How to Develop Positive Financial Behaviours

Dennis Harhalakis founded Cambridge Money Coaching to help transform the way people think about money. He addresses people’s financial issues to reduce their anxiety and enable them to make better decisions. In this Q&A, Dennis explains how positive financial behaviours can help you stay in control of your money, to build wealth and financial security.
Money coming out of Jar

Photo by Josh Appel, Unsplash


Why is it that some people are able to build financial security for themselves, whereas others struggle with everything money-related?

Research in the late 90’s analysed the behaviour of people who accumulated wealth over their lifetimes. It identified four common traits relating to being in control of your finances and building wealth over time, and interestingly, they bear no relation to income nor social standing.
The four positive financial behaviours are:

  1. Frugality

Frugality refers to the relationship between your spending and your income. In simple terms, it means don’t spend all your earnings, you need to be able to save. It can be difficult for people, because sometimes there simply isn’t enough money to save. But building financial security and wealth requires some level of saving. And finding that money to save is usually achieved by understanding your finances better.

  1. Confidence

Confidence comes from developing the skills and ability to build and maintain wealth. This is where financial literacy sits, but it’s also about budgeting and planning. Planning is the key driver of financial wellbeing: people who think more than 10 years ahead have significantly more income saved.

  1. Responsibility

This is about taking ownership of your financial outcomes. It means not blaming others for your problems – the government, the economy, the system, or other people. These are things out of your control, so it’s easy to point the finger. But when you blame outside factors, you lose not only your power and control to turn things around, but also the motivation to do so. At the same time, believing external factors have more power over your future than your own choices and actions, is a recipe for stress and losing sleep. Responsibility means focusing on what you can control, taking ownership of it and learning how to make good decisions around it.

  1. Social indifference

This is the ability not to be influenced by the spending behaviours and material possessions of others, as well as trends in consumer goods and services, and more importantly now, the endless messages from the media to buy this, wear this and drive that. Most people compare up when they compare, and the more you compare up, the more stress you have and the less satisfaction you get. Also, the higher your spending, the lower your saving.
The contradiction in this concept of compulsive consumption, is that it’s not any of the things that we already own that will make us happy, but the next thing we’ll buy. When you realise how fundamentally flawed that is, I think social indifference becomes a little easier to practise. I’m not saying don’t have nice things; enjoy what life has to offer, but without becoming addicted to it.

It’s important to note that these financial behaviours all have an emotional component:

  • It is hard to budget if thinking about money makes you anxious.
  • It is hard to be indifferent to the opinions of others if you have low self-esteem.

The key to developing positive financial behaviours begins with understanding the emotional elements of your own relationship with money. What drives those emotions, what drives your behaviour? This is where money coaching can help, to recognise and comprehend those patterns, so you can make the changes you want.


What does a healthy relationship with money look like?

If you want to learn how to do something better, then understanding your relationship is the cornerstone of that process. In terms of our relationship with money, that means:

  • How do I feel about myself?
  • How do I feel about money?
  • How do I feel about money and myself?

So, let’s start with ‘myself’: people who are confident with finances feel good about themselves. I am competent, I have confidence in my knowledge and decision-making processes. I take ownership of my outcomes. My self-worth does not depend on my net worth or possessions.
When I feel good about money, I view it just as a tool that gives me choices, a means to achieve wellbeing. It’s not the work of the devil, or something we don’t talk about, and it’s not some confusing thing that I don’t understand.
When I feel good about money and myself, then thinking about money doesn’t make me feel anxious, ashamed or guilty. I am comfortable engaging with the financial system. I’m the kind of person who manages my finances well.
So, that is the core part of having a healthy relationship with money. But that has to be shown or taught to people. For example, if your family never discussed finances, or circumstances were challenging when you were growing up, then it would be natural to feel anxious, and basic money management is something you’ll have to learn.   Once you understand your relationship with money, you can begin to improve it, which will help you make better financial decisions.


How can we make better financial decisions?

It’s not necessarily about making fantastic decisions it’s more about avoiding bad ones.

Here are three important examples:

  1. Don’t get trapped in high interest debt, for instance credit card or overdrafts. It’s hard to sort anything if you’re paying 30-40% interest. If you are running up high interest debt, go and negotiate with the bank or provider to try and reduce it. Or seek help from a reputable source such as Step Change debt charity.


  1. Set yourself up for success. Don’t pay unnecessary penalties or charges on overdrafts or credit cards. Set alerts if you are approaching your overdraft limit, then you have a chance to do something about it.


  1. Work out whether you have an income or spending problem. Know where your money goes and budget for it. There are plenty of simple ways through banks and apps like Monzo and Revolut, which help you keep track of where your money is going.

Most importantly, engage with your finances, really think about your behaviour around money.

To find out more, or to contact Dennis Harhalakis about coaching:

Cambridge Money Coaching

LinkedIn – Dennis Harhalakis


Grad Bites: Money and Me – Understanding our Relationship with Money
Why people struggle with financial matters & the importance of building a healthy relationship with money