Manage Money Retirement

Smart Money Habits for Building Wealth

These 10 smart money habits will help you build wealth and retire with no financial worries. Obtaining Financial Independence will be no problem.

Looking for smart money habits that will make the future you wealthy?

Perhaps your asking yourself, “How can I become rich?”, or “What are good money habits?”

The following wealth building habits will help you become a millionaire before you know it. These smart money habits are taken straight from the behaviors of those who have already achieved millionaire status.

Smart Money Habit #1 – Start with Why

Smart Money Habit - Start with Why

In the book Start With Why, Simon Sinek talks about how leaders inspire everyone to take action.

“People like Martin Luther King Jr., Steve Jobs, and the Wright Brothers had little in common, but they all started with WHY. They realized that people won’t truly buy into a product, service, movement, or idea until they understand the WHY behind it.”

Start With Why – Simon Sinek

Start taking leadership of your own personal finances and Start With Why.

Why do you want to be wealthy? What’s behind your financial motivations?

Is it to put food on the table? To travel? Take family vacation? Retire with dignity?

Taking time to first understand your Why — the Mental, Spiritual, Social, Physical and Financial drivers that impact your financial decisions — will not only help clarify your smart money habits, goals and priorities, but will be your basis of motivation and inspiration to continue on when the going gets tough.

Smart Money Habit #2 – Tithing and Giving

It may seem counterintuitive that giving away money, no strings attached, is at the top of the list for building wealth, but I firmly believe that freely donating our time and money helps a person tremendously.

God doesn’t need out money, but we as people were designed to be givers. Giving and tithing helps shape our hearts and minds to not be greedy, to help people in times of need, and in many ways beyond things having to do with finances.

If you’re a church-goer, you’ve certainly heard it said,

“Test me in this," says the LORD Almighty, "and see if I will not throw open the floodgates of heaven and pour out so much blessing that you will not have room enough for it…”
Malachi 3:10

Try it for yourself, and see how you are blessed. Blessings come in many forms; some involve money.

If you’re not tithing to a church, then it’s called giving. There are plenty of organizations doing great work that could use your donation. Just make sure to do your research to see if they are in line with your personal beliefs.

In general, freely giving out money helps us become less selfish and look out for others more. It keeps our priorities straight, and in return other people are more willing to help us.

Doing this step will open up the doors for the followings steps to be even more successful.

Smart Money Habit #3 – Start Investing

Don’t Be Afraid to Fail

Do you want to do something great? Then don’t be afraid to fail!
Think about these two life events: Driving & Your First Job.

Making a mistake driving or at a job can cause serious money. Did you have any fear when starting either one of those?

Yet, I’m willing to bet you do both without hardly a worry.

So, what changed?

First, you started. You got over that initial hump and realized it wasn’t so scary.

Second, you increased your knowledge through driving and working.

Those are two things that most people can’t opt out of. However, people can opt out of investing. All you have to do is take that initial step. Keep working at it, and it will get better.

No matter what you do, even if you are great at it, failure is going to happen from time to time. The important part is that you get up after. Don’t quit! Keep going!


If building wealth were easy, everyone would be wealthy. Truth is though, becoming wealthy requires keeping smart money habits through difficult challenges.

These challenges might come in the form of paying off debt, or it might come in the more fortunate form of a raise at work or an unexpected windfall.

Either way, perseverance will keep you working towards your financial goals.

Smart Money Habit #4 – Ignore your Peers Money Habits: Save More

Smart Money Habit - Save More

Most Americans are either not savings money, or savings very little. Chances are, that is what your peers are doing as well.

70/30 Rule

There are a handful of people that have at least thought of saving for retirement. There is a common rule of thumb called the 70/30 Rule

According to this rule:

  • 70% of your take home income should go towards your everyday expenses like food, shopping, housing, utility bills, sinking funds such as traveling, and so on.
  • The remaining 30% should be divided up as follows
    • 10% of income should go into savings (or towards debt).
    • 10% of income should goes toward investments, retirement, saving for college, etc.
    • The last 10% of income is for charity or donations.

10% savings rule of thumb

Did you notice another common rule of thumb in there? That would be the 10% rule. If you go talk to a financial advisor, this is the common value they’ll tell you to save for retirement.

Sure, if you plan on working 40 to 45 years, you probably will have enough saved up for retirement.

However, if you want to retire early, if you want financial freedom, if you want to be able to give without worry, then you will have to save more. I encourage you to save as much as you can, but a minimum of 15% of your income towards investing and retirement.

Smart Money Habit #5 – Seek Out Successfully Wealthy People

In contrast to ignoring the average people around you, go and find the people who have achieved what you want to achieve. This works in all aspects of life, in addition to finances.

Did you know your net worth tends to mirror that of your closest friends? Who you hang out with matters!

This doesn’t mean you need to drop the friends you have now, but network with people you can learn from. Find people that motivate you to have good wealth building habits and can be a mentor to your decisions.

