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The seven habits that create true and lasting wealth.

We are what we repeatedly do. Excellence then, is not an act, but a habit.”–Aristotle.

So often we define our lives by the big events. Graduation, marriage, children, a big promotion, and retirement are some of the milestones that many of us remember (or will remember) as defining moments in our lives.

What often gets neglected, however, are the little things we do each and every day that make the big events possible. As Aristotle said, it’s what we “repeatedly do” that produces excellence. So when it comes to money and wealth, what do you repeatedly do?

You can’t reduce financial freedom and security to a simple formula. But, like excellence in any other area, financial excellence is a result of our everyday habits.

Related: Ways to Celebrate National Financial Freedom Day

This is best illustrated by two people: the high-income individual who fails to achieve financial security and the low-income individual who lives free from debt and other financial constraints.

So what are the habits that set the latter apart from the former? And how can you cultivate these habits in your own life as a way of working towards wealth and financial freedom?

Related: Dough Roller Podcast 303: 4 Pillars of Financial Success

Here are the seven habits of wealth I’ve worked on cultivating in my long journey towards financial freedom:

1. Hard Work

This habit is first among equals. Achieving financial security is often the result of consistent diligence. We have all heard of individuals who stumbled into wealth through an inheritance or the lottery. these stories are the most memorable, but they aren’t the most common.

The stories that don’t get told are of people like teachers who make $50,000 per year for 40 years but manage to save $1 million by retirement. Or business owners who quietly build wealth while putting in 50 or 60 hours a week, year-round.

Besides helping us actually build wealth, hard work also helps us enjoy the wealth we’ve created. If you have children, you know this to be true. They’ll almost always treat a toy they’ve bought with their own hard-earned money more kindly than one you gave them for nothing.

By working hard, old man, I hope to make something good one day. I haven’t yet, but I am pursuing it and fighting for it . . ..–Vincent van Gogh.

2. Modest Living

This habit is the great equalizer. Modest living can produce great wealth on a relatively small income. In contrast, frivolous, uncontrolled spending can result in financial turmoil for the highest paid among us.

My grandmother lived modestly. She was a nurse, and her income was modest. Yet she managed to pay cash for her home and save enough for a comfortable retirement.

More importantly than allowing us to save money, though, living modestly helps cultivate gratitude. When we approach our financial situation with gratitude and humility, regardless of our income, we’ll appreciate it more and find it easier to continue living modestly.

A just and reasonable modesty does not only recommend eloquence, but sets off every great talent which a man can be possessed of.–Joseph Addison

3. Patience

Shortcuts born out of impatience lengthen the trip. With wealth, impatience often leads to decisions with dire consequences.

But be sure you don’t equate patience with inaction or passivity. Instead, practice the habit of making thoughtful long-term decisions that minimize risk while producing wealth.

Warren Buffett is the epitome of a patient investor. His investing success is often the result of patiently waiting for the right time to buy a stock or a company.

Patience will also help investors ride out the waves of the market. Declines in the market–and your portfolio balance–are inevitable. Patient investors continue looking at the next 10 or 20 years, knowing that the market has always rebounded eventually. Instead of selling, they’ll hold their positions and wind up on much better footing because of it.

Patience also pays off when it comes to making purchasing decisions. If you buy a car the first time you walk on the lot, you’re highly likely to spend more than you need to. Sleep on it, and you’ll be more prepared to get a better deal. (Plus, if you leave and come back later, the dealer will probably offer you a better deal, too.)

But investors don’t necessarily have the patience to wait for the great company with the great underlying economics at the right price. When Warren bought Dairy Queen, I joked, “He probably wanted to buy it when he was eight years old, but it wasn’t the right price.” So he waited 50 years or so.–Mary Buffett, Warren’s sister.

4. Perseverance

If earning financial freedom were easy, everybody would do it. The fact is, obtaining financial security requires working through difficult challenges. These challenges might come in the form of the small, daily discipline of tracking your spending to better pay off debt. Or your first challenge might be slaying the debt dragon so you can save more later. Or your challenge might be deciding what to do with a huge raise or unexpected windfall.

