Personal Finance

Building good financial habits

“First we make our habits and then our habits make us.” – Charles C. Noble

Habits are at the core of successful money management. Good financial habits allow us to create a solid foundation whereas bad financial habits can sink us (and keep us sunk) faster than you can say, “ooh, cute shoes!” If you’ve been reading my posts over the past few weeks you’ll know I’m on a bit of a mission to find mentors and role models in various areas of my life. I’m working on the theory that if you can create new habits and thought patterns that mirror those of successful people, they will take you significantly closer to achieving a similar level of success and allow you to create abundant life. This week, I was listening to a presentation by Chicken Soup for the Soul co-creator, Mark Victor Hansen in which he shared his personal philosophy for paying himself first: Give 10, Save 10, Invest 10. It resonated with me and so I thought I’d explore it a little more in this post in the hopes that it would resonate with Retire Happy readers too.


The idea of tithing has existed for millennia. Traditionally associated with religious giving, tithing involves giving 10% of your income to benefit others. Whether you give to a religious organization or a charity that means a lot to you doesn’t really matter, it’s the giving that counts. The Law of Reciprocity states that the more you give, the more you receive, and if you talk to people who are committed to tithing, chances are they will tell you that no matter how hard you might think it would be to find the money to give, it always seems to be there. Just like the “pay yourself first” philosophy, the key to tithing is to take the money first, rather than hoping that there will be enough left after all your expected and unexpected expenses have been covered. So many of the successful people I admire are committed to philanthropy and for me, this is one of the biggest incentives to build wealth: simply put, if you have the money you can help far more people than if you don’t. When you make giving a habit, it ensures that you can make a positive difference to the world around you.


Within Mark’s philosophy, there is a difference between saving and investing. To me, 10% allocated for saving is the money that needs to remain liquid and accessible. This is the money that is intended for unexpected and expected expenses: your contingency fund, your vacation fund, your Christmas fund, etc. Too often, we forget to allocate dollars for regular expenses such as birthday, vacation and Holiday spending into our monthly budget and this can often result in charging more to our credit cards and lines of credit than we can easily pay off. Committing to saving 10% of our income for these kinds of expenses reduces our need to rely on credit and dramatically lowers our stress levels. It also helps to increase our comfort zone when it comes to accumulating money and builds a greater sense of security.


Whether you choose to invest in stocks, mutual funds, GICs or any of the other investment vehicles that you might have access to, it’s important to take advice about how your investment dollars are allocated from someone who is qualified to give that advice. Any financial professional should take your goals, risk tolerance, and time horizon into account when offering suggestions as to the best way to invest your money in order to achieve the results you’re looking for. They should also review your portfolio with you on a regular basis to make sure that it still meets your needs. Your investment dollars have the potential to grow significantly over time and it’s important that you are comfortable with where you’re invested and why so that you’re not tempted to deviate from the plan when the markets are going through a rough patch.

I am a big fan of simplicity when it comes to money management and Mark Victor Hansen’s philosophy offers a very simple way to build security, wealth and to positively impact the lives of others. Using his 10-10-10 solution means that you have 70% of your income to cover needs and wants which is a realistic amount and if you set up your saving, investing and giving contributions so that they come out of your bank account automatically on payday, it makes getting into the saving habit even easier. Whether you start with 10:10:10 or 5:5:5, building strong financial habits is a surefire way to create financial stability and build wealth.

What financial habits have you created to help you on your journey? I’d love to hear about them!

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