One of my favorite quotes is:
“We first make our habits, then our habits make us…”
- By John Dryden.
$1,680 per year!This is outrageous and will not lead to building wealth. If you take compounding into account and go out over the course of your 30 years of working, you could be paying close to $150,000 for a cup of cheap sugary coffee each day.
Do this at home most of the time and save the going out for a nice treat every once in a while.You get the point. Go, but make it a treat again, not a habit. Make making coffee at home your habit and reserve the coffee out for a nice break with a family member or friend. Another habit to mention is very simple, your daily dental health routine. Make it a habit to brush and floss etc. multiple times a day. The average cost of a composite filling is $250. Again, for a very low up front cost and effort these costs can be avoided. So push forward and start one healthy habit today. You will feel better each day and a person could be a lot wealthier for it. But how do we form habits if we are no good at it? And many of us can easily fall into bad financial and health habits and routines.
Simple Ways to Build Better Habits
1. Start small!Start building a habit that is so simple and easy that it can be done quickly each day at minimal effort. For example, instead of saying I will go to the gym and work out for 3 hours today. Say, I will exercise for 5 minutes a day by going out in the backyard and walking around. One I do is to jump on my stationary bike in my garage for 5-10 minutes. This actually leads to greater habit building potential. Just like big financial goals, our brains become too overwhelmed by huge goals. You can’t wake up and say I am finishing my college degree today. It takes one class at a time, one lesson at a time, one homework assignment at a time.
2. Focus on one at a timeWe have multiple goals and things we want and need to do in life, but we have limited energy and band width from moment to moment. Experts say it is best to focus on improving one habit at a time.
3. Partner with someoneWe are pack animals and tend to behave in the manner of those around us. This is why choosing friends and a spouse are very important decisions, they will influence us more than we imagine. Find a partner to set habit goals with and keep each other accountable. Find a walking or exercise and set scheduled dates, it keeps things on track. Choose to be around people that want to have a wealth mindset or value the power of investing.
4. Nothing is perfectRemember that nothing is perfect. There will be days when we don’t make the best choices for ourselves. The key is to not give up and not beat ourselves up. Move forward and make the next choice better. Be easier on yourself and remember habits are formed one at a time and one decision at a time. Make the most of this moment, the only moment we truly have.
5. Think hard about consequencesA good habit is easier to keep if we think long and hard about the consequences of the bad habit. We know that smoking has health deteriorating effects right away and into the future. Thinking about ourselves having to undergo major lung cancer surgery or having a heart attack may make us stop the bad habit. I understand smoking can be challenging due to the addictive nature of the drug, so one should certainly see a medical expert to undergo help and treatment kicking the habit. Many successful folks like Buffett or Gates use the Rule of 10. Before they make a decision they ask themselves how they will feel about that decision in 10 minutes, 10 hours and 10 years? This could lead to making better decisions for yourself and forming better habits.
The Habits of MillionairesSelf made millionaires in the US tend to have a set of common core habits. Here are some of them that we can replicate for increased chances of success:
1. Live well below their meansI grew up hearing that it is not how much you make that matters, it is how much you save. There are many high income earners that have low net worth. I do believe that one needs to make a solid salary to save and invest up to significant wealth levels. Recent surveys says earning around $75,000 a year for most people affords a stable comfortable life and allows one to save a bit.
2. Allocate time, energy, and money efficiently, in ways conducive to wealth buildingThis is a very powerful concept that makes me examine how I use time, energy and resources. How can these be maximized to encourage investment and living a life of work and True Wealth?
3. FI is more important than status displays of wealthSee, most people want to show off, we are herd animals. We want to live in a certain place, drive a certain car and look a certain way to display status and wealth. Many millionaires are able to shun and tame this ego driven aspect of human existence. They are more focused on wealth accumulation than on displaying “trophies” or baubles of wealth.
4. They target market opportunitiesThis reminds me a lot of Warren Buffett who is famous for saying when everyone is fearful, you should be greedy. What he means is that there are times when investments lose mass favor, and at that time they are on sale and cheap. A person can acquire more assets at this time because they are on sale. Know anyone that bought a house after 2010, they have now made a lot of money in appreciation because in 2010 the real estate market had tanked. We wrote about this in our article Your 3 Big Financial Opportunities This article was featured on Camp FIRE Finance because it outlined how most people will have a few big opportunities in their life to invest, the important thing is to be prepared.
How can you improve your habits?Take some time to think about all the habits in your life. What are you doing repetitively without even thinking about it? Or, more importantly what are you not doing? Investing automatically? Walking? Spending quality time with people you love? What are some tactics you have used to build healthy habits?
- The ideas expressed are only opinions of the authors. This is not advice of any kind to any particular person.