Regardless, perseverance keeps you working towards your goal. Even when you want to blow windfall money on a fabulous vacation. Or stop paying extra on your debts so you can buy a new car instead.

Whatever the challenge, perseverance keeps you working through it to your end goal.

Life is difficult. This is the great truth, one of the greatest truths-it is a great truth because once we see this truth, we transcend it.–M. Scott Peck

5. Balance

We are constantly bombarded with imbalance in the financial press. Either real estate beats stocks or stocks beat real estate, but rarely is there a healthy balance of both. Balance in all aspects of our lives produces completeness in a way that obsession never will. But balance does not mean a lack of passion.

To the contrary, balance in our relationships, work, finances, and other areas of our lives enables us to pursue life with passion while remaining firmly rooted.

When it comes to personal finance, balance looks like deciding to save while still paying down debt. It looks like taking a modest vacation to build memories for your young kids, even if that means lowering your savings rate just a bit. Essentially, balance in your finances means learning to live in today, while still planning for the future.

If the future gets too much a hold on you, it can lead you to a miserable, miserly life in the now just to enjoy a fabulous retirement later–when you didn’t spend time or resources to build up relationships now to enjoy. But if you live too much for the present, you’ll find it easy to go into debt or fail to save for the future.

The word “happiness” would lose its meaning if it were not balanced by sadness.–Carl Gustav Jung

6. Self-Awareness

“I’m trying to find myself,” was a common refrain among teenagers when I was growing up. Then it was typically the best excuse we could muster for avoiding the realities of adulthood.

But the fact is a healthy dose of self-awareness brings into focus the motivations behind the daily decisions we make. Self-awareness allows us to understand what motivates us to spend money, what investments are best for us given our tolerance for risk, and ultimately what will produce contentment in our lives. And practicing the daily habit of introspection will produce self-awareness.

Self-awareness takes time to cultivate. But try journaling a little at the end of each day. Think about the choices, large and small, that you made that day. Try to get down to the root of why you made those choices. What was your motivation?

Understanding what motivated your choices can help you change the choices you make tomorrow. You’ll learn underlying reasons for making decisions, especially those you know don’t align with your long-term goals. This will let you continue practicing these other habits that produce wealth.

I think self-awareness is probably the most important thing towards being a champion.–Billie Jean King

7. Learning

It’s what we don’t know that we don’t know that is the most dangerous. The habit of lifelong learning lets us improve our careers, investments, and spending, as well as other areas of our lives.

The older I get, the more I realize that learning is a process, not an event. And as soon as we think we’ve got it all figured out, something comes along to remind us just how fragile our understanding can be. Therefore, make learning a daily goal, and your finances will thank you for it.

Luckily, we live in a time when learning, either about career development, finances, raising kids, or just about anything else, has never been easier. If you’re really busy, consider subscribing to some podcasts on the topics you want to learn more about. (Hint: The Dough Roller Podcast is a great place to start if you want to learn more about finances!)

I went to the woods because I wished to live deliberately, to front only the essential facts of life, and see if I could not learn what it had to teach, and not, when I came to die, discover that I have not lived.–Henry David Thoreau

So what do these habits teach us? In the words of Aristotle, they teach us that what we have is a result of what we repeatedly do. Wealth then, is not the result of an act, but the result of our habits.

Author Bio

Total Articles: 1083
Rob founded the Dough Roller in 2007. A litigation attorney in the securities industry, he lives in Northern Virginia with his wife, their two teenagers, and the family mascot, a shih tzu named Sophie.

Article comments

fathersez says:

This is an interesting well written post. Thanks for sharing.


Debt Free Revolution says:

Along with an excellent list of qualities, you found quality quotes to go with them! I enjoyed this immensely.

Michael Kwan says:

Nice post. The optimist in me wants to think that I have all seven habits, but the realist in me realizes that there’s still some work to be done.

Jaspreet says:

Nice Post.

I find that errors which we do trying to create short cuts are worth observing and removing. I will work on that this week.

Thank you