Why do people spend money they don’t have, burst through their budgets, and end up pinky-swearing that they will never spend money like that again — until they do it again the next time?

In the book, “Atomic Habits,” James Clear wrote, “The costs of your good habits are in the present. The costs of your bad habits are in the future.”

Think about that. Buying something that you don’t really need at the expense of saving for something that you do means that you are paying a future price to satisfy today’s want.

It feels good right away, but not so good down the road. Saving for tomorrow has the opposite effect — it is a current sacrifice for a future benefit.

I don’t always love the concept of bad or good, because it implies an either/or decision, so let’s switch it to more productive or less productive habits and figure out how we’re going to plan for tomorrow without completely sacrificing today.

The easiest way to have productive money habits is by wanting what we have. The gap between what we want and what we have is generally where our money issues originate. But there are many factors that can create disharmony between what we want and what we have. The most obvious one is our environment.

If you want to gain more control over your finances, your environment has a significant impact.

We all respond to our surroundings, so it is important to be in an environment in which you are comfortable and which is consistent with your values.

One of our client’s daughters went to private colleges with many children whose parents’ gave them a credit card to use as they wanted. Our clients had a different financial approach with their children, so it meant that the children either had to find other classmates who did not have the same luxuries, work in order to provide some of those things for themselves, or excuse themselves from too many shopping trips or nights out that their cohorts went on.

Those were some uncomfortable choices that they had to make during an already challenging time of life. Yet the act of making those choices has helped them better understand their values and will hopefully lead to more consistent future decisionmaking.

In that situation, the children had to control their environment.

What are the choices that you are making to help control your own? Decisions around living in neighborhoods with two working parents or not, private or public schools, a larger or smaller home will result in a lifestyle that will make you cohere with your values or potentially foist you on a hamster-style treadmill.

You get to pick and it is important to recognize that you will be affected by your choice.

Clear also wrote about the “Diderot Effect, where obtaining a new possession often creates a spiral of consumption that leads to additional purchases.”

When one of our clients redid their kitchen, it made them feel like other parts of their house were out of date. Suddenly a manageable couple month project became a couple of years as they planned what additional things they felt they needed to do to keep their home up to snuff.

If you wish to develop better financial habits, they need to be integrated with the life you want to live. It’s important to think of the unintended consequences that your decisions can cause. A job change for a small bump in pay may underestimate some of the social costs of switching and the less obvious costs such as commute times.

I know some people who got a dog and suddenly felt like their rental was no longer adequate. They moved to a more costly place that was bigger with more access to green space. But the cost of the puppy turned out to be far more than what they paid for him and some of his vet bills.

The ideal situation is to minimize your need to use self-control.

Remember, self-control is denying something today for a benefit tomorrow. But exercising self-control disregards the enjoyment we get from today.

If you have decided to give up drinking, you probably won’t be hanging out in bars. If you want to get a handle on your spending, you probably don’t want to be pulling items out of magazines that interest you and following it up in the rabbit hole of the internet.

I can almost guarantee you that you will find something you don’t really need, and probably buy it.

That is the joke of the “giving up the latte movement.” You can save $5 a day by sacrificing your caramel macchiato, but blow $100 in a minute mindlessly buying something on the internet.

Define what success means to you and position yourself for it.

One way of simulating the buying pleasure without the cost is every time you decide to not buy something, you take a minute to transfer the price of the item into an account. You can label that account for experiences, philanthropy or something that would be meaningful to you. You may even use it to fund a retirement plan.

It often is the anticipation of the purchase that is more exciting than the purchase, but the act of doing something can create a dopamine high.

Transfer that high into something intentional and you will most likely have less clutter and be happier.


Ross Levin is the chief executive & founder of Accredited Investors Wealth Management in Edina.