Monthly Finance Message:

Behavior Change Generally a Gradual Process

October 2010

Barbara O'Neill, Ph.D., CFP®
Extension Specialist in Financial Resource Management
Rutgers Cooperative Extension

According to a leading theory, personal behavior changes, such as saving money and losing weight, take place in defined stages over a period of time. This theory, called the Transtheoretical Model of Change, has been applied to a variety of human behaviors including weight control and addictions (e.g., smoking and drinking). It has been used in numerous research projects on various topics sponsored by government agencies and major corporations. Recently, this theory has also started to be applied to changes in financial behavior (e.g., repaying debt and saving money). Detailed information about the Transtheoretical Model of Change can be found in the book Changing For Good by Prochaska, Norcross, and DiClemente.

According to the Transtheoretical Model, there are five major stages of change. At the pre-contemplation stage, people may not even be aware that a problem (e.g., high debt load) exists or that a change should be made in their life. At the contemplation stage, they gain knowledge about alternative behaviors and begin to understand ways to change (e.g., reduce spending). At the preparation stage, people commit to make a change and gain required skills (e.g., taking a course in personal finance). At the action stage, they "take the plunge" and actually change their behavior. In the maintenance stage, people work to sustain their change and reap the rewards of their efforts (e.g., an increased bank balance through regular saving).

The Transtheoretical Model also defines several major processes of change that relate to one or more of the behavioral change steps. The remainder of this article discusses these processes and how they can be used to change financial behavior. In the pre-contemplation and contemplation stages, a key process is consciousness-raising or raised awareness. An example is that news stories about the benefits of saving small dollar amounts on a regular basis might cause a person to think, "I should save some money." One example is hearing that $100 saved monthly with an 8% annual return will grow to $150,030 in 30 years. This can "plant the seed" that regular saving grows substantially over time.

The social liberation process means taking advantage of alternatives in one's external environment that encourage people to begin or continue a change. Non-smoking areas in public places and low-calorie entrees in restaurants are examples of social liberation. An example in the financial arena is the availability of employer 401(k) plans to both save money and reduce income taxes.

The emotional arousal process is a sudden emotional experience related to a behavioral change that is experienced on a deep, feeling level. Perhaps this is why books and game shows about millionaires are so popular lately. Dramatic stories of how others people's lives have changed may encourage some folks to save themselves. Emotional arousal can be a powerful change agent whether the behavior being changed is drunk driving (e.g., seeing an auto accident victim), smoking (seeing someone with lung cancer), or over-spending (seeing a financially stressed out family or someone having their car repossessed or a "bag lady").

Self-reevaluation is a fourth change process. This means thoughtfully assessing a problem and what could happen if your conquer it. In other words, imagining how your life could be better if you changed your behavior. For example, "If I start to save, I could afford to send my children to college."

Commitment takes place during the preparation stage of change. Here people acknowledge that "if it is to be, it's up to me." An example of commitment is "I will save $25 per paycheck." At the action stage of change, countering is an important process. This means substituting a healthy response (e.g., saving $3 per day) for an unhealthy one (e.g., spending $3 on lottery tickets). Another action stage process in environmental control. This means restructuring your environment to reduce the probability of a problem-causing event. An example is signing up for an employer retirement savings plan (e.g., $50 per month) so money can be invested in fund shares before it is spent.

Personal change is hard and it doesn't happen just because we want it to. Most successful changes require persistence, positive thoughts, and a strong support system. Are you ready to make changes in your health habits or personal finances? Set a goal, select 3 to 4 Small Steps to Health and Wealth™ behavior change strategies, and then start putting them into action. "What you think about, you bring about" and this includes the process of change.


  1. Rutgers
  2. Executive Dean of Agriculture and Natural Resources
  3. School of Environmental and Biological Sciences