We are what we repeatedly do. Excellence then, is not an act, but a habit. — Aristotle

We tend to define our lives by the big events: graduation, marriage, children, a big promotion, retirement. What often gets neglected are the little things we do every day, the little things that make the big events possible. As Aristotle said, it's what we “repeatedly do” that produces excellence. When it comes to money and wealth, what do you repeatedly do?

Financial security cannot be reduced to a simple formula. Like excellence, it is the result of your daily habits. An individual with high income who has poor daily habits will fail to find financial security. But a person with relatively low income can achieve financial freedom through the power of good habits. So what are the habits of wealth?

Hard Work

By working hard, old man, I hope to make something good one day. I haven't yet, but I am pursuing it and fighting for it. — Vincent van Gogh

Hard work is the habit first among equals. Achieving financial security is often the result of consistent diligence. We've all heard of individuals who found wealth through inheritance or the lottery, and these stories are the most memorable. What we rarely hear about, however, is the school teacher who works hard for 40 years and, along with some of the other habits below, manages to save $1 million or more on a salary that never exceeds $50,000 per year. Hard work enables us to appreciate all the more the financial security that it produces.

Modest Living

A just and reasonable modesty does not only recommend eloquence, but sets off every great talent which a man can be possessed of. — Joseph Addison

This habit is the great equalizer. Modest living can produce great wealth on a modest income. In contrast, frivolous uncontrolled spending can result in financial turmoil for the highest paid among us. My grandmother lived modestly. A nurse by education and training, her income was modest by the prevailing standards. Yet she managed to pay cash for her home and save enough for a generous retirement. More importantly, modest living produced a contentment in her that money just cannot buy.

Patience

But investors don't necessarily have the patience to wait for the great company with the great underlying economics at the right price. When Warren bought Dairy Queen, I joked, “He probably wanted to buy it when he was eight years old, but it wasn't the right price.” So he waited 50 years or so. — Mary Buffett

Shortcuts born out of impatience lengthen the trip. With wealth, impatience often leads to decisions with dire consequences. Patience, however, should not be equated with inaction or passivity. Rather, practicing the habit of patience produces thoughtful, long-term decisions that can produce wealth while minimizing risk. Warren Buffett epitomizes the patient investor. His investing success is often the result of patiently waiting for the right time to buy a stock or a company.

Perseverance

Life is difficult. This is the great truth, one of the greatest truths — it is a great truth because once we see this truth, we transcend it. — M. Scott Peck

If it were easy, everybody would do it. The fact is, obtaining financial security requires working through challenges. These range from the small, daily choices we make, which over time have a monumental impact on our finances, to the big money events in our lives that are the most memorable. Perseverance keeps us focused on our goals, and enables us to confront all challenges, big and small.

Balance

The word ‘happiness' would lose its meaning if it were not balanced by sadness. — Carl Gustav Jung

We are constantly bombarded with imbalance in the financial press. Either real estate beats stocks or stocks beat real estate, but rarely do we hear of a healthy balance of both. Balance in all aspects of our lives produces completeness in a way that obsession never will. But balance does not mean a lack of passion. To the contrary, balance in our relationships, work, finances and other areas of our lives enables us to pursue life with passion while remaining firmly rooted. In our finances, balance shows us the importance of living for today and for the tomorrows that come our way.

Self-Awareness

I think self-awareness is probably the most important thing towards being a champion. — Billie Jean King

“I'm trying to find myself,” was a common refrain among teenagers when I was growing up. It was the best excuse we could muster for avoiding the realties of adulthood. But a healthy dose of self-awareness brings into focus the motivations behind the daily decisions we make. Self-awareness allows us to understanding what motivates us to spend money, what investments are best for us given our tolerance for risk, and ultimately what will produce contentment in our lives. Practicing the daily habit of introspection leads to self-awareness.

Learning

I went to the woods because I wished to live deliberately, to front only the essential facts of life, and see if I could not learn what it had to teach, and not, when I came to die, discover that I have not lived. — Henry David Thoreau

It's what we don't know that is most dangerous. The habit of life-long learning enables us to improve our careers, investments, and spending, as well as other areas of our lives. The older I get, the more I realize that learning is a process, not an event. As soon as we think we've got it all figured out, something comes along to remind us just how fragile our understanding can be. Make learning a daily goal, and your finances will thank you for it.

What do these habits teach us? In the words of Aristotle, they teach us that who we are and what we have is a result of what we repeatedly do. Wealth then, is not the result of an act, but the result of our habits.