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In their 1996 book The Millionaire Next Door, Thomas Stanley and William Danko outline seven characteristics of truly wealthy people. Surprisingly, those characteristics aren’t things like “inherited wealth,” “have a seven-figure salary,” or “are great investors.” Instead, many of them simply focus on developing better money habits that contribute to a financially sound lifestyle.

But good habits are hard to stick with — it takes a great deal of discipline, motivation, and self-control to develop and follow through with them. We’ve talked a bit about good money habits How To Start Saving Money And Stop Spending With 4 Easy Habits How To Start Saving Money And Stop Spending With 4 Easy Habits One of the top new year resolutions on many people's lists is to spend less and save more. It's easier said than done, but you can still rely on several apps and tools to help... Read More in the past, but now we’ll focus on how you can develop those habits. These principles will prove useful in your quest to build wealth, no matter which financial habits you’re trying to adopt.

1. Set Specific Financial Goals

Goals are certainly motivating, but not all goals are created equal: a 1981 meta-analysis found that “specific and challenging goals led to higher performance than easy goals, ‘do your best’ goals, or no goals.”

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Image credit: marekuliasz via Shutterstock.

So if you want to give yourself a good reason to improve your financial habits, you will need specific, actionable goals. If you haven’t read it yet, check out our guide to 5 mistakes to avoid when setting goals 5 Critical Mistakes To Avoid When Setting Goals 5 Critical Mistakes To Avoid When Setting Goals Goal setting is a great way to cut down on procrastination and boost productivity. If you don’t have goals, you don’t have direction. Without direction, it’s easy for you to feel lost and confused. Fortunately,... Read More , and keep them in mind when you’re working on your money habits.

Here are a few specific, measurable goals to give you some inspiration:

  • Only eat out once a week.
  • Update a budget spreadsheet or app every day.
  • Save $5,000 by the end of the year.
  • Double last year’s 401(k) contributions.
  • Save 20% of every paycheck.

2. Remove Barriers to Financial Success

Now that you have a goal, what’s stopping you from getting there? Maybe it’s your friends on social media encouraging you to spend more Are Your Social Media Friends Sabotaging Your Finances? Are Your Social Media Friends Sabotaging Your Finances? Your friends on social media might be unintentionally sabotaging your financial habits; here's how to make good decisions in the face of temptation. Read More . Or your reticence to look for a new job even though you’re underpaid. It could be your coffee addiction that keeps you spending $5 every day on a fancy coffee. No matter the barriers between you and good financial habits, the first step is to identify them. Be honest with yourself.

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Once you’ve identified those barriers, come up with a plan for taking them down. Maybe you can adjust your social media settings so you see more positive influences. Or use a gamification app Gamify Your Life With A Few Clever iPhone Apps Gamify Your Life With A Few Clever iPhone Apps When you're feeling short on discipline, try supercharging your productivity and self-improvement with a little more fun using these iPhone apps. Read More to make job-hunting more fun. Or invest in some nice coffee-brewing equipment of your own that will pay off down the road. Attacking those barriers can be tough, but getting rid of them will reduce the amount of mental energy you need to solidify your habits eventually.

3. Start With Small Changes

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Image credit: Elias Kordelakos via Shutterstock.

We’ve talked previously about the power of micro habits How to Use Micro Habits and Spark Massive Personal Change How to Use Micro Habits and Spark Massive Personal Change Creating new habits is hard. Habits are usually built over weeks or months of repetition, and motivation is the challenge. When the going gets tough, micro-habits can be a huge help. Read More , which are great ways to kick off new routines that might otherwise be difficult. Want to start spending less? Make a habit of quickly checking your bank balance on your phone before you make an unplanned purchase. It only takes a couple seconds, and it’ll help you make a more informed decision.

When you decide on a financial habit you want to start using — let’s say cooking dinner at home more often — think about a small step toward it that you can take. In this example, your small step could be spending an hour every weekend planning your meals Plan Weekly Meals in Under 1 Hour with 5 Web Tools Plan Weekly Meals in Under 1 Hour with 5 Web Tools There is a way to eat healthy food that doesn't cost much and do so in a way that doesn't require too much effort on your part. That secret is weekly meal plans. Read More . It won’t stop you from eating out, but it’ll help give you a reason to save your money. These small changes can make a big difference.

4. Build in Flexibility

People often neglect flexibility when analyzing their finances; you set up categories for all of your regular spending, figure out how much you should be saving, get it all set up in your preferred budget app, and plan for every last cent. But that’s setting yourself up for failure, because there will always be unexpected expenses.

Sometimes they’re necessary ones, like computer repairs, medical bills, or phone replacement. And sometimes they’re not; maybe there’s an exciting new game release, or a great sale on Amazon How to Get the Best Discounted Deals on Amazon How to Get the Best Discounted Deals on Amazon There are lots of great deals on Amazon, but you need to know how to find them. Here are some tips and tools to help. Read More  that you can’t pass up. Make sure you’ve built in some flexibility to your budget, and don’t be too hard on yourself when you go over in a category or you don’t quite make your budget for the month. It happens. Achieving good financial habits is a long-term endeavor, and occasional slip-ups are to be expected!

