6 Money Habits To Build Wealth

Financial success and wealth isn’t achieved overnight. It takes a firm plan and a commitment to execute it to the letter.

Intelligence, charm and talent  are all fine and dandy, but more often than not these aren’t what separate the wealthiest from the poor among us.

The differences lie in our daily habits and rituals. These subconscious, second nature activities make up a 40% of our waking day.

So in other words, you spend two out of every five minutes on autopilot!

Habits are neutral pathways stored in the basal ganglia – a mass of tissue in the centre of our brains in the limbic system.

The neutral fast lane saves on brain energy. When a habit is stored in this region, the parts of the brain involved in deeper decision-making fail to fully engage in the activity.

However, as we all know, there are good habits and bad habits. I’m still attempting to rid myself of some of my bad ones, but I’m slowly getting there.

But, good habits or bad, besides a lucky lottery win, there are only two ways to become rich:

  • Live below your means, saving more than you earn.
  • Expand your means so you earn more than you spend.

Some people are lucky enough to be born into wealth.

However, the self made millionaires out there all follow a simple path by adopting good financial habits that have helped them to build up wealth.

Building wealth with good financial habits

Always know where your money is going

Have a good look through your bank statements and credit card statements every month.

You’ll quickly uncover things you wasn’t aware you were paying for such as subscriptions, club / gym memberships and other recurring charges for products and services you no longer use.

One of the most common reasons for these recurring charges is they’re a paid subscription for something that once came with a free promotional period.

It’s easy to forget about them, and if you’re not keeping a close eye on your accounts, it’s just as easy to keep paying for them unaware.

Make a budget so you can see exactly where your money is going every month.

Conduct an annual expense review

Over time, many of your expenses will change. You should always conduct an annual review on your expenses to see where reductions can be made. How can you build up wealth if you’re over paying on things you don’t need to? 

Insurance policies such as life insurance should be reviewed regularly – at least every two years.

In some cases you can find the same cover for less, or more cover for your money.

TV and internet packages can often change in price when certain channels are added or dropped.

You could be paying for channels you wasn’t even aware you were paying for.

Most people I know barely watch the channels they’ve got.

See if there is anything you have no need for on your package and negotiate a reduction in your bill from your provider.

The amount of times I have called Sky over the years to reduce a package and they have allowed me to keep hold of the channels for free is unbelievable.

If you don’t ask you don’t get!

Be aware though, usually it’s free for six months and then the payments kick back in. Make a note of the date you spoke with them and call back to cancel it again.

If you have come to the end of your mobile phone contract you will continue to be charged the same monthly fee even though you have already technically paid for the phone.

When you get to the end of your contract, if you’re not interested in an upgrade, switch to a sim only deal. When I did this last year I reduced my bill from £45 per month to just £18 – a £324 saving for the year.  

Avoid spendthrift friends and colleagues

Unfortunately most of us are not taught to live within our means by our parents.

As a result it’s likely that all of us have friends that financially drag us down with their reckless spending.

Random nights out can start topping £200 with ease and holidays almost seem like an investment.

Give careful consideration about the affect your friends have on your spending habits. Hanging around with spendthrifts can lead to you being more frivolous with your own money.

Our habits are heavily influenced by the people we associate ourselves with.

One thing self-made millionaires have in common is they surround themselves with like minded people  

Make sure you are surrounding yourself with people who also want to live below their means.

Use online deals and coupons

In Britain a lot of us almost see it as embarrassing to use a coupon to reduce your grocery or restaurant bill.

One person who has no such problem is my better halves uncle. I have to admit he’s kinda’ my hero.

I’ve never seen him pay full price for a meal yet. One such occasion after a three course meal for him and his wife they paid 56p for the entire thing. He handed in a wad of coupons instead of cash!

Contrary to popular belief, most millionaires are not flashy people with a need to splash cash willy-nilly. Chances are you live next door to one.

Their money was built on living on less than they earn. Don’t turn your nose up at money off deals and coupons. Over the course of a year it really starts to add up.

Apps such as Top Cashback and Quidco are great for seeking money off and cashback deals.

Maintain housing costs of 25% – 30% of income

It is thought that around 64% of millionaires live in modest homes, not the flashy mansions we are lead to believe.

If you have no need for five bedrooms why buy a five bedroom house?

Keeping household bills down to a minimum leaves extra saving money for you to store away.

Change your energy suppliers regularly, or at least check to see that your provider is the cheapest within your area.

Review insurance policies to make sure you are on the best package possible. As with life insurance, you could find the same cover for less or more cover for your money.

Use the Piggybanking technique

Piggybanking works by first of all deciding what you’re saving for, then allocating a Piggybank for each thing. For e.g.

Piggybank 1 – Retirement

Piggybank 2 – Wedding

Piggybank 3 Holiday

Piggybank 4 Mortgage deposit

Piggybank 5 Emergency fund

Each month you top up each of your Piggybanks until you have reached your target.

It’s automated and if there is an emergency and you need to dip into your savings (let’s face it we’ve all been there) you can choose which pot to skim from so you know exactly where your finances stand.

See these two articles for a more detailed breakdown of Piggybanking

The Anatomy Of Piggybanking

How I Turned Three Current Accounts Into A Saving Machine

Final word

Nothing above is out of reach for any of us to do. A change in mindset is the biggest fundamental change you need to build wealth.

Seeing the abundance in life opens your mind to greater opportunities. Anyone can be a millionaire if they really put their mind to it.

What tips do you have for building wealth?

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David Naylor is the editor of the Thinking Thrifty blog. An award winning personal finance and lifestyle blogger, he shows how it is possible to live extremely well for less.
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12 thoughts on “6 Money Habits To Build Wealth

    1. Thanks for commenting Stefan. Yeah piggybanking really got my finances in order. I always found it got confusing tracking what was saved for what. This way I don’t have to fill out yet another spreadsheet out! Ha.

  1. I love all of these tips. We do a monthly review of spending and it can be really eye opening. We used to spend an insane amount at restaurants, now we’ve cut back. Plus like you said, we’ve caught charges for subscriptions we thought were cancelled. I honestly can relate to each item you’ve mentioned, but my favorite is that millionaires are likely living next door and you have no clue. They’re just living within their means and saving. 🙂 Thanks for sharing.
    Kelsey @ Tealmama recently posted…Take an Action-Filled Trip to North DakotaMy Profile

    1. Thanks for commenting Kelsey. I was horrified when I finally wen through my finances at the end of last year. I had told myself for years there was nothing spare to save, turns out there was quite a bit when i really put my mind to it. I think you’d enjoy reading The Millionaire Next Door: The Secret of America’s Wealthy!

  2. Some great tips – your points about forming habits really reminded me about “The Power of Habit” by Charles Duhigg. Sad to think about how many of our decisions are made on autopilot especially when we are trying to change things for the better.

  3. Great tips! These are good by themselves and even more powerful when combined. I am working on getting into the habit of checking for deals online before buying anything that I don’t need immediately. So many things can be found online for a better price if you just look.

    1. Thanks Paige! Yeah 9 times out of 10 there is a better deal on line. I’m going to be reviewing another product that would suit you perfectly if you are now starting to look for the best deals. Keep an eye out for tomorrows post!

  4. In this age of overspending, mostly subconsciously, and frequent marketing messages that are intended to fire up neural pathways of our subconscious mind to get us to buy; it is important to use our conscious mind and question ourselves whether or not we really need or we are really benefiting and getting value from what we are buying. Thank you for the tips to create wealth building money habits.

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