It can be tough to maintain good financial health. For many of us, it's not something that comes naturally and can often be just as challenging as improving other factors of our lives such as fitness.
That's why incorporating certain behaviours into our financial regimes can be a powerful tool in making positive changes. Academics have been looking into this for some time and it turns out there are many behavioural models available to help people with money - from saving for a rainy day through to getting better at keeping track of bank statements.
At Noddle, we've been working with Ivo Vlaev, a Professor of Behavioural Science, from Warwick Business School to uncover methods to help people make the most out of their money. And, to put these methods to the test, Professor Vlaev has been working on a UK-wide 'Financial Intentions' challenge over the last few months. This saw 12 participants being given specific models based on certain characteristics and tendencies to improve the way they manage their finances.
The behavioural models in the challenge were split into three categories - keeping track, making ends meet and planning ahead. Below is some insight into which types of personalities are most suited to the different models as well as some tips for applying each model.
Keeping track of your finances
This model is great for people who trust themselves with their own money management. They may sometimes be impulsive, but do have the ability to form long-term habits. Plus, they find it easy to stop an action once it has been started, for example, they can eat half a piece of cake rather than the full slice!
To make checking your bank account a regular habit, associate it with something you enjoy doing in a specific situation. So, link checking your account to having your 3 pm cup of tea and biscuit, or check it before you scroll through Facebook at lunchtime.
Do the same thing for checking your credit report monthly - link getting your pay slip to logging in to Noddle.co.uk to check your financial health. This makes checking an automatic habit, which will feel rewarding rather than a chore.
Making ends meet
This model suits people who are able to recognise they have strong spending habits. They may also experience emotionally strong responses to things like shopping when buying certain products can boost their social appearance.
Think about your spending habits, what do you do and when? Do you find yourself buying things you don't need? Perhaps you buy a take away coffee every morning to make work feel less of a chore, or maybe you grab a takeaway on the way home from the weekly supermarket shop. Once you know what you do and when, try substituting to save money.
So, instead of grabbing a coffee on the go every day, maybe save it for a proper sit down chat with a friend at the weekend when you enjoy your cappuccino and your friend's company more.
Lastly, this model is good for people who consider their future and can visualise it. They can remember spending habits but can also keep a future goal in mind, always considering how purchases affect them in the long term.
Develop a three month saving goal, broken down by fortnightly targets. It's always good to see what you are saving for so get a picture of your goal - whether that's a holiday or a house - and write a statement on it to keep you motivated. Stick it on your fridge, your desk or pop it in your wallet so you see it every day.
Changing our financial habits isn't easy - but it clearly can be done by tapping into behavioural science. Working with Professor Vlaev, we've found that it's crucial to be honest with yourself about your own behaviour and what makes you tick.
Helping the British public to manage their money is at the forefront of Noddle's mission. Noddlers are financially savvy, but everyone can learn new ways to make their money go further especially from someone as qualified as Ivo. We want everyone to be as clued up as possible when it comes to their finances and, in turn, reap the long term benefits.