Strategy · Whitepaper
By Mark Norris, BBA · EA
Success is the sum of small efforts, repeated day in and day out. Success is a habit. What habits do you need to be financially successful?
Start with a money management system. It will help you live within your monthly budget, increase your net worth, and maintain good credit.
The trap
Imagine a family that measures its success by how much they borrow and spend. They buy a house they can't afford, a car they can't afford, and carry high revolving credit balances. It looks marvelous — but debt is piling up.
It feels like prosperity, yet we know it's not. Sooner or later the car gets repossessed, the house is foreclosed, and they find themselves in bankruptcy court. The depression feels terrible. The situation is a complete failure — not the family. They were misguided. So, what should they do?
Adapt and change is the survival skill that works best.
The good news: solutions are available if they acknowledge the problem. Hope is not a strategy.
The science
"Habits are the choices we deliberately make at some point and then stop thinking about, but continue doing every day. They become automatic behaviors."
— Charles Duhigg, The Power of Habits: Why we do what we do
Researchers have uncovered that 40% to 45% of what we do on a day-to-day basis are habits. It may feel like a conscious decision, but it's actually a habit. The habits we have now, the ones we want to change, and the new ones we'll form are all constructed of three parts:
Part 01
The trigger that tells your brain to go into automatic mode — a time of day, a place, a paycheck hitting your account.
Part 02
The behavior itself — what you actually do. Depositing the check, updating the ledger, paying bills.
Part 03
The satisfaction that reinforces the loop — security, self-esteem, high net worth, good credit.
By focusing on changing one habit — what Duhigg calls a Keystone Habit — you can reprogram the other habits in your life as well. Keeping up a money management system is that keystone habit.
Goal setting
The way to use habit loops to set goals is the If/Then statement — your why added to your habit loop.
When [Cue], I will [Routine] because it provides me with [Reward].
Example
"When I get paid, I will deposit my check, update my money management system, and pay bills — because it provides me with self-esteem, security, good credit, and a higher net worth."
The golden rule of habit change: keep the same cue and the same reward — change only the routine.
In closing
"There is nothing you can't do if you get the right habits. People who make quantum changes become very deliberate about their habits."
— Charles Duhigg
Great financial tips to pair with your habit loop live in 7 Money Pillars, Income Strategies to Build Wealth, and Habit Stacking. But the loop itself — cue, routine, reward, repeated — is the engine.
Throughout your life you'll make financial decisions. Using this website will enhance your financial success. Good luck.
Ready to run your own loop?
Start free — cancel anytime. Private by default.
Made with Emergent