Your friends do reflect who you are, so be careful on who your close friends are.

Smart Money Habit #6 – Live on WAY Less than you make

It should be common sense, but with our culture relying on using debt, living on less than you make can be difficult.

Cut Unnecessary Living Expenses

Speaking of our culture, Americans (and most of the modern world) tend to get wrapped up in instant gratification and consuming things to keep up appearances. Cutting these expenses will help you to save up piles of money.

Avoid Lifestyle Creep

Have you ever received a raise or a bonus from work? What did you do with that extra money?

Don’t give into the temptation to use up all of the money on products and services that give you a more affluent lifestyle.

As your income grows, don’t raise your spending to match your income. Rather, pump that money into savings and keep living modestly.

It’s okay to take a small portion of that money to go celebrate, but be very conscientious of how much you’re spending.

Smart Money Habit #7 – Create Multiple Income Streams

Smart Money Habit - Create Multiple Income Streams

In times of abundance, it will be extra money in the bank. In times of need, aka a recession, it will be the security and cushion you need when one income stream suddenly dries up.

Here are some ideas for creating extra income streams.

Active Income

This is the income that requires a person to perform some action. In return, they are compensated with money.

This is most commonly referred to as work.

Work More – Side Hustles

Side hustles can be a great way to develop a hobby or test out something you have been interested in. It could be a new business on the side or, perhaps, doing freelance work in your area of expertise.

Passive Income

Here are the two most common types of passive income. This is what people are talking about when they say, “Make money while you sleep!” Passive income doesn’t require active work to earn it.

Investing in Stock Market

This is perhaps the easiest way to create passive income, and you don’t need a whole lot of money to get started. There are a ton of investing apps these days to get you started. Apps such as Acorn or Robinhood.

Once you have $1,000 saved up to invest, you can move into mutual funds. Mutual funds are a collection of stocks, that is managed by someone called the fund manager.

All you have to do is put your money in and let it grow. A lot of mutual funds also pay out a dividend. This is profit that companies pay out to investors. You can take it and put it in your pocket, but I suggest you reinvest it.

Real Estate

Crowdfunded Real Estate

A lot of people envision real estate as expensive to get into. Luckily, technology has made the entry point easier.

There is now a thing called Real Estate Crowdfunding. Think Kickstarter, but for real estate. Crowdfunded real estate investing makes it so you do not have to search for property, get a mortgage loan, screen or manage tenants or manage the property. More importantly, someone else is responsible for the property loans. Your risk and workload are minimized, yet the potential for profit still exists.


Once you’ve saved up enough, you can move from crowdfunded real estate to owning your own investment property. There is more risk, but that means a larger reward. A good rental property will net you 8-10% a year on your initial investment.

As a bonus, rents rise every year, while the cost of a mortgage stays the same. That means you make more money each year. That said, I do think going mortgage-free is the best way to go.

Smart Money Habit #8 – Budget

Do you know where your money is going? How much you’ve spent vs invested?

It’s hard to become wealthy if you have no idea what you’re doing with your money. Gain control of your money by first recognizing where it goes, and then telling it where to go.

I teach you how to create a budget in How to Create a Powerful Zero-Based Budget

Pick a day each month to sit down and review your budget. We usually do this the first day of the month. We make sure all our expenses are in last month’s budget and create the budget for the month ahead.

Review your budget. Compare previous month’s spending line by line to see what’s changed and what can be improved.

Track your spending

Did you know 59% of Americans don’t keep track of their spending?

Once you know what your spending money on each month, you will start to notice areas that you can cut bank and put towards savings and investing.

Most people don’t realize how much they’re spending on food and entertainment.

Create a budget, and you will know exactly how much. Be sure to track every dollar, down to the penny.

Saving is Part of the Budget

I’m sure you’ve heard it said, “Pay yourself first.” This means putting money into savings before doing anything else. Literally, anything. Save before paying bills, spending on discretionary items, and giving.

I don’t agree with paying yourself first. Here is the order that I believe is best.

  1. Tithe/Give
  2. Pay your Bills/Utilities
  3. Finally, “Pay Yourself”
  4. Everything else.

That means when creating your budget, you need to know your income, and then have categories for tithe, bills, and savings.

Divvy up your money accordingly among these categories first. The money left over can then go towards less important items in the budget.

Automate Savings & Bill Payment

There is a reason computers are replacing the jobs of people. Once programmed, they will get the task done on time, every time.

Have you ever forgotten to pay a bill? Yeah, so have I.

Fortunately, most utilities, or any service that requires a recurring payment, provide ways to setup automatic bill payment.

A second benefit of doing this is that you’ll never have to pay late fees. That’s more money in your pocket!

Automating also works great for saving money and building wealth.

Here are some ways to automate your savings:

• Ask your employer to direct deposit part of your paycheck into your savings account.

