I absolutely nerd out over all things effective and efficient. And Stephen Covey’s international acclaimed, best selling book, The 7 Habits of Highly Effective People is just that. It contains powerful lessons and principles to apply to the way we manage ourselves and our time, as well as the way we interact with the people around us. The 7 Habits are widely known and cited by business and leadership professionals and considered one of the best books in self improvement. What does all this have to do with personal finances, money management, and getting out of debt? Well, I’ve taken inspiration from these 7 Highly Effective Habits to create 7 Habits for Financially Savvy People. People who want to be highly effective in their finances. (Finally putting my shelf of entreleadership books to good use! (True story)).
Make sure you print off the FREE worksheet (at end of post) to start putting these habits to work in your life!
1 Be Proactive
Be proactive about your life in general, and personal finances in particular. Being proactive means taking action and laying plans before they’re needed! Saving that rainy day fund, increasing your income, and saving now for future purchases.
Guess what, you are responsible for your own life. By and large whatever financial situation you are in now is the direct result of choices you have made so far. And your future situation will be the direct result of the choices you are making now. No one is going to care as much about your money as you, so you better start taking the lead! It’s not a cheesy poster people, it’s the truth: The secret of your future is hidden in your daily routine.
2 Keep Your End Goals in Mind (Begin with the End in Mind)
What will your money allow you to do? Do you want to be “working for the weekend” and enjoy your whole paycheck partying or shopping every weekend? (Now that song is playing in my head…) Do you really want to do that for the rest of your life? Will earning allow you to take time off and travel the world? Will it allow you to buy a home and raise kids? What financial legacy will you leave behind: A legacy of debt. A legacy of wealth and inheritance. A legacy of generosity and altruism?
I don’t want you to lay out huge, far reaching goals for the next fifty years. (Unless you’re a hyper planner like me and love doing that sort of thing. But don’t let planning get in the way of action;) I do want you to get in the habit of thinking of your finances in bigger than monthly numbers. What you do month to month can add up to have huge impacts on what you can afford year after year.
Don’t know where you stand with your finances? What’s Your Net Worth will show you how to find out!
3 Prioritize (Put First Things First)
To put first things first you must decide what things are most important to you. And then make those things top priority and first scheduled in your day to day life. Do not confuse “busy” with productive. There are a million and one things out there to distract us from what’s really important. And what’s really important is different for each and every one of us.
If you haven’t learned about The Time Management Matrix in 7 Habits, you need to. Read more here. It is an excellent guide to prioritize your daily tasks into what actually has impact on your life and goals. And it has been instrumental in improving my effectiveness in all areas of life. Decide what really matters to you, and then carefully examine your life to see if what you are currently doing is getting you closer to your end goals. If it’s not, make some changes. Don’t settle by living life busy and distracted. Cut through all the fluff and get to what’s really important to you.
4 Cultivate a Winning Money Mindset (Think Win/Win)
This chapter of the book is all about interpersonal relationships. And changing the way we think about interacting with the people around us. I’m going to apply this section to changing the way we think about money, income, or personal finances. Many of us have limiting beliefs that can hold us back from our dream lives. One of my limiting beliefs when I entered the working/adult world was that if I took a bigger, better job, it meant I took it away from someone else who might “need” it more than I. It sounds silly now, but I was trying to find my place in the workforce in 2009. When all you’d hear about on the news was how bad off everyone was and how high unemployment rates were across the country.
That’s a crazy limiting belief, just like many others out there, maybe there’s one or two that you have, too. In a world and economy that has room for the Fidget-Spinner phenomenon, there’s simply no excuse for limiting our beliefs about money! Carve a few minutes out of your schedule to stop and reflect on the way you think about money. Do you think only lucky people get rich. Or it’s somehow selfish to save money for your future. Or that you are stuck in your current income bracket? Notice how these thoughts could be holding you back from your goals and dreams.
5 Understand the System & Be Patient (Seek First to Understand, Then to be Understood)
Understand that becoming wealthy and reaching your goals is a process. A process best managed with a system, or strategy. This is not necessary, of course, but we’re talking about being highly effective with money. The most widely quoted and highly respected people in the finance world all follow similar strategies. Pay off debt, save from every paycheck, diversify income and investments… to name a few. Establishing systems and strategies for our personal finances and money can set us way ahead of the crowd. Take the time to learn about a few strategies you are not using yet that can help you win in personal finances.
6 Organize, Implement, & Benefit (Synergize)
“Simply defined, (synergy) means that the whole is greater than the sum of its parts.” -Stephen Covey
Implementing all these Habits together will bring the greatest benefits. If Habit 5 is about learning and understanding money strategies, then Habit 6 is about setting them up.
Being proactive about your approach, keeping your end goals in mind, prioritizing your actions, improving your mindset, and understanding the systems that will get you to your money goals will all exponentially increase the benefits you reap from your efforts!
- Get your financial info and goals all in one place. (Organize)
- Create a plan to put all these habits into place and start actively working on making your dreams come true. (Implement)
- Track your progress over time to see how you are getting closer toward your goals every month and year. (Benefit)
7 Renew (Sharpen the Saw)
The last habit is renewal. Taking time away from the everyday hustle and bustle to recharge and re-energize. If we don’t take care of ourselves, we won’t be able to take care of our finances, or anything else in our lives. Money issues can be confusing, stressful, even downright intimidating. So it’s important to step away on a regular basis so you don’t burn out or give up. Even “rich” people stress about money. Making self care and personal health a priority will help your health and happiness in all areas.
What I want you to take away from this is a better understanding that reaching your financial goals is going to be the result of frequent, consistent, small actions. It is a shift in the way that we approach money every day. Moving away from being a passive spectator of our finances, to an active, proactive boss of them!
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