Habits have power to make you rich or poor!
When I began my Rich Habits Study, I wanted to know the answer to one question: why are some people rich and other people poor?
Five years, and 51,984 questions later, I learned the answer – Habits.
Habits dictate your circumstances in life. Habits affect just about every aspect of your life. And there are many shades of habits.
Types of daily habits in human life
- Money habits
- Eating habits
- Drinking habits
- Exercise habits
- Sleeping habits
- Downtime habits
- Work-time habits
- Reading habits
- Relationship habits
- Happiness habits
- Thinking habits.
- And many more……..
We have morning habits, afternoon habits and nighttime habits too.
According to a 2006 Duke study, 40% of your daily behaviors are habits.
Money habits have the most profound impact on your financial circumstances
Money habits can be broken down into two categories:
- Spending Habits
- Savings Habits
Many of the self-made millionaires in my study were able to accumulate their wealth by virtue of having learned smart money habits from either their parents or some mentor in life.
I called these millionaires Saver-Investors.
When you have smart money habits, you spend less than you make and you then save and invest the difference.
Over time, your savings and investments grow and compound.
Those who dutifully follow this guaranteed path to wealth eventually become financially secure.
Some even become multi-millionaires.
But most, unfortunately, do not follow this guaranteed path to wealth.
Majority of the population do no follow Money spending and saving habits
In a 2013 survey conducted by the Associated Press, they found that 80% of America’s adults struggled with poverty or were near-poverty, – just one paycheck away from their lives unraveling.
No safety net, little to no savings, every day just trying to keep up with their bills and credit card payments.
People are inclined to poor habit of spending more
One of the main drivers of poverty for those who make a decent living, is a Poor Habit that is all too common in the United States.
It’s called Want Spending.
Want Spenders spend more money than they make on their wants.
They surrender to instant gratification, eschewing saving in order to buy things they want now: 60 inch TVs, nice vacations, expensive cars, bigger homes and jewelry.
They also spend too much money at bars and restaurants.
Worse, they will even go into debt in order to finance their want purchases. Want Spenders are a special breed of poor, in that they create their own poverty. Want Spending is a Poor Habit fueled by a number of things:
- Envy – You envy what others have.
- Peer Pressure – You buy what others buy, just to fit in. This is also known as Keeping up with the Joneses.
- Emotions – Your emotions drive you to make spontaneous purchases of things you desire in the moment.
- Addiction to Spending – You get a Dopamine hit every time you buy something new.
- Low Self Worth – You spend money on things in order to impress others and this temporarily boosts your low self-worth.
- Ignorance – You are financially illiterate. You don’t understand how to manage your money.
- No Plan – You have no financial plan and no clear vision of what you want your life to be in the future.
If you are like most, you struggle with some aspect of Want Spending.
How can one control “Want Spending” or Poor habits of spending and not saving?
Awareness is the key.
Once you understand what type of Want Spender you are, you can put a stop to it and forge smart money habits that will ensure you never allow Want Spending to ravage your financial life.
Source: Quora
