Whether you’re looking to save more money, invest better, or manage your finances more effectively in 2023, it all starts with your daily habits.

As James Clear said in Atomic Habits:

“Your habits have a powerful effect on your life. They can be the difference between success and failure. They can determine whether you are healthy or unhealthy, wealthy or broke.”

To help you build better daily financial habits, we’ll go over five practical habit-building methods from Atomic Habits.

Instead of trying to overhaul your entire financial life in one big swoop, focus on making consistent incremental changes to your daily routine.

As said in Atomic Habits, “You don’t need to start a new habit perfectly. You just need to start it.”

For example, if you want to save more money, you can start by saving $100 a month. Although this isn’t a lot of money, it helps to build the habit of saving.

Once you’ve got the practices and systems in place to save $100 per month, you can increase your savings to $150 or $200 a month.

And then increase your savings to $300 a month.

And then increase your savings goal to $500 per month, etc.

As James Clear says:

“Habits are the compound interest of self-improvement. The same way that money multiplies through compound interest, the effects of your habits multiply as you repeat them.”

This is one of the key insights from Atomic Habits:

Small habits can turn into big habits over time.

By starting small, you build a strong foundation for your desired habits.

And the stronger this foundation, the more you can increase the ‘load’ of your habits.

It’s much easier to stick to a habit if it’s convenient and accessible. By making it easy to do the right thing, you’ll be more likely to follow through on these good habits.

For example, if you want to save more money, you can:

And if you want to invest more, you can:

By making your financial habits easier (or even automatic), you don’t have to rely on Spartan levels of self-discipline to practice them.

Just like making good habits easier to perform, you should make bad habits more difficult to perform. The more difficult it is to practice a bad habit, the less likely you are to do it.

For example, if you have the habit of frequent online shopping, you can make it more difficult by implementing the 72-Hour Rule:

Every time you see something you want to purchase, wait 72 hours before buying it. If after 72 hours you still really want to buy the item, you can.

Most people who follow this rule find that they either completely forget about their potential purchase or realize they don’t really need the item after all.

The 72-Hour Rule makes a bad financial habit more difficult because it takes the impulsiveness out of online shopping, potentially saving you hundreds of dollars per month.

Whether saving a certain amount of money, paying off a debt, or reaching a specific milestone in your net worth, it’s important to celebrate the progress you’ve made.

As James Clear writes, “Small wins can create a sense of accomplishment and make it more likely that you will continue the good behavior in the future.”

Obviously, you can’t celebrate your progress if you don’t track your progress. That’s why habit-tracking is one of the most important things to do.

It’s important to remind yourself that your daily habits are a tool to help you reach a larger goal.

As Clear writes, “Your habits are the path to your desired outcomes.”

So rather than focusing on what you’re giving up or sacrificing, try to focus on the positive aspects of the habit you’re trying to build.

For example, rather than saying “I’m going to stop spending money on unnecessary things,” try saying “I’m going to start saving more money because I want to have more financial freedom.”

By keeping the end goal of your habits in mind, you frame your habits in a positive way instead of seeing them as something you ‘have to do’.