January 14, 2020

Break Out of Your Bad Financial Habits

Money often moves in cycles. On the large scale, economists have noted that a business cycle contributes to periods of boom and bust in the American economy1, and in your own life you have financial routines, behaviors, and obligations that regularly come up. Sometimes these cycles can be harmful to your financial health, and when you’re stuck in a bad cycle, getting out of it is the only way to move forward. With time, effort, and a few strategies in your pocket, you can change your finances.

We’re going to cover two financial cycles, bad habits and debt spirals, and go over methods that can help you escape them. Breaking bad habits can let you free your money so you can spend it on things you truly value, while getting out of a debt spiral is key to putting yourself on the path to financial freedom.

Financial habits are cycles that pretty much all people go through. People’s everyday lives are filled with habits, some good and some bad. Sometimes those bad habits, like constantly ordering food delivery or impulse shopping online when you’re bored, can put a real drain on your finances. Escaping bad habits can be hard, though, because research shows that engaging in a habit reinforces it, making it even more ingrained in your behavior.

After studying the nervous systems of rats and monkeys, neurophysiology researcher Ann Graybiel proposed that, as people perform actions, the corresponding routines become grouped together in their brains to make them more efficient in a process called “chunking.”2 For example, if you soothe yourself whenever you get stressed by looking at pictures of baby hedgehogs, over time the brain functions you need to perform that action will get chunked together so that multiple steps (get stressed, notice stress, think about baby hedgehogs, reach for your phone, search for photos of baby hedgehogs, etc.) become just a couple steps (get stressed, look at some tiny prickly pigs).

So, if habits reinforce themselves, how do you get rid of them? Well, according to a study by psychologists Bas Verplanken and Wendy Wood, trying to break a habit completely is difficult. Instead, it’s easier to replace your bad habit with a different, more positive one3. For instance, instead of browsing Amazon when you’re bored, you can train yourself to go to a news website or open a crossword puzzle app.

The same study also says that changing your environment can help you change your habits, though most people can’t just decide on a whim to change where they work or live. Still, even small changes to the environment in which your bad habit occurs can help, like making sure your kitchen is stocked with food you want to eat if you’re trying to eat out less. Also, you can take advantage of changes to your environment that occur naturally. For instance, if you’re moving anyway, you can use that as an opportunity to help change a bad financial habit you have.

A different, more serious financial cycle is the cycle of debt known as a debt spiral. A debt spiral is a situation where your debts get so high that the interest increases the amount you owe faster than you can pay the debt off. At that point, even though you may be contributing significant amounts of money toward paying your debts off, the amount you owe keeps climbing. It’s not clear how many Americans are going through debt spirals, though considering a recent survey from Northwestern Mutual reported that U.S. adults have an average of $29,800 in personal debt (not counting mortgages)4, it’s not hard to imagine it’s a significant number.

It’s definitely possible to get out of a debt spiral, but there isn’t really an easy shortcut you can take. A post on the website for the nonprofit Association for Financial Counseling & Planning Education suggests applying old-fashioned personal finance advice like reducing spending, stopping credit usage, and increasing saving5. It also says a good way to start the process of ending a debt spiral is to make a spending plan. Figure out how much you can contribute toward your debt by looking at your variable expenses (expenses you can easily change by cutting back, like entertainment costs) and then looking at your fixed expenses (expenses that tend not to change, like housing costs) for areas where you can cut back. It will probably take some lifestyle changes and sacrificing, but debt is a prison that’s worth escaping.

With Cash Out, Earnin is trying to break the cycle of payday to give people better access to the money they’ve already earned. We view the pay cycle as a system imposed on everyday American workers that holds them back, so we’re building a way for people to escape it. Just like how we’re working to change payday, there are cycles that you have the power to change or break if you put your mind to it.

EarnIn is a financial technology company, not a bank. Bank products are issued by Evolve Bank & Trust, Member FDIC. The EarnIn Card is issued pursuant to a license from Visa USA Inc.

1Subject to your available earnings, Daily Max and Pay Period Max. EarnIn does not charge interest on Cash Outs.

2Fees apply to use Lightning Speed. Lightning Speed may not be available to all Community Members. Cash Outs may take up to thirty minutes, actual transfer speeds will depend on your bank connection. Restrictions and/or third party fees may apply, see Earnin.com/TOS for details.

1Restrictions on use of Services and/or third party fees may apply, see earnin.com/privacyandterms for details.

2Balance Shield cash out is subject to your available earnings and daily pay period max. Other restrictions and/or third party fees may apply. For more information visit earnin.com/privacyandterms.

3Tip Yourself Account funds are held with Evolve Bank & Trust, Member FDIC and FDIC insured up to $250,000. Tip Yourself is a 0% APY and $0 monthly fee service. Other restrictions and/or third party fees may apply, see earnin.com/privacyandterms for details.

1Fees may apply to use Lightning Speed. Lightning Speed may not be available to all Community Members. Cash Outs may take up to thirty minutes, actual transfer speeds will depend on your bank connection. Restrictions and/or third party fees may apply, see  Earnin.com/TOS for details.

