Personal Finance 

Don’t Change Yourself, Change Your Financial System

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How old are you? Unless you’re under the age of 20 or 25, chances are you will not change.

I don’t care how much willpower you think you have, the vast majority of people will not change their habits once they’ve become an adult. This is why the government created rules to prevent cigarette companies from marketing to minors (Joe the Camel?).

In fact, your only chance of changing usually comes on the heels of a very “shocking” event. How many stories have you heard of people getting their finances on track because their brother’s house was foreclosed? How many people lose weight because their doctor warns of impending health problems? While I don’t wish a “shocking” event onto anyone, sometimes we all need one to get us back on course!

In the absence of a shock, what can you do to help your finances? Don’t try wholesale changes to yourself or the way you do things, change your financial “system” so that it works better with You. Below are a few ideas to help you do this.


In 2009, banks earned nearly $40 billion dollars in overdraft fees, nearly all of which came from 10% of their customers. If you’re one of those, either opt out of overdrafts or find a bank that doesn’t change you $35 each time you overdraft.

ING Direct has a checking account product that does overdraft protection using a line of credit, usually up to $500. When you overdraft your checking account, they extend you a short term loan at Prime + 2%. The rate is in the single digits right now, which means the monthly cost of overdrafting your account by $100 is less than a dollar. While it would be better if you didn’t overdraft your account, it’s even better for you to switch to a less punitive bank while you work things out.

Credit Card Debt

If you are bad with credit cards, don’t use them. Credit cards can be very valuable financial tools if you’re able to use them properly. Like a circular saw, you can cut beautiful pieces of wood or you can chop your arms off. If you can’t stop yourself from chopping your arms off with a credit card, don’t use one!

You may have read me earlier this week when I said that cash and debit only households are basically paying credit card households a few hundred dollars a year. While that stinks, it’s better to pay a few hundred in invisible costs than a few thousand to a credit card company.


We can all agree: budgeting is boring. Not only is it dreadfully boring, it’s not fun. Who wants to carry around a notebook and record every transaction you have? Not many. The people who do it don’t necessarily enjoy it but they realize it’s part of keeping a tidy financial house. You can’t get ahead if you constantly spend more than you earn. You can’t know for sure if that’s happening if you don’t track your spending. You can’t plan for the future if you don’t plan what you’re doing today. That’s why budgeting is important, so how do we make it easier?

If you use debit or credit cards, you can use a personal finance tool, online or offline to help you track and categorize expenses. You can use a variety of free budgeting software packages (or simple envelope budgeting) to help you plan your spending.

Take a close look at the things you’re having trouble with and try to change your system. Sometimes it helps to meet in the middle, making a small change in your behavior with a small change in your system, to give you the little extra edge.

{ 15 comments, please add your thoughts now! }

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15 Responses to “Don’t Change Yourself, Change Your Financial System”

  1. billsnider says:

    When I was in my mid 50’s, I read a book about preparing for retirement. I found out that not only was I unprepared financially, I was also devoid of activities, direction, health (lack of physical activity) and many other such things that the book pointed out to me.

    Thank god that I read and reread the book and acted on it.

    Bill Snider

  2. Shirley says:

    I recently took a good look at a graph of our optional expenses, those that we could do something about if desired. Car repair and maintenance jumped right out at me! Time for a new pickup for hubby and give the old one to a grandson to tinker with.

    I hadn’t realized just how much we were spending on this favorite relic of his, and I still wouldn’t ralize if I hadn’t used that graph.

  3. zapeta says:

    I changed my financial system by instituting a budget and using You Need A Budget. It has helped me plug the little leaks that I was missing in my previous budget. This small change helped me a lot.

  4. lostAnnfound says:

    the older I get, the less I like the debt our family has, but we have to make changes to help eliminate that. Got rid of the cell phone a few months ago, and cancelled cable and got Netflix (cheapest plan). That has freed up $90/month more to apply towards debt. Small changes that as they add up can make a difference.

    The big changes are harder because, as you say and I believe too, we are older and more set in our ways/complacent about what we have/just want to go with the flow.

  5. cdiver says:

    Start by finding people who will pay you what you think you are worth!

  6. BrianC says:

    Willpower is definitely overrated. Long term change, it seems to me, is best accomplished when you’ve set things up so you don’t even have to think about your actions. Don’t force yourself to decide not to eat junk food every time you open the refrigerator–just don’t buy the stuff and the decision is made.

    • Shirley says:

      Some people’s willpower is brand new because it has never been used. 😉
      You have to WANT the change, not just think about it, before it can even begin to take place.

  7. I agree completely. It’s hard for anybody to change the way they are and in particular change their lifestyles once they are used to it. That’s why there are instances of people who we makes lots of money, yet can’t afford to live up to the lifestyles they have created for themselves.

    • jsbrendog says:

      i think the biggest problem is not people being unable to change but not knowing how to enact it. You can’t change everything at once and make big sweeping changes. it just doesn’t work. You have to start small, nail it down, make it intoa routine, and then build on it. Then it may become sustainable, not for everyone obviously, but for some.

  8. jsbrendog says:

    this is why i love it helps me budget, sends me email rmeinders and nastygrams when i do stupid stuff or get banged with fees and tracks my net worth for me.

  9. Anonymous says:

    A word about tracking spending. It can be exciting because of the rush you get when you realize you ARE now in touch with your money and can see your spending habits on paper. That gives you the power to change.

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