Wealthy Habits – Financial Literacy 101
These 5 wealthy habits are key to financial success. November is Financial Literacy Month(FLM) in Canada. I am convinced that financial literacy is a key step to the empowerment of individuals, organizations and communities. It is unfortunate when people shy away from talking about money and money issues because sharing and learning from each other is a great way to educate oneself.
The year 2020 is especially challenging because of the pandemic. The Financial Consumer Agency of Canada has set this year’s FLM goal to help Canadians gain financial confidence and make informed financial decisions relevant to their circumstances by equipping them with practical tips and tools.
I will dedicate this month to writing on topics related to financial literacy.
Habit is stronger than reason
George Santayana
Habits
I love to learn and there’s always something to learn. I learn from stories, experiences, books, movies, podcasts, everything and anything is a learning opportunity. And what better way to start the financial literacy series than building strong habits?
We are all creatures of habit, there’s no denying this fact! There are so many things I do subconsciously every minute, every day, out of habit. Frankly, when I do not do some things too, that can be a habit. Oftentimes when people hear habits, their minds go straight to negative things they need to replace with positive things. And we know how challenging it can be to conquer some of these negative actions we would like to stop.
Habit tends to get a negative rap all too often. For instance, people use the phrase – breaking a habit frequently like habits are all so bad. Yes, there are bad habits; there are also good habits. Associating habits with negatives and a lot of hard work creates a mental challenge for people because our thoughts influence our actions, which in turn influence our outcomes.
Good and bad habits are powerful and have a huge impact on many areas of our lives which is why I cannot agree more with George Santayana that habit is stronger than reason. Personally, I have way too often reasoned that I should do or not do a lot of things; used my strong will and even affirmations but if I don’t switch the habit, kill it or create/replace the habit, no amount of reasoning seems to help when I succumb – those wicked homemade pastries!
The Case for Habits
I like this definition from the book Atomic Habits by James Clear – A habit is a routine or practice performed regularly; an automatic response to a specific situation. In this book, James Clear shares how minute (or atomic) changes we make can become very meaningful in the long run, though the changes may not be noticeable at first. This is important to us if we agree that habits, especially forming and maintaining good habits can be a struggle.
And habits don’t have to be complicated. Simple, small habits done consistently add up. Wealthy habits are habits I have seen people with lots of wealth do consistently that are worth practicing by everyone and especially anyone that would love to be wealthy. We’ve heard stories of people that come into good fortune like the lottery winner, who then looses very quickly all the fortune, finding themselves in a situation worse than before they won the lottery.
I’m sure most people will have a long list of all the things they could do if they become wealthy. This is great as long as they have adequate knowledge on how to manage money in the first place. There are also people who are forced as a matter of necessity to live on a tight budget. Once their situation improves, one would hope they would use those budgeting skills but that doesn’t happen. Why? Because, they probably didn’t learn any skills, their situation was driving their actions and they unfortunately did not master the good money management skills. These are sad situations.
5 Wealthy Habits
Habits are important. Up to 90 percent of our everyday behavior is based on habit. Nearly all of what we do each day, every day, is simply habit.
Jack D. Hodge
In the scriptures, we are reminded in Luke 16:10 (NIV): “If you are faithful in little things, you will be faithful in large ones. But if you are dishonest in little things, you won’t be honest with greater responsibilities.” This is a basic principle in life and is applicable to everyone.
There is a popular saying, sometimes attributed to Desmond Tutu that you eat an elephant one bite at a time. So we will take a look at building simple practical habits to expand our financial literacy skills.
- What are your values? – This is the ultimate first step. I have had the opportunity to be around some influential and rich people, asking questions, and studying some of their actions and ways of doing things. One striking practice I have observed is that these people know what their values are. They also base their financial decisions based on these personal values. Do you know what your personal values are? Do you base your financial decisions on your values? This can be as simple as you want it. For example, I have a friend who wears only black dresses. She is not influenced by fashion decisions that do not align with her values. ACTION: Take out your pen and paper, set aside 30 minutes, and list out your core values. Then take some time to see how you can use these in your financial decisions like my friend who practices minimalism
- Invest in you! – Personal finance is really personal. No one else can do it for you. You have to take it personal and be personal with your finances. During the period I was observing and learning from my wealthy friends, I observed that they never stopped learning and investing in themselves. They kept themselves educated about their various bank accounts; things happening in their environment that may impact their money; and very importantly they learned new skills and ways to grow and manage their wealth. These people read books, articles, and listened to podcasts on a daily basis. They had curated lists to check out every day. They spent little time watching TV or engaging in things that were not creating value for them. And fun was not out of the question too. They did spend time on fun things that they valued as well. How do you invest in yourself? Do you make out time every day to develop yourself and specifically in the area of finance? ACTION: Find a list of books, podcasts, or articles on personal finance. Some ideas to start include, asking your friends for good referrals, google, or a visit to the public library. Invest at least 30 minutes each day in learning something new about your finances or finances in general. You can take it to the next level by finding a partner or multiple friends/family and sharing your learning with them. Then make sure to start putting into practice what you are learning.
