Most of us can think of a habit we’d love to master. Like not overeating at an expensive restaurant when you hear the voice of a parent telling you to eat everything on your plate because hungry kids are living in Africa.
Or the fact that it tastes so good you don’t want to stop, right? Or you may want to weigh your ideal weight, or you want to create and enjoy a secure retirement.
There are many reasons to develop good habits.
Today, I will share with you how some of the most successful people in the world create effective, positive habits.
Transcript: Wealth Inside and Out® Podcast – How to Create a Habit
Hi, my name is Annette Bau (bah oo), your Wealth Inside and Out® Podcast host.
I’m a Certified Financial Planner™ and founder of The Millionaire Insider®.
For over 30 years, I have been advising and researching the top 1% of millionaires.
I am passionately obsessed with money, mindset, the intersection of self-worth and net worth, and how the two connect and allow us to live fulfilled and wealthy lives on our terms.
From Humble Beginnings
Growing up in the Midwest, I had a dream and began investing $25 a month 35 years ago, and today, I have a multi-million-dollar net worth.
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Today in How to Create a Habit, you will learn:
- What is a habit
- Why money habits are so important
- How long it takes to change a habit
- The process to create habits that stick
What is a Habit?
It’s a repeated behavior that often occurs unconsciously.
Positive habits include exercising, healthy eating, or saving for retirement. And negative ones, such as smoking, drinking too much, or overeating.
This means we do it repeatedly, and eventually, it just starts kicking into our primal brain, and we do it unconsciously.
The behavior becomes automatic. Over time, it’s like brushing your teeth, pouring a cup of coffee, or scrolling through social media.
This time of the year is a great time to review habits and determine what you want to change in the upcoming year to live more wealthy, healthy, and fulfilled.
So, please listen today and start incorporating the different goals and habits you want for the new year.
Why Money Habits Are So Important
Money-related habits are crucial for several reasons, as they significantly shape financial well-being and stability.
Positive money habits, like budgeting, saving, and investing wisely, can contribute to financial success. This allows you to plan for the unexpected and create a secure retirement and financial future. Negative money habits can lead to financial difficulties.
When you have good money habits, you can prevent or manage your debt much better and sometimes even eliminate it.
Reducing Financial Stress
Positive money habits help you to reduce financial stress.
They can alleviate financial stress by providing a sense of control and security. This can positively impact mental and emotional well-being.
By consistently saving, investing, and making sound financial decisions over time, you contribute to your wealth accumulation. This wealth provides for financial growth and security.
Money habits influence spending behavior.
Developing the habit of mindful and responsible spending ensures that resources are allocated efficiently and aligned with financial goals.
Improving Credit Score
You may have a great credit score, but what about your partner? Or your kids?
Making payments on time contributes to a positive credit history and improves credit scores. A higher credit score can result in better financial opportunities. It is also essential to make sure you have credit in your name. Don’t wait until your spouse dies to find you have no credit.
Role Model for Future Generations
Money habits are often passed on to our children. Developing positive habits sets a good example for children, grandchildren, and other family members. It helps to promote financial literacy and responsibility.
Saving for retirement consistently is a crucial money habit. The sooner you start investing, the more compound interest your principal can generate. I will link to an episode on compound interest. It is amazing to see your money grow through compound interest.
The more money you save, the more comfortable your retirement.
How long does it take to change a habit?
It takes between 18 and 254 days to form a new habit, on average 66 days.
Wendy Wood is a psychologist at USC and foremost expert. She wrote “Good Habits Bad Habits.”
Her research has focused on:
- How and why people fall back into old habits
- What patterns help people meet goals
- How to change unwanted practices
The Process of How to Create a Habit
1. Identify the Habit
First, determine the habit you want to establish. Then, make it specific, measurable, relevant, and time-bound (SMART).
2. Start Small
Break down the habit into smaller, manageable tasks. It can be helpful to begin with a smaller part of the desired habit to make it achievable. Some people recommend going big to achieve your goal, which I agree with.
For example, when you start exercising, many find it easier to just go for it. Yes, it may be painful initially, but eventually, you will see the results.
The right answer is what works for you.
3. Create a Routine
It can be helpful to associate the habit with an existing practice. This makes it easier to remember to perform the tasks.
4. Choose a Consistent Time
Many people find it helpful to establish a specific time of day for the habit. Consistency can help you reinforce the behavior.
5. Track Your Progress
It can be helpful to keep a record of your efforts. A journal or habit-tracking app to monitor your progress can be beneficial.
6. Stay Consistent
Commit to completing the habit every day. Consistency is crucial for habit formation.
7. Create Consequences
Many people find it easier to stick with a habit when rewarded. Others are more effective with negative consequences. A negative consequence example is sending a check to your least favorite political party.
A positive reinforcement would be something you enjoy, e.g., a massage.
Determine what works best for you.
8. Learn from Results
It is important to understand that failures are a part of success. Determine what went right and wrong and then adjust as needed.
Some good questions include:
What triggered you to get off course?
How did you get back on track?
9. Social Support
Share your goal with supportive friends or family. A support system can provide motivation and accountability.
Habit formation takes time. Be patient and persistent, even if progress seems slow.
11. Evaluate and Reinforce
Continue to evaluate your progress on your new habit. Determine if you need to adjust the routine. Positive affirmations can be a great strategy to reinforce a habit.
So there you have it.
Creating a fulfilled life with good money habits will help you secure your retirement.
You’ll be so glad you did.
Recap – How to Create a Habit
A habit is a behavior that you repeat. It often occurs subconsciously.
Money habits are important because they impact every aspect of our lives, now and in retirement.
It takes between 18 and 254 days to form a new habit. On average, 66 days. I encourage you to review the process to create a routine.
Consequences help create habits. If you complete the task, you get a positive reward; if you do not, you get a negative one.
That is a great place to start.
It’s important to remember that success is subjective, and each person’s habits are unique, so take time to figure out what works for you.
Additionally, these habits are not a guaranteed path to wealth. They represent common patterns observed in the lives of many successful individuals. By combining these insights with your situation, you can improve your odds of success.
Until our next episode, take one action that will help you create a secure financial future and retirement you love.
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Thank you so much for joining me for
How to Create a Habit.
I’m Annette Bau (Bah oo).
All international copyrights are reserved.
Bye for now.