6 Simple Money Habits That Got Me Out of The Rat Race

Habits are the compound interest of self improvement.

They’re crucial to success, whatever it is you’re trying to achieve.

There are few places where habits are more important, than when you’re trying to improve your financial situation.

So, here are 6 money habits that helped me escape the rat race in my 20’s.

The 100 Day Rule

The 100 day rule is a rule I use when I feel the urge to splurge (what a rhyme) on something that I don’t need.

It could be:

• A new item of clothing.

• A new video game.

• A new gadget.

And all I do is ask myself a simple question…

Will this have the same value to me on day 100, as it does on day 1?

Now, I’m not a psychopath, and not every purchase you make has to provide you with financial gain.

But, if you’re going to buy something for it to then have zero value to you within a month, it’s best to not buy it.

• If you buy a new pair of shoes you plan on wearing for a year or more — spend.

• If you plan on playing a new video game with your mates for a year — spend.

• If you’re buying a trendy new gadget and be bored or it after a week — avoid.

I still remember buying a video game for $60 and played it for one hour, and never touched it again, just because some friends were playing it and I felt left out.

You live and learn. That’s why I implemented the 100 day rule.

Learn to Say No

Wow, this is a powerful one, and it’s super underrated.

This follows on perfectly from what I mentioned in the point above.

Succumbing to the expectations and desires of other people can be detrimental to your financial future.

Even amongst adults, peer pressure can exist. You can find yourself spending money on things you don’t want, just so you don’t feel left out.

So, I developed a mental force field which enabled me to put my own long term goals above the urges of the present moment.

By remembering your overall goal, it’s way easier to say no to things you don’t want to do.

You don’t feel the need to justify yourself either, which is a great feeling.

“Let’s all buy this new video game!”

“No.”

“Why not?”

“Because I don’t want to.”

It’s a special feeling of power when you’re able to say no without feeling guilty.

Avoid Debt At All Costs

Now this point is with the exception of a mortgage, which is a fundamental part of living.

But we’re living in a time where debt has become so easily accessible, it’s scary.

Debt is as much of a mental headache as it is a financial one, and for this reason I live by the rule of not getting into debt unless my life depended on it.

When you look around you, debt is everywhere.

Everyone owes other people something.

The US are some $30 Trillion+ in debt, and consumer debt makes up a huge part of this.

• It keeps you trapped.

• It keeps you working longer than you should be.

• It stressed you out.

When you’re getting yourself into debt unnecessarily, you’re ruining your chances of an early retirement, and a better life.

Why? Because the amount you’re owing is constantly going up…

Interest.

Just like earning interest on your investments, you have to pay interest on money you owe.

You also have the factor of compound interest to consider, and in some cases, lenders charge interest which is compounded daily.

If you can avoid debt, avoid it.

It’s a simple philosophy, really: if you can’t afford it, you can’t have it.

Acknowledge The Opportunity Cost

When you buy something, you eliminate the possibility of buying other things.

With the exception of really small purchases, it’s always a good idea to think about what you could miss out on, if you were to buy something.

Of course, necessities such as:

• Rent/Mortgage

• Groceries

• Phone

Are exceptions, because… they’re necessities.

But when you’re spending money on “wants”, like:

• A new car.

• A new watch.

• A holiday.

Take a bit of time to acknowledge some things that you want, but won’t be able to do if you hit “buy”.

A lot of decisions I make get made with the intention of improving my future life, and it’s a method that works.

I’d recommend it to anyone I talk to.

Stick to The Basics

You should never overcomplicate the formula to building wealth. You don’t need to reinvent the wheel.

• Make money.

• Keep as much of it as possible.

• Use said money to make more money.

• Repeat until financially free.

You don’t need to change any of these core steps.

If you do, you risk losing money and falling behind someone who stuck to the basics.

You don’t need to:

• Invest into super high risk assets

• Start trading

• Gamble

• Inflate your lifestyle for “motivation”

You need to stick to the basics, and that’s what I did.

Invest As Soon As You’re Paid

A lot of people will pledge to invest, but then come the end of the month, they’ve spent all their money and have nothing left to invest.

For a lot of people, it’s because they don’t really care to invest.

But, if you’re serious, and you want this problem solved, make investing the first thing you do when you’re paid.

Or, at least, after necessities are paid off, then invest.

It’s simply a matter of priorities.

When it comes to spending, you have needs, wants, and investing/saving.

For a lot of people, the order of priority is:

1. Needs

2. Wants

3. Investing

But in truth, it should be:

1. Investing

2. Needs

3. Wants

Or, at least:

1. Needs

2. Investing

3. Wants

So, eliminate the possibility of living paycheck to paycheck by making investing a higher priority.

I did this, and it changed my life forever.

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