‘It takes 21 days to build a habit and 90 days to build a lifestyle’ – we are sure most of us have come across this at least once while scrolling through Instagram or WhatsApp forwards. It seeds a sense of great hope in one’s mind, doesn’t it? After all, we all would want to believe it when we are told that we can turn our lives around in a matter of a few weeks.
What have habits got to do with safe investment options, you may wonder. Well, it’s very much intertwined, to say the least.
Piggy banks and the savings lesson
A colorful container with a thin horizontal hole, thin enough to insert a coin in it – piggy bank or gullak -is something we, as kids, would have played with. The purpose of giving such a thing to kids would be to make them understand that if they put a penny whenever they get one for the following few months, they can/will be able to buy whatever they like.
Looking back, we can realize that it was a simple attempt to build a habit – the habit of saving money with an incentive. Most of us did it because we knew – the goal – we would get our Favorite toy or candy in return when we broke open the piggy bank.
Fun practice for kids with a valuable lesson. That makes sense, right?
Difficult, yet so easy
Let’s fast forward to grown-ups and their state of finances.
To achieve a goal that depends excessively on money, there needs to be a set path to pursue it. Planning beforehand is extremely helpful. To create a habit that will help you get better at your finances, it’s preferable to have a structured process, and here’s how one can start:
Having a goal, small/big or a ‘doesn’t seem possible’ type
Estimate how much you need to achieve that goal
How you can reach your goal – a loan from a bank, borrowing from friends, etc.
Staying on the course that leads you to that goal
The most crucial part is the fourth step because that would mean doing the same thing over and over again. This is particularly difficult because we are not hardwired to lead our lives doing the same thing, a monotonous life.
It can be the fact that there are a lot of other things to pay attention to – the extra dinner date or a new gadget or an ongoing flash sale of apparel – and as a result, we skip ticking off some of the things on the to-do list. All of which are very likely to burn a hole in your pockets.
HOWEVER, frequent deviation from the goal is something we can work on. It was not out of nowhere that someone said it takes ‘21 days to build a habit – at least 21 days. The point is, the repetition of activity over and over again for a good number of days or weeks or in some cases, months.
Compounding benefits of habits
Research says that behavior is very likely to turn into habits when they are performed consistently and frequently performed.
Let’s not forget the existence of inflation which will erode away your money’s value with each passing day. This leads us to the importance of starting early – the earlier you invest, the greater the chances of exponential growth of the amount invested.
This, in a way, is a human version of how compound interest works. For example, we can think of the health benefits that one stands to gain for a lifetime by practicing yoga or regular exercise from a young age.
Similar is the case with getting oneself used to saving money or spending money prudently. The earlier you get yourselves used to saving and investing money whenever possible, the greater the chances of growing those amounts. A rupee saved is indeed a rupee earned.
Old habits die hard but, they age well
Let’s take an everyday example to get to the point. Consider cooking. What makes a person a good cook? The person should be able to cook tasty food. That’s the bare minimum expectation, right? But what goes on behind the scenes are the actual answers to becoming a good cook, i.e., in the context of personal finance, how do you make yourself capable enough to manage your finances?
There are many things that you can do to improve your financial situation. One of the most important things is to have good financial habits. Invest in yourself – learn about financial planning and investing basics so that you can make informed decisions. Get a credit score and keep it high – improving your credit score will help you get better loan terms and lower interest rates on your loans.
The willingness to cook food will lead him/her to cook regularly with the determination to cook better. Preparing oneself to cook – we mean making time for cooking. How about cutting veggies? Of course! That’s elementary. One ought to do that as well. It’s the combination of all these little things that will make the activity of cooking a part of your routine, your personality, and not just a habit.
The result – good food – will only get better when the activity is done over and over again.
The path to financial wellness is a very similar one. Only if one has a goal for which finances are a small contributing factor, will they be likely to achieve it. Following your rulebook for spending and saving is crucial.
And, that’s when you can afford not to worry about money!
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