Any financial goal can be achieved through DAILY ACTION. Once you’re able to write down your SMART goal, the rest is to develop a Habit, since you’re what you repeatedly do.
The choices you made in 2020 are responsible for your current financial state. For example, a bad habit such as Unnecessary Spending is one of the reasons why 60% of the adult population in Nigeria (for instance) have many financial problems.
So how do you achieve your income goals using the principle of habit formation? Before you read the next sentence, we encourage you to read the first part of this series here.
The Power of Habit
Tomilola decides to save X amount before May 2021 so she can travel to Canada for Summer. She downloads a simple savings app to help her save with ease. Asides this, Tomi would like to stop spending excessively and put away (and grow!) funds that she does not want to touch.
On the App, there’s a feature which (when turned on) allows auto-debits from Tomi’s Bank account to her savings stash until she reaches her target. She decides to set it to ‘Monthly’ since she receives her salary at the end of the month. What this means is, on the 26th of every month, 35,000 naira will leave her bank account to her savings wallet at exactly 6pm.
That’s how habits work towards financial goal attainment.
Any habit you decide to build has three parts to it: Trigger, Routine and Reward.
In Tomi’s case, the Auto-Save feature is what Triggers the action or Routine behavior which is savings, while the Reward is the X amount before May 2021 and trip to Canada for Summer.
Altogether, this creates something called a “Habit Loop,” which allows her to stick to her goal which is to save X amount of money. And at the heart of any good Habit Loop is a good reward. In fact, it might just be the most important aspect of building good habits. That’s because it has the biggest impact on whether or not you stick with the behavior.
So if Lady Roda, who sells corporate wears for ladies decides she wants to start investing in Mutual Funds with 20k, her Habit Loop will look like the following;
Trigger: Daily sales income from customers
Routine: Contribute 1,000 everyday (Monday to Friday) for one Month (4 weeks).
Reward: Building WealthtoFinancial Independence
A Proven System…
Imagine how it would feel if every time you put your mind to something and you got it done, not that you started in January and lost momentum before the end of March. You just finished what you started.
If you’re always asking, “How does (Your Colleague’s Name) keep to her budget every month?” then you have the answer — the power of habit.
The truth is, you’re more than capable of achieving every goal you set. All you need is a better strategy for getting things done. A proven system that helps you stick to — and finish — everything you start.
You can learn how to make your habits stick for life. Once you know how to do this, you are guaranteed success in everything you do — from this moment forward.