The A-B-C's of Behavior Change

In order to teach others valuable money management lessons it is essential that you model positive financial behaviors at home with your kids. Children learn through observation. The day to day management of personal finances and routine conversations (or arguments) about money are constantly being witnessed and reviewed by inquiring minds. Think about the important lessons that you learned about money as a child. What events or money lessons helped shape your views about money and wealth?

Next, take a moment to review where you currently stand as far as your financial life plan is concerned. Are there any financial behaviors that you would like to change? For the majority of people the answer is a resounding YES! That is why, prior to jumping into learning activities for kids, it is important that us grownups take a moment to review the "ABC’s of Financial Behavior Change".

Most people find it difficult to give up or change things that are familiar. For many people seeking financial change, negative financial behaviors occur on a regular basis. Since negative financial behaviors are usually present for long periods of time it often helps to understand the characteristics of the behavior itself.

A very simple yet effective method of assessing financial behaviors is called the "ABC" approach. Behavioral psychologists typically use this method to make observations on the Antecedents, Behaviors, and Consequences of the behavior that needs to be changed. In other words, "What comes directly before the behavior?", "What does the behavior look like?", and "What comes directly after the behavior?"

This approach is relevant to the financial literacy discussion because poor financial behaviors need to be replaced by positive alternatives. For example, lack of organizational skills and budgeting (antecedent) could lead to the behavior of overspending. The resulting consequence is often credit card debt as a result of living beyond one's means. To change this cycle you need to alter the behavior. Once you recognize fear or avoidance related to establishing a spending plan (a.k.a. "budget") you need to stay focused on the short and long term benefits of financial freedom. The resulting consequence could be a small reward such as dining out or a trip to the movies. Of course, the ultimate consequence is financial freedom which allows people to use money to help accomplish life planning goals.

The ABC process is very basic, but with financial planning you sometimes need to take the baby steps before you run the race to financial freedom. Take a few moments to analyze your problem financial behaviors. Try to identify any patterns. If there are consistent antecedents and/or consequences, then you should have a plan in place that will target them in order to increase or decrease the target behavior. The ultimate result will be financial freedom. Most importantly, you will also be modeling positive financial behaviors for your children.