Listen to The Money Vault - How to build good money habits
In this episode of The Money Vault, we revisit a classic conversation on how to build positive financial habits that last. I reveal the simple daily routines that have helped me take control of my finances, including automating my savings, setting a monthly spending plan, and adopting tactics such as "zero spend" days.
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The Money Vault - How to build good money habits
Summary:
I look back at the core principles of building positive financial habits (and breaking bad ones). I explain the psychological framework behind habit formation, detailing how making actions obvious, attractive, easy, and satisfying can transform how you manage your money. I share real-world examples of these rules in practice, including daily morning routines, smartphone app management strategies, and the shift from restrictive budgeting to a positive spending plan.
Key insights
- Focus on systems, not just goals - Achieving financial success relies on the daily processes you put in place, not just the end target.
- The 1% rule - Small, incremental daily improvements in your financial habits create a massive compounding effect over time.
- Make good habits easy and obvious - Simplify your financial life by automating your savings and investments, and check your spending via budgeting apps as part of an existing daily routine, like drinking your morning coffee.
- Create friction for bad habits - If you want to stop impulse spending, make it difficult. This can include hiding retail apps from your phone's home screen, setting screen time locks, or choosing not to carry a physical wallet.
- Use a spending plan - Shift your mindset from restrictive budgeting to a "spending plan." Assigning your discretionary money to specific pots allows you to enjoy guilt-free spending on the experiences you value.
- Try zero-spend days - Committing to a day without spending any money helps break the continuous cycle of daily consumption and resets your financial focus.
Resources
Links referred to in the podcast:
- Sign up to our weekly newsletter
- Take out a trial of 80 20 investor
- Atomic Habits by James Clear
- MTTM - Episode 184 - Getting the most from your phone's Stock App
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