Maybe you drink no fewer than three coffees a day, or perhaps you make regular trips to yoga classes. Habits have the power to build up over time and create momentum – a mojo that carries you toward success. When this happens, the many pieces of your life tend to come together naturally to keep you on track. With money, this means maintaining your budget and achieving your goals.
But just like you might miss a single gym session and struggle to make time for any thereon, it’s possible to lose your mojo and feel unable to get it back. So what do you think? Have you lost your money mojo?
We all have money habits, for better or for worse. Great habits help us to consistently grow, whereas negative ones deplete our buying power and diminish future opportunities. Therefore, keeping bad habits isn’t only a burden on your present-day spending but has compounding effects on what lies ahead of you.
The snowballing consequences of habits – both good and bad – are described by Noel Whittaker in his book “More Money”. He describes a train which travels towards a $3.8 million retirement. Riding costs a daily fare of $2.83 (or $1,000 a year). A newborn child boards the train for free and, as it thunders along its tracks, the train grows in value and each daily fare adds up and accrues interest until the child reaches 65. Assuming 9 percent annual interest, the child would retire with $3.8 million to their name. This represents how great habits build over time to prepare us for a brighter future.
Is your money mojo keeping you in locomotion?
Conversely, those who don’t board the train the day they are born to face a boarding fee equal to the value of the train. That is, in order to reach the same destination, new boarders would need to pay the amount they would have accrued had they boarded at birth. A five-year-old would need a starting deposit of around $6,000, while a 21-year-old would require almost 10 times as much.
Furthermore, if someone were to disembark from the train, reentry to the same destination would cost the value of the absentee period. So, each year “off the train” would cost $1,000 plus the relevant interest.
Whittaker’s train analogy demonstrates two things: that beginning positive habits as soon as possible is vital to future success, and maintaining them is equally important.
Can you keep your money mojo in balance?
The train analogy, though pertinent, can easily be daunting. If you’ve lost your money mojo or have found your momentum isn’t taking you where you want to go, how can you change the course of your financial future? The road to good habits can be difficult.
Before you can change your future, you need to address the past. Think critically about the decisions and influences that have led you to where you are now.
With your past in mind, describe the conversation going on in your head and then imagine how you’d like to feel about money. Put this down onto paper and read your own attitudes back to yourself to cement the drive for change.
Now think about where you’d like to be. Create a SMART goal to put you back on track and measure your progress.
When respected, a budget can help you fall back into positive habits. However, switching to complete frugality in one full sweep might shock you – instead, you should constantly reshape your budget to ease you back to your money mojo.
One of the greatest barriers to maintaining habits is not understanding them. Read about money, or talk to family and friends about your habits. Take the time to reflect on your habits at regular intervals and adjust as necessary.
Finding your money mojo isn’t always easy; sometimes you need a hand from someone who understands. Reach out to Invest Blue today for compassionate financial planning advice.
What you need to know
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