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Check your money habits

Most financial advisers are rightly of the opinion that most people fail to see that their problem is not necessarily their income (or lack of it), but rather their money habits.
Savings and investments are not necessarily functions of your earnings but rather functions of habits just like other habit-driven issues like smoking.

The ‘science’ of habit formation
Habit formation is much like walking along a weedy path. With more walks on the path, the path becomes cleaner and easier to tread on, such that if you were to walk that same direction, you would most probably choose the already well-treaded path. This is exactly the psychology behind habit formation, including habits relating to money: A path once passed is easier passed in subsequent times. Once a thing is done, it becomes easier to do it the next time.

Dr. Sidney N. Bremer, in his book, Successful Achievement, aptly puts it this way – the chains of habit are too weak to be felt until they are too strong to be broken.
So it is best to form and inculcate a habit of savings and investment early such that it would become part and parcel of your person with the passage of time, for the benefits are indeed immense while the pains are short-lived.


Categories of ‘poor investors’

In this insight, it may be interesting to look into two categories of ‘poor investors’ that the great personal finance author, Robert Kiyosaki, enumerates in his work, Cashflow Quadrant, as follows:


  • ‘Level 0’ investors and ‘Level 1’ investors.


‘Level 0’ investors

According to Kiyosaki, Level 0 investors are those with no money to invest. They either spend everything they make or spend more than they make. There are many rich people who would fall into this category because they spend as much, or more than they make. Unfortunately, says Kiyosaki, this zero level is where about 50 per cent of the adult population would be categorised.


‘Level 1’ investors

The other level is what he tags Level 1 investors or borrowers. This is an entirely interesting group and will reveal to us how not to manage money:
These people solve financial problems by borrowing money; often they even invest with borrowed money. They live their financial lives with their heads in the sand like an Ostrich, hoping that everything will work out. While they may have a few assets, the reality is that their level of debt is simply too high. For the most part, they are not conscious about money and their spending habits.

Anything they own of value has debt attached to it. The expressions ‘low down’, ‘easy monthly payments’ always draw their attention. They often purchase depreciating toys such as boats, swimming pools, vacations and cars with those words in mind.

They list these depreciating toys as assets and go back to the bank for another loan and wonder why they get turned down.

Shopping is their favourite form of exercise. They buy things they don’t need saying words like ‘If I don’t buy it now, I may never find it again at such a great price’, or ‘I want the kids to have what I never had’. They spend everything they make and then some. They are known as consumers. Shop owners and car dealers love these people. If they don’t have the money, they borrow it.

When asked what their problem is, they will say that they just don’t make enough money. They think more money will solve the problem. Little do most of them realize that the money they earn today seemed like a fortune or dream to them just yesterday. But today, even though they have achieved their dream income, it still is not enough.


All is habit!
There is ample evidence that whether savings and investment are made, like I’ve always pointed out, are not really dependent on the capacity or ability of the person but rather on the habit that has been formed over time on them.

It has been said that, in order for you to form a habit of an act, you need to repeat the act five for consecutive months and before you know it, it gets into your subconscious, your subconscious takes over from there and the act becomes a habit. So simply act and tread the path of habits you’d like to cultivate i.e. habits that will prove beneficial to you and yours.

Perhaps the critical or acid-test for each intended act should be, “If I should continue acting in this manner continuously for the next five months, where would it take me?

. Excerpts from my latest book, INSPIRED KEYS TO FINANCIAL FREEDOM


You can order your copy of the book through or call 08039428648.


About Lanre Oyetade

A multiple award winner in Economics and business journalism, Lanre Oyetade has served close to two decades in the media industry, spanning different notable stables, where he is privileged to have risen to the position of a title editor. A masters degree holder in Economics from the University of Lagos and doctoral student at the Babcock University, he is a winner of the prestigious NMMA Capital Market Award for two consecutive years (2004 & 2005), and was also a nominee for the body’s banking and finance and money market awards for two years. In 2013, he also won the Most Outstanding Business-Reporting Title Editor award of the National Institute of Marketing of Nigeria (NIMN). A minister in the LORDS’s vineyard, he has been an inspirational speaker and resource person at many corporate and religious fora since early 2004, and has so far authored three books on the capital market; on personal effectiveness, and on personal finance, in 2008 and 2014, respectively.