Habits play such an important role in every aspect of your life. And those habits, good or bad, are reflected in your finances.
Some of our habits are small, almost insignificant. Over time, though, they have a large effect. There are little things that I've done over many years that have had outsized results. Individually, they don't move the needle. But they're like little course corrections on the cruise ship of life. A little change early on, repeated and compounded over many years, can have a significant impact.
When you add them together, they can help you achieve things you never thought possible.
Small Habits Lead to Big Results
A prime example for me was gaining strength. I made a decision to build muscle but I didn't want to be one of those guys who spent hours in the gym. I learned that there are workout regimens that don't require a ton of time, but which still improve strength with just 20-30 minutes a session. These routines target several muscle groups at once. (The deadlift is a good example.)
Because these sessions only took 20-30 minutes, it was easy to make time for them. As a result, I started going to the gym more regularly. And once I was there, something funny happened. On some days, I did the workout and left. On others, I felt like I could do more. So, I incorporated other exercises that targeted smaller muscle groups. The promise of a short session got me in the habit of going to the gym. That was the hard part. Once I was there, I often did more than I had planned.
At first, I saw my strength increase until I hit a plateau. I talked with some folks and realized I had two non-obvious weaknesses: insufficient protein intake and grip strength.
- For the protein, I added a bit of unflavored protein into my coffee each morning.
- For grip strength, I started doing more dumbbell exercises in lieu of barbell exercises. The simple act of carrying the heavy weights to a bench helped increase my grip strength.
Both were small changes that became daily habits, which eventually had a big impact on my exercise regimen. Neither was difficult, I just had to discover them. And today, I'm stronger than I've ever been thanks to these seemingly minor changes.
But you're not here for fitness tips from me. You're here for money tips, right? Here are some simple habits I've developed that might not seem like much at first, but which have had a huge impact on my finances. Maybe they'll help you too.
I believe anyone can start a side business that becomes their full-time business.
My first job out of college was writing software in the defense industry for Northrop Grumman. Every day I went to my 9-to-5 job, wrote software that went into enormous radar systems, and then went home to my little apartment. While I had dreams of starting my own business, my head was always filled with stories of hot tech startups raising millions of dollars. (The hot company back then was Friendster, raising $12 million in 2002.)
While I dreamed of a venture-backed startup, I started a personal finance blog to chronicle what I'd learned about managing my money after getting my first job. I discussed everything from the best photo printing services to how a 401(k) worked to my net worth.
When I bought a home three years ago, the economic climate was different from today. Back then, a house would could be listed on Friday and a contract signed by Monday. It was easy to get a loan (too easy, in fact) and you could make every mistake in the book and still find yourself a home.
Despite the market differences, sound financial planning and a handful of smart moves will ensure that you won't regret grabbing your piece of the American dream. This post isn't going to go over the merits of buying versus renting or how you should pick a real estate agent. Instead, I'll focus on the things you should do to prepare yourself before applying for a loan and then buying a home.
Don't borrow money
Your home will likely be the single largest debt you will take on and represents the greatest risk in the eyes of potential lenders. With lending rules tightening, it's becoming more and more important that you make yourself look as safe as possible. Safe means as little debt as possible and as little access to credit as possible.
A few months ago, my wife and some of her friends decided to start a book club. They recently held their second meeting, at which they discussed Randy Pausch's The Last Lecture. My wife and I both attended Carnegie Mellon University, where Professor Pausch taught. He was very well known even before his Last Lecture, and so my wife was looking forward to the book discussion.
Professor Pausch's lesson in his Last Lecture is to always enthusiastically pursue your dreams, regardless of how out of reach they seem. Pausch was a man who achieved many of his childhood dreams by the time he died at age 47. It's unfortunate he didn't have more time.
After the book group meeting, my wife thought of some goals she'd written down for herself when she was in sixth grade. When she got home, she told me about her goals, how she had forgotten about them after all these years, and how they were still important to her. I asked if she still had the list. She found it and we looked them over. Then, I walked into the other room, put the piece of paper in a frame, and put her list of goals on the desk.