the personal finance habits of successful people | 10 things to do to be successful

Written by Glen James
Podcast host, author and former financial adviser

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Want to know the personal finance habits of successful people? Let’s chat about 10 things to do to be successful with your personal finances!

By focusing on altering the financial habits in our lives, we have a much better chance of improving our personal finance situation. Where you are in your life today is a result of your habits, good or bad! How many things in your day happen out of habit? We mostly run on autopilot! Do you remember working out how to put your shoes on today or how you reversed out of the driveway this morning? The answer should be no.

What if we could make our financial life run on auto pilot and remove ourselves from making as many bad decisions as possible? Let’s chat about the 10 things to do to be successful in managing your finances.

a healthy personal finance mindset

When you’re trying to eat healthy and exercise more, you don’t become an Ironman overnight. It will take you a while to become that fit ninja warrior you’ve always wanted to be, but once you’ve established healthy habits you set your internal compass toward success.

Sometimes it’s best to start with some low-hanging fruit - a short and easy goal to show yourself you can do it, and to get an easy win on the board. You might decide to stop drinking sugary soft drinks, replace it with the no-sugar version, before moving onto sparkling water as your drink of choice. With your exercise or training regime you might aim for 15 minutes of exercise as a regular habit, then build the timeframe from there. Can we look at these examples and think about something you can do with your personal finances today to start to turn a corner?

Our brains love routine and the path of least resistance for anything. So let’s make it easier for our brains to make the transition.

It’s important to get to know what habits are first. Universities have studied the neurological process that is at the core of every habit. This was a three-step process. Cue, Routine, Reward.

The process works like this:

Cue: I’m stressed out

Routine:  Eat chocolate

Reward: Feels great and stress stops

This is known as The Habit Loop. What if we could somehow change our personal finance habits to a cycle like this:

Cue: I get paid

Routine: Invest money

Reward: See my account growing & feel good about the future

We want our brain to crave things so the habit loop is triggered!

They say it takes at least 30 days to form a habit.

In my career as a former financial adviser I’ve seen under the hood of hundreds of client’s personal finances and those with healthy money habits have far more money than those who do not. Less debt, too! Seems like a no-brainer, hey!

There is no correlation between how smart someone is and how much money they have. I have seen very smart high-income earners with little to no savings. This is because they have not put any habits in place when it comes to their personal finance.

I’ve also observed that their habits are more around their thought process and mindset rather than something physical. It’s like learning how to control the most powerful asset you have: your mind. If you are keen to learn more about the idea of habits check out the book Atomic Habits by James Clear.

here are 10 personal finance habits of successful people:

habit 1: keep away from consumer debt

The poor ask how much per month, the rich ask how much. This habit may take a few months to crack! Removing yourself from the credit card, buy-now-pay-later and personal loan cycle will be the best thing you’ll ever do. This frees up your cash flow, allows you to be more considered and will prevent impulsive purchases. Paying cash for household goods and other items is the best habit to get yourself into for the long term! Paying off and staying out of consumer debt should be the first thing you do on your journey to successful habit land!

habit 2: automatically invest money into an investment or superannuation every single month

This habit is low hanging fruit. Can you start today? Can you set up a small amount each month to a savings account out of reach, your superannuation or an investment? Even $10 a week to a Raiz account? Can you build this habit by asking a friend to join you with a savings plan to strengthen your savings muscle (habit!)? Start small, set a goal and get that habit loop happening to see your money increase and prove to yourself the system can work.

habit 3: have a money system that is automated

This is like automatic investing, but focused on covering the expenses in your life. Most successful people have their personal spending plan or budget nailed. It should take care of itself. For example, setting up automatic transfers with money going into a cash hub account and then a weekly amount going to a spending account, bills account, short term savings etc. This removes the human nature element and in separating your daily spending into another account you can’t get your hands on it and spend it unnecessarily.

habit 4: keep educated, encouraged and focused

Fiction is great for entertainment, but what can you learn for improve to skills and knowledge around personal finance? Successful people are in the habit of always working on personal development. Can you get in the habit of listening to an educational podcast on the way to work or perhaps read something to improve things in your life? What can you learn from online personal finance communities like ours? Jump in and get engaged with what people are talking about.

habit 5: write down a goal to aim for

You’ve heard that old saying: “if you aim for nothing, you’ll hit it every time”. It’s been our experience that successful people have goals and live to meet those goals. Will mistakes be made along the way? Yes, absolutely. But mistakes are a part of success. You learn much more from failings and mistakes than you do with anything else. What are you aiming for? Can you also get an accountability partner to help each other work on this habit? If something flops, what were you missing to make it a success? Don’t lose traction because you made a mistake or you think you’ve failed at achieving your goal - keep it up and you’ll get there.

habit 6: delay instant gratification

They say that the best time to plant a tree was 25 years ago, the next best time is today. Successful people only think about the future. They are in the habit of delaying gratification. The short-term gratification is won in the process of doing something long term. How can you change your mindset today? What can you do for the you of 10 years from now?

habit 7: stay connected to like-minded people

Surround yourself with people who want to be successful with their personal finance too! You’ll have a sounding board for questions, inspiration to draw from, ideas to trial, encouragement when you need it and jokes from other personal finance nerds! Just kidding. But there’s nothing quite like being surrounded by people who get you - people who understand your goals, support them and give you tips along the way. Join the money money money Facebook group if that is something you’re seeking on your personal finance journey!

habit 8: spend mindfully and in line with your values

When potential purchases drop onto your radar using a values-based spending approach is key. This ensure that your spending is in line with what you truly value, not just what looks shiny right now. Take the time to write a note on your phone - what is important to you? What do you want to spend money on or invest in? What purchases or investments line up with your life values? If a spending option is fleeting or doesn’t resonate with you, then pass on by.

habit 9: use the guidance of a professional when appropriate

Not to shock you or anything but there are some things you don’t know. Unbelievable, right? At money money money we are pro-advice - meaning we encourage members of our community to seek the support of a professional when their situation requires it. Should everyone see a financial adviser? Truthfully, no. But if you have a number of financial goals, some investing ideas and you believe the assistance of a qualified third party could help you make the best decision, then you will find value in engaging the services of a financial adviser. If this is something that interests you please reach out to our team to see if a financial adviser could be useful for your situation.

habit 10: just start, no matter how small the step is

As I mentioned earlier I oftentimes met people with big salaries that had nothing to show for it, because their habits and behaviours were out of whack. Being a success with personal finances doesn’t equal a big salary - it equals making the most of what you have. Being a good steward of your money is key to a healthy personal finance situation. One of the key things on this is just starting - start to invest in shares (even $10 a week into a micro-investing app), start to contribute to super, pay off your debts, only spend money you have - they’re all seemingly little steps, but they add up to big results.

so what now?

The challenge is this: what is one thing can you start TODAY? Make it small, make it a habit. Go easy on yourself and do one thing at time!

p.s. this is based off an article Glen James wrote originally for your best interests.