5. Automate Your Finances

 

Possibly the best way to build great financial habits is to put the decision-making power in someone else’s hands. If you can put it in the hands of a computer, even better! A machine won’t ever be tempted by a new pair of shoes or the latest hit console game. Automation makes the process much easier and gives you one less thing to worry about.

Automated investing apps Robots Can Manage Your Investments: What You Need to Know Robots Can Manage Your Investments: What You Need to Know Managing your finances can be intimidating. It's tempting to let someone else handle investments for you, but can you trust a robot to oversee your money? Read More like Clink, Acorns, and Betterment automatically take small amounts of money out of your bank account and invest them. Digit helps you save in much the same way. Having money automatically taken out of your paycheck and deposited into a retirement or savings account is a great way to reduce your financial worries How Financial Minimalism Helps You Save Money & Eliminate Stress How Financial Minimalism Helps You Save Money & Eliminate Stress It's easy to let your finances get out of hand, but using the principles of minimalism can help you keep them under control and reduce stress. Read More and help you move toward your goals. Any way you can automate your money is going to be helpful in meeting your goals.

6. Complete a Money Challenge

There’s something about facing a challenge that’s especially motivating for a lot of people. If you’re one of those people, taking on a financial challenge can be a big help in developing better money habits. We looked at a number of money challenges How to Fix Bad Financial Habits With a 30-Day Money Challenge How to Fix Bad Financial Habits With a 30-Day Money Challenge Read More earlier this year, including the 30-day no-spend challenge and the 52-week savings challenge, both of which can help you establish better habits.

Challenges like these are great for helping you build momentum with your new habit, much like the highly successful Don’t Break the Chain system of habit-building (if you like this particular system, there’s a motivational app 4 Simple Motivational Web Apps That Can Spur You Into Action In Seconds 4 Simple Motivational Web Apps That Can Spur You Into Action In Seconds How to motivate yourself isn’t taught in schools. It is something each of us must learn to do on one’s own…or take the help of the web for some pointers. One of the pointers that... Read More that you should check out). To really increase accountability and the chances you’ll complete the challenge, make it public!

7. Strengthen Your Willpower

It’s commonly said that willpower is like a muscle How To Work The Willpower Muscle How To Work The Willpower Muscle Some people don't have the willpower problem. What makes those productive people different? As it turns out, there's plenty of research on the subject, and the answer turns out to be pretty simple Read More — the more you use it, the stronger it gets. With habits, the wisdom goes both ways; willpower helps you stick to your habits, and developing habits means you don’t have to use as much discipline to keep from succumbing to temptation.

Feeling low on willpower? Check out some YouTube videos that will give you tips on how to improve your self-control Self-Control IS Possible: Learn How With These 10 YouTube Videos Self-Control IS Possible: Learn How With These 10 YouTube Videos Learn all about self-control with the help of these expert YouTube videos. Improve your own ability to focus and make good choices. Read More , watch a few motivational TED talks, or use one of these seven quick ways to be more motivated 7 Quick Things You Can Do To be More Motivated 7 Quick Things You Can Do To be More Motivated Read More . Exercising self-control with money is hard, but the more you do it, the easier it becomes, and it’s one of the best money habits you can develop.

8. Improve Your Financial Knowledge

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Knowledge is power. The more you know, the more likely you are to be able to make progress and meet your goals — this is true whether you’re working on an advanced degree or trying to establish better money habits. Fortunately, there are a lot of great ways to further educate yourself about money out there.

You could aim to listen to a great money podcast 10 Podcasts That'll Help You Save Money & Get Out of Debt 10 Podcasts That'll Help You Save Money & Get Out of Debt There are a lot of money-related podcasts out there, but these 10 are the best for helping you get out of debt and master your money. Read More every day while you drive to work. Or subscribe to a few financial blogs 7 Financial Blogs For Women to Take Control Of Their Money 7 Financial Blogs For Women to Take Control Of Their Money If you're a woman looking for financial advice online, we've got you covered. Here are seven blogs you need to be reading. Read More that’ll help keep you informed and motivated. There are plenty of great personal finance newsletters Cash In With 10 of the Best Personal Finance Newsletters Cash In With 10 of the Best Personal Finance Newsletters Learning more about personal finance is the first step to improving your financial situations. These 10 newsletters will improve your knowledge every day. Read More out there that will teach you things on a daily or weekly basis, too. Keep learning about money, and you’ll be able to keep growing it!

Get Started

The best time to start building better money habits is now! Set a goal or two today, and think about how you can make it easy to meet that target. Use the strategies above to make it as easy as possible to get into a new, financially sound routine, and let us know how it goes. We want to hear about your new money habits!

Have you tried to develop better money habits? What strategies did you use to make them stick? Share your difficulties and successes in the comments below!

Image Credits: Singkham/Shutterstock

  1. Howard A Pearce
    October 5, 2016 at 8:12 pm

    On a lower level but important is to get into the habbit of paying off your entire credit card balance EVERY MONTH

    The minimums are so low that you are bound to get in to deep.

    You will also learn to treat your card as money knowing you "have" to pay it off every month

    • Dann Albright
      October 21, 2016 at 8:05 pm

      Yeah, only paying minimums is a terrible idea. Though you don't have to pay off the entire balance to avoid interest fees; you can just pay the statement balance, if that's easier. But yes, I totally agree. Make sure you're paying enough each month!

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