Power of Habits!

A journey, no matter how long or short, always starts with the first step.

As we enter the new year, the first week is the most crucial for forming any habits. If we want to start something new, what better day to start the life you want to live!

While the first step is the most daunting one for most of us, do you know what is harder? Sticking to the plan. Healthy habits can help you do that. According to James Clear, the author of the book, ‘Atomic Habits’, it is not the huge effort that you put at the end that matters but rather the small efforts that you do regularly that make all the difference. Small habits are very powerful as they can create a transformation in your life by creating synergies and developing focus.

How to stick to healthy habits?

1. Cue - Make it obvious:

If you want to start a new habit, make it easy for you to carry out the “action” at the decision point. For example, if you plan to start running, keep your running shoes near your bed at night. So, when you wake up in the morning, your sports shoes are the first thing you will see, nudging you to run!

2. Craving – Make it attractive:

Link the habit you are trying to build to an action you love doing. Make the process enjoyable. Going back to the previous example, if you like listening to music, carry your headphones and listen to music while you run.

3. Response - Make it easy:

Make the new habit easy to follow like keeping a target of running for 15 minutes.

4. Rewarding – Make it Satisfying:

Reward yourself for keeping up with the habit.

This is true for financial and money matters too!

Life you want to live can also be – retiring early or retiring with comfortable money. It may also be to build enormous passive wealth.

For a salaried individual, a goal could be to build a corpus of Rs. 5-50 crores. For a business person, the goal could be to build a passive financial wealth of Rs. 5-500 crores. The first step towards your goal is to acknowledge the need to plan today. If you start a SIP of Rs. 1 lakh for 10 years, you build Rs. 3 crore; if you do a SIP of Rs. 10 lakhs, you build Rs. 30 crore - just by building a habit.

1. Cue - Make it obvious:

Investing is automatic. Setting up an SIP trigger date in the first week of every month, helps you invest right when the month starts.

2. Craving - Make it attractive:

Checking at the amount getting accumulated each month and knowing that you are the one who is making this possible, is attractive in itself!

3. Response - Make it easy:

Having a deterrent like a lock-in period can help you stick to your plan longer.

4. Rewarding – Make it Satisfying:

Proof of the pudding is in eating. Imagine 10 years down the road, you achieved what you imagined today!

As James Clear says, “You do not rise to the level of your goals. You fall to the level of your systems.” So, start building your systems today and unleash the power of habits in investing. Since the market is at all-time high, I wanted to understand the general sentiment about the market - I would appreciate it if you could vote below.

Happy New Year and Happy Investing!

Tejas Lakhani
Chartered Accountant, Financial Professional for 10 years+