2Restrictions and/or third party fees may apply, see Earnin.com/TOS for details.

3Balance Shield cash out is subject to your available earnings and your daily pay period max. Other restrictions and/or third party fees may apply, see Earnin.com/TOS for details.

4Tip Yourself Account funds are held with Evolve Bank & Trust, Member FDIC and are insured by the FDIC up to the standard maximum deposit insurance amount per depositor, per FDIC-insured bank, and per ownership category. Tip Yourself is a 0% Annual Percentage Yield and $0 monthly fee service. Other restrictions and/or third party fees may apply. For more information/details visit earnin.com/tos.

5Up to two days early is based on comparison with traditional banks. Exact timing is dependent on your employer’s payroll policies. For more information on eligibility and requirements of Earnin Express, visit Earnin.com/TOS.

6Your Max on Earnin Express is up to 80% of your payroll or $1000, whichever is less. The 80% is dependent on you routing your full paycheck to Earnin Express. For more information on eligibility and requirements of Earnin Express, visit Earnin.com/TOS.

7Learn how we collect and use your information by visiting our Privacy Policy.

1Disclaimer: Restrictions and/or third party fees may apply, see earnin.com/privacyandterms for more details. Lightning Speed may not be available to all Community Members. Cash Outs may take up to thirty minutes, actual transfer speeds will depend on your bank connection.

2Disclaimer: Lightning Speed may not be available to all Community Members. Cash Outs may take up to thirty minutes, actual transfer speeds will depend on your bank connection. Restrictions and/or third party fees may apply, see earnin.com/privacyandterms for details

3Disclaimer: Community Member must have had at least 1 successful debit with EarnIn. Limit to 1 Max Boost per pay period. A boost will not adjust a Community member's daily max. Restrictions may apply, see earnin.com/privacyandterms for more details

*Disclaimer: Balance Shield Cash Out is subject to your available earnings and daily pay period max. Other restrictions and/or third party fees may apply. For more information visit earnin.com/privacyandterms

1Restrictions may apply, see earnin.com/privacyandterms for more details. Tip Yourself Account funds are held with Evolve Bank & Trust, member FDIC and FDIC insured up to $250,000. Tip Yourself is a 0% Annual Percentage Yield and $0 monthly fee service. Your Tip Yourself Account and any Tip Jars are not Savings Accounts. For more information/details visit earnin.com/privacyandterms

2Disclaimer: NO PURCHASE NECESSARY TO ENTER OR WIN. Must be 18 years of age or older and a legal resident of the U.S. or DC. Games begin each Sunday starting 12/6/20 at 9:01 p.m. ET and end the following Monday at 9:00 p.m. ET with the last Game ending 12/19/21. To download the App, view the Official Rules, odds disclosures, prize details, and alternate means of entry, visit https://www.Earnin.com/wewin/game-rules/. Void where prohibited. $10,000,000 grand prize payable over 29 years. Sponsor: Activehours, Inc. (d/b/a Earnin), 200 Portage Ave, Palo Alto, CA 94306.

3Disclaimer: Restrictions Apply. See Earnin.com/wewin/pool-rules/ for more information

1EarnIn does not charge a hidden or mandatory fee for use of its services. Restrictions and/or third party fees may apply. For more info: visit earnin.com/TOS.

*Survey conducted in February 2020 with 889 participants.

* Earnin does not charge hidden fees for use of its services. Restrictions and/or third-party fees may apply. For more info, visit earnin.com/TOS.

1EarnIn is a financial technology company, not a bank. The Deposit Account, Secured Account, and EarnIn Card are issued by Evolve Bank & Trust, Member FDIC. The EarnIn Card is issued pursuant to a license from Visa USA Inc.

2Subject to your available earnings, Daily Max and Pay Period Max. Restrictions and/or third party fees may apply, see EarnIn.com/TOS for details.

3Internal analysis conducted by EarnIn in January 2021, represents total users who Cashed Out at least once from January 1 to December 31, 2020

4This research was conducted online by FTI Consulting’s Digital & Insights team, on behalf of Brigit, MoneyLion & EarnIn. FTI Consulting researched n=4,735 of Brigit, MoneyLion and EarnIn’s Direct to Consumer (D2C) Early Wage Access service consumers between the dates of April 21st, 2021 – May 18th, 2021, and results were weighted in equal proportions to ensure equal representation among the consumers of each participating company. Due to the standard convention of rounding, some totals may not add up to 100%

5Internal survey conducted in February 2020 with 889 participants.

6EarnIn does not charge hidden or mandatory fees for use of its services. Restrictions and/or third party fees may apply. For more info visit earnin.com/TOS

7$4.68 ATM fee = $3.02 ATM + $1.66 bank fee https://www.bankrate.com/banking/checking/checking-account-survey/

8Internal data June 2022- Dec. 2022.

* EarnIn does not charge hidden fees for use of its services. Restrictions and/or third-party fees may apply. For more info, visit earnin.com/TOS.

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