Want to Achieve Your Goals? Start Building Habits.
Few things can shape your future as powerfully as your habits, especially when it comes to both managing your finances and improving your overall life. Whilst setting goals—whether financial, personal, or professional—can provide motivation, it’s your daily habits that truly determine whether you achieve those goals. Habits act as the hidden forces that drive your actions, enabling you to make steady progress toward your aspirations without constant effort.
In this blog, we’ll explore the differences between goals and habits, and explain why adopting a systematic, habit-based approach to both your life and finances can yield long-term, sustainable success.
The Limitations of Goals
We all have goals, whether it’s saving for retirement, building a business, improving our health, or cultivating personal happiness. Whilst these goals can inspire us, relying solely on them comes with limitations.
Here are a few key problems with focusing only on goals:
1. Goals Have an Endpoint
Goals are often finite. Once you achieve them, the journey ends, which can cause people to regress to old habits. For example, you may work hard to save £10,000 for an emergency fund, but once you reach that target, you might stop saving regularly, leaving yourself vulnerable to future financial surprises.
This same issue occurs in other areas of life. People work hard to run a marathon, but once the race is over, they might stop exercising altogether. Or they set a goal to lose weight, only to gain it back after celebrating their success. Habits, however, don’t have an endpoint. They are continuous and help maintain long-term improvements in all aspects of life.
2. Goals Rely on External Factors
Life is unpredictable, and sometimes achieving your goals becomes impossible due to factors beyond your control. For example, an unexpected expense can derail your financial goal of saving for your dream home. Or a sudden injury could prevent you from hitting your fitness targets.
Habits, on the other hand, are more adaptable. If you’ve developed the habit of setting aside 10% of your income, this routine can continue even if you face temporary setbacks. Similarly, having the habit of daily physical activity makes it easier to adjust to life’s challenges while maintaining progress toward long-term health. Habits provide the resilience needed to stay on track, no matter what life throws at you.
3. Goals Require Constant Effort
Achieving a goal often requires ongoing decision-making and self-discipline. For example, if your goal is to save money, every purchase becomes a moment of tension where you have to decide between spending or saving. This constant vigilance can be mentally draining, leading to burnout or decision fatigue.
Habits, however, automate decision-making. Once established, habits remove the need for constant evaluation, allowing you to achieve your goals with far less effort. For instance, setting up an automatic transfer from your monthly salary to a savings account eliminates the need for repeated financial decisions.
4. Goals Can Lead to Complacency or Recklessness
Setting goals can sometimes trick your brain into feeling like you’ve already achieved something, which may reduce the drive to take real action. This feeling of satisfaction is especially common when people announce their goals to others, giving a false sense of accomplishment.
Additionally, unrealistic goals can lead to poor decision-making. For instance, someone with a goal to double their income in a short period might take dangerous financial risks or compromise their ethical standards to meet this target. By contrast, habits promote steady progress that is more sustainable and responsible in both life and financial decision-making.
The Power of Habits
Now that we’ve explored the limitations of goals, let’s delve into why focusing on habits is more effective in both life and finances. Habits serve as the building blocks that enable you to take consistent, small steps toward long-term success.
1. Habits Make Progress Automatic
One of the most powerful aspects of habits is that they operate automatically once they’re established. Take, for example, the habit of saving a portion of your income each month. Over time, this habit requires no effort or mental energy—your savings grow automatically, without the need for constant thought or self-discipline.
The same principle applies in other areas of life. Whether it’s exercising daily or prioritising time with loved ones, once these actions become habitual, they propel you toward your goals without requiring extra effort. This automation frees up mental energy for more complex decisions and tasks.
2. Habits Make Challenging Tasks Easier
As Charles Duhigg explained in his book The Power of Habit, “Habits are powerful, but delicate. They can emerge outside our consciousness or can be deliberately designed.” Once a habit is formed, it makes previously challenging tasks easier and less stressful.
For instance, the habit of reviewing your finances weekly can help you spot unnecessary expenses, making financial management less of a burden. Similarly, establishing a habit of working out each morning eliminates the daily battle of deciding when or whether to exercise. In both finances and life, habits remove friction and simplify otherwise difficult tasks.
3. Habits Last a Lifetime
Once you establish a good habit, it can last a lifetime. Habits like automatically saving a portion of your income or regularly reviewing your investments can continue paying dividends for years, even decades. Likewise, positive habits in your personal life—such as practising gratitude or maintaining regular exercise—can have a lasting impact on your health and happiness.
According to research, habits govern a large portion of our daily actions, often without us realising it. By building positive financial habits, like paying off credit card debt regularly or investing consistently, you ensure that your financial success becomes a lifelong process rather than a fleeting goal.
4. Good Habits Compound Over Time
The benefits of habits compound over time. As Stephen Covey once paraphrased Gandhi: “Sow a thought, reap an action; sow an action, reap a habit; sow a habit, reap a character; sow a character, reap a destiny.”
In financial terms, this means that even small habits—like saving HK$50 a month or reviewing your budget weekly—can have a profound impact over the long term. The power of compound interest means that small, consistent actions can grow your wealth exponentially over time.
In life, habits such as regularly practicing a skill or investing time in relationships can lead to profound personal growth and deeper connections with others. These incremental actions eventually accumulate to shape your overall well-being and success.
5. Habits Can Start Small and Grow
One of the greatest advantages of habits is that they can start small and grow as needed. For instance, you might begin by saving a smaller amount per week. Over time, as the habit becomes ingrained, you can increase the amount and watch your financial progress accelerate.
This approach also applies to personal development. If your goal is to read more books, start by reading just 10 pages a day. As reading becomes part of your daily routine, you can gradually increase the amount. Starting small ensures that your habits are sustainable and prevent burnout.
Why a Systematic Approach Works for Life and Finances
By focusing on building positive, long-term habits, you can create continuous improvement in both your life and finances. Even if you face setbacks—whether they’re financial emergencies or personal challenges—your habits will help you stay on track.
For example, Warren Buffett’s habit of reading for hours every day builds the knowledge necessary for his investment decisions. Similarly, automating your savings and investment contributions ensures that your financial growth happens steadily over time.
These small, consistent actions—repeated hundreds or even thousands of times—compound to create extraordinary results in both life and financial success. By concentrating on habits rather than one-time goals, you develop a foundation for lasting improvement in every area.
Conclusion
Whilst goals give you direction, it’s your habits that truly determine your success in life and finances. By focusing on building sustainable habits, you not only make progress toward your goals but also create a system that supports long-term well-being and financial security.
Instead of concentrating solely on achieving specific targets, shift your attention to the small, repeatable actions that can transform your life and financial future. When good habits take over, success—both personal and financial—becomes a natural outcome of your daily routine.