reflection – called the “fast brain” – and this can have major ramifications for their finances.

George Akerlog & Robert Schiller

“A budget tells us what we can afford but doesn’t keep us from buying it.”

William Feather, American Publisher

“It takes more than financial literacy to truly help people work toward a stronger financial situation. Attention must also be placed on their behaviors, self-efficacy, and helping them develop systems to truly make a positive impact.”

Vince Shorb, CEO, National Financial Educators Council

NFEC Position Statement

Breaking financial habits that take individuals away from their financial goals lies at the foundation of achieving longer-term goals. Many people will have to work their way through the Stages of Change hierarchy to break these habits. This process starts with understanding where change is needed, taking personal responsibility for making change, and taking consistent action.

It’s good to know personal finance concepts (i.e. financial literacy); but without molding positive behaviors or modifying problematic behaviors, topic knowledge will have less positive impact. The NFEC’s material focuses on helping people work through behaviors that may be holding them back. Our highly-valued champions and advocates for financial education are to be commended for their commitment to promoting this mission; all our educators receive detailed training on how to mold and modify financial behaviors. Financial behavior is also an instrumental component of all our educational resources.