These days, your employer usually provides some sort of website that you can log into and set how much of your paycheck goes towards your retirement account. Go take care of it.


Have you done it yet?

• Schedule a recurring transfer from checking to savings every payday.

If your employer doesn’t provide the option, do it yourself. Transfer a portion of your paycheck from checking to a dedicated savings account.

Reduce/Remove debt

With the exception of a mortgage, getting into any kind of debt is a stepping stone to perpetual debt. Once entered, it becomes increasingly difficult to pay off, and often leads to even greater financial stress and strife.

Your income is never a certainty, so it’s wise to be prepared with a savings buffer of six months’ worth of earnings at all times. That is your guarantee that, should the worst happen, you have a cushion that will enable you to get back on track.

Smart Money Habit #9 – Set SMART Money Goals

It’s not enough to just say you want to save more money or grow wealth.

In his book, “Secrets of the Millionaire Mind”, T. Harv Eker writes, “The number one reason most people don’t get what they want is that they don’t know what they want. Rich people are totally clear that they want wealth.”

When you have goals for your money, it’s easier to define the action steps you need to take to accomplish your goal.

And you want to make those steps as specific as possible.

You can start by writing down goals for your annual income and net worth. Like all goal-setting, be realistic, but don’t be afraid to challenge yourself.

Remember that budget from the last step? Use your budget to help create SMART money goals.

In case you haven’t heard the SMART acronym before, it stands for Specific, Measurable, Achievable, Realistic, and Timely.

Lastly, write your goals down and put them somewhere you frequently see, like on the fridge in the kitchen. Seeing your goals daily will help you stay motivated to get them done and won’t allow you to forget about them.

Invest to reach your goals

Now that you’ve identified your goals and have a budget, you should know what you are savings for and how much you need to save to reach your goal.

For long-term goals (those over 5 years away), investing is one of the best ways to make your money grow. Think investing for long-term goals such as retirement or a child’s education.

To learn where to invest money for these types of goals, read Retirement Accounts Guide for 2020 & The Order I Invest My Money

For college education savings read Should I Invest in a 529 College Savings Plan?

Smart Money Habit #10 – Read

Smart Money Habit - Read

Read to Increase Money Knowledge

It’s important to keep learning, teaching yourself, and investing yourself long after formal education is over.

If you’re serious about making the most of your money, learning about it should be one of the smart money habits you cultivate.

Steve Siebold in his book, “How Rich People Think”, writes “Walk into a wealthy person’s home and one of the first things you’ll see is an extensive library of books they’ve used to educate themselves on how to become more successful.”

Read for Fun

Reading doesn’t have to be just about money either. Reading itself has many benefits that factor into building wealth.

Goodnet explains that reading has the following positive effects on the brain:

  • Reading allows us to experience more sensations.
  • Reading makes us more empathetic.
  • Books provide plenty of mental stimulation.
  • We become less stressed when we read regularly.
  • Reading can improve our memory.

You can see the powerful effects of reading.


Just by reading this post, you’ve already started working on building that smart money habit.

If you need help on finding additional books to read, I recommend using

Try taking the books I’ve recommended in this article, and you will find many more related, entertaining, and relevant books to read.

What do Millionaires do?

Did you know most millionaires were NOT born into money? They didn’t inherit any large sums of money. That’s right, they are self-made millionaires.

According to a study by Fidelity, 88% of millionaires are self-made. That means 9 out of every 10 followed smart money habits to build over a million in wealth.

Millionaire Habits

Here is a quick list of millionaire habits. You’ll see that I’ve already covered most of them, so I won’t put too much detail.

Millionaires set ambitious goals and act on them. We all have dreams, but millionaires actually take action and pursue their ideas and passions.

Millionaires have mentors. Millionaires know that they cannot possibly know how to do everything. They find experts to guide them through what they don’t know. They lean on others for perspective and insight, choosing their closest friends wisely.

Millionaires are not afraid of failure. Millionaires understand the benefits of learning lessons through failure. However, the risks they take are calculated and thought out.

Millionaires buy used cars. Learn why they do this by reading Car Depreciation: One Reason you Should Buy a Used Car.

How did they become a millionaire?

Millionaires create multiple income streams. They put in the work to make sure that all of their income streams continue to grow.

Millionaires invest money with every paycheck. Rather it’s putting money into mutual funds, or putting money back into their own private business, millionaires invest a portion of each dollar they receive.

Millionaires invest money in the stock market. A survey of millionaires ranked individual domestic stocks as their top investment added in the past year, followed by certificates of deposit, money market accounts or cash equivalents; equity exchange traded funds; individual domestic bonds; and domestic equity mutual funds.


Reading these habits is the easy part. Now it’s time to follow through and take action. Habits take time to develop, so work a little at them each day.

One reason people don’t create habits is because there is something in the way, some sort of inconvenience. Try to remove obstacles that are stopping you from creating these smart money habits.

I hope to see y’all in the millionaire club one day.

FIRE Away!