Power Of Good Financial Habits

“People do not decide their futures, they decide their habits and their habits decide their futures.” The above quote from F.M. Alexander has struck a chord with me for various reasons. Among other things, I think, the power of good habits in the world of finance is often ignored or not given its due importance as a force which can help in long-term wealth creation. Investors predominantly tend to focus on the technical aspects of finance, current market trends, trying to decode what the experts are saying on news channels, etc. However, I would argue that adopting good financial habits alone is a sufficient condition for a lay investor to secure his or her financial future.

- Ajit Menon

Let me elaborate on certain activities which fall under this ambit and which require very little technical knowledge or expertise in finance.

The habit of paying yourself first. This is a concept wherein whatever one earns on a monthly basis, one must save a little amount i.e. paying himself/herself before one pays everybody else - like the landlord, maids, household bills, entertainment etc. This simple act of saving over a period of time has the power to create a corpus big enough to sustain oneself during retirement years.