Understanding brain wiring is key to breaking bad money habits and achieving goals, according to a financial psychologist.

It's natural to stick to what's familiar when trying to make better money decisions, says Charles Chaffin, co-founder of the Financial Psychology Institute and a professor at Iowa State University.

""Our brains are wired to prefer the status quo and resist change, which is why we're inherently lazy, according to him," he explains."

Even if an overhaul helps you get closer to reaching your financial goals, you're likely to continue spending and saving and investing the way you always have.

To improve your money management skills and overcome bias, create obstacles for undesirable behaviors and make positive habits effortless. Here's how to do it.

'Make it tougher' to spend money and easier to save

It is necessary to save money for future use, whether it is for short-term goals like an emergency fund or long-term goals like retirement. However, you also have current financial requirements and desires that need to be met.

According to Chaffin, the solution is to automatically transfer your money to your desired destination before it reaches your checking account.

"Automation is the removal of obstacles that enables individuals to save and invest more efficiently, allowing them to focus on other aspects of their lives," he explains. "For instance, a 401(k) plan can be automated, eliminating the need for individuals to make decisions about their retirement savings. This way, it becomes a non-issue in their budget."

To reduce financial strain, you may need to make certain actions more difficult, such as avoiding keeping junk food in your pantry or limiting online purchases.

"If you're prone to overspending, avoid storing your credit card with Amazon or any retailers, advises Chaffin. Make it harder for yourself to spend excessively."

Consider switching to an all-cash spending system.

According to Chaffin, cash is tangible and more real, which makes people feel like they're actually spending their money. In contrast, using a phone to make transactions doesn't feel as real.

Keep specific goals in mind

Unless you're clear about your financial goals, none of your efforts to save or spend less will stick, according to Chaffin.

"Having goals gives meaning to things relative to friction, allowing you to focus on eliminating frictions that hinder progress."

Setting specific financial goals increases the likelihood of sticking to good financial habits, according to Chaffin. Instead of aiming to save a general amount, setting a specific goal, such as saving $5,000 to go to Hawaii by the end of the year, can help keep you on track.

To effectively change money habits that don't work for you, you must be willing to address the problem by regularly checking in on your finances to identify areas of success and areas for improvement.

Avoiding reckoning with your money habits will only worsen the situation, he argues.

"Individuals who are money avoidant often experience difficulties, as they refuse to confront their finances," he remarks. "By focusing on and examining your finances, you are more likely to modify your behaviors to align with your goals."

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