- Plan and set goals – Once you know your values, have become more confident because you are now knowledgeable about finances, planning, and goal setting naturally follow suit. “But don’t begin until you count the cost. For who would begin construction of a building without first calculating the cost to see if there is enough money to finish it?” Luke 14:28 NLT. Planning is crucial to success. A budget is a plan that helps you meet your financial goals. Your goals will be based on what your values and priorities are. The budget will help you execute and meet your goals. The habit of setting goals and writing them down is not a daily task, however, goals need to be broken down into actionable steps that could include daily tasks that ultimately lead to the bigger goals. For example, to help me meet my spending goal, I plan what my dinner will be every week, Focusing on only dinner for the week, not only make it feel less overwhelming but helps with my grocery bill as well as my overall wellbeing. ACTION: Set your financial goals, then break these down into smaller daily tasks that will add up to the bigger goal. Tip: Identifying and carrying out one simple task daily that impacts other things will be very helpful in your success.
- Review, re-assess and re-focus: “The unexamined life is not worth living.” – Socrates. Making time to reflect on your progress and journey is a simple habit that packs a powerful punch. My wealthy friends all had a regular reflective practice. Reviewing their progress against their goals and values helped in learning more about themselves, what triggered certain behaviours and if unwanted, they would find ways to deal with these triggers when they came up. This meant they were mostly in control of their money actions and decisions and not pushed by external influences or their natural senses. We are all gifted with so many things inside of us and it’s through self reflection that we discover and re-descover ourselves everyday. Every action and decision becomes an opportunity to learn what to do or what not to do. Imagine how powerful this can be in your financial journey. I recently learned a simple, no frills approach to managing finances by the Japanese called Kakeibo. Since you have been endowed with all you need inside of you, why not make out time to tap into your inner powers and master your money? ACTION: Schedule some time once or twice a week to reflect on your financial tasks and goals. You may choose to tie this to your weekly grocery shopping trip or any other cues that seamlessly aligns with the opportunity to reflect. Make sure to note your observations without judgement but rather with an openness to learning and re-focusing if need be. Enjoy the process and you will see small yet mighty improvements that will compound over time.
- Give and be grateful: There’s a satisfaction that comes with being grateful and giving our time, talent and treasures with others. I believe this is our ultimate purpose here on earth. We are commanded to love each other and the act of gratitude and giving express nothing else but love. You always have something to give and share with people. You may bless someone, some where with your talent, time or treasure and the best part is that this gift multiplies once you give it. It is a true joy and there are promises to us as we give to others. This is one of the secrets of wealth that is not widely explored but it is practiced by the wealthy because they know and live this multiplication every second. In Luke 6:38 (NLT) we have this promise: “Give, and it will be given to you. A good measure, pressed down, shaken together and running over, will be poured into your lap. For with the measure you use, it will be measured to you.” This says it all really. Do you think you have nothing to give? A smile can warm hearts especially in these troubled times. A helping hand to your neighbor, a chat with a teenager encouraging them in their struggles, sharing our many gifts… The list goes on. You cannot look too far before you see ways to give and be grateful. Try it and try it everyday. Make it a habit. And that’s your ACTION for this wealthy habit.
These wealthy habits are applicable at any stage of your financial success journey. You do not have to wait to be a millionaire before developing wealthy habits of knowing your core values; investing in yourself; planning and setting your financial goals; reflecting on your journey and progress; giving and being grateful. Remember, that all you need is simple, small wealthy habits done consistently and over time, you will see big changes in the right direction. If you struggle, try accountability. And if you fail or fall, rise up and continue the journey. Your tiny step is better than no step at all. All you need is that little momentum. If your goal is to become a millionaire, wealthy habits will help you get to that goal faster.
Hope this has blessed you as we kick off the Financial Literacy Month. As always, share your comments here so we all learn together.
Thank you for taking the time to read today.
Blessings.
