Following a routine makes it easier to build wealth. Here's how

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We've all been told that following a routine is important in many aspects of life – for physical fitness, good eating habits, solid work patterns and so on. But many experts tell us that establishing a routine is also necessary for successful investing and building wealth.

From an early age, my mother taught me that it wasn't about how much I earned, but how much I saved. I would add that it is not just about how much we save, but also how and when we save – ideally, without thinking about it too much.

When I think about my clients who have managed to achieve financial independence, I would say that they also have very defined patterns that help them save and track their finances.

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Let's take a look at what some prominent people have said on this topic and then I'll share my tips on how you can apply their observations to improve your own personal financial game.

To change a habit, 'understand its structure'

Advice: In his best-selling bookIn “The Power of Habit,” Charles Duhigg discovered that people who stick to a daily routine are more likely to make smarter financial decisions.

“Habits are first cobwebs and then cables,” Duhigg wrote, referencing his observation that building wealth through investing takes time and consistency to develop good habits and see results.

Another quote: “The key to changing a habit is to understand its structure – to identify the cues, the routine and the reward – and then change it,” is Duhigg's way of noting that it is important is to understand your own spending and saving habits. . That helps you identify what drives you to spend money, establish a routine for saving a certain amount of each paycheck, and reward yourself for reaching your savings goals.

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“The brain can be reprogrammed. You just have to be judicious about it,” Duhigg wrote. This can be applied to investing by recognizing that you can change your financial habits and mindset with deliberate effort. By educating yourself about investing, setting specific goals, and staying disciplined, you can reprogram your brain to prioritize saving and investing for your future.

My opinion: Dates of Pew research supports this. Pew found that individuals who maintain consistent savings routines are more likely to build wealth over time than those who don't. The report says that “households are taking advantage of automatic mechanisms to generate savings. Such programs have shown promise for other types of savings and, with appropriate adjustments, could provide a valuable platform for building and rebuilding emergency savings.”

Putting your savings and investments on auto is a small change that can significantly impact your long-term net worth. Instead of waiting to save, set up automatic savings on your important “target” accounts. Have regular transfers to your emergency fund, retirement savings, your children's college savings, paying off credit cards, and even for your next dream vacation.

'Automatic' behavior drags us along

Advice: Wendy Wood, professor of psychology and business at the University of Southern California, is the author from “Good Habits, Bad Habits: The Science of Making Positive Changes that Stick.” Wood says that habits give us the freedom to focus on other things, while our “automatic” behavior carries us away.

By establishing routines that support our financial goals, we can free up mental energy to focus on other aspects of our lives. This can be especially important when it comes to investing, which can be complex and stressful. “Small changes in the environment can lead to big changes in behavior,” Wood wrote. Wood also said that “the more times we repeat a behavior, the less effort it takes to do it.” The more you invest, the easier it becomes.

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Here's a look at more coverage in CNBC's Women & Wealth special report, where we explore how women can increase their income, save and make the most of opportunities.

My opinion: If you typically invest in individual stocks, consider diversifying your portfolio by also adding mutual funds or exchange-traded funds that track a broad market index. Making this a regular habit will also help you become more comfortable with stock market movements, diversifying your portfolio, and the process of investing and rebalancing. This, in turn, will require less effort over time and reduce investment anxiety.

Daily actions weigh more heavily than 'occasional' movements

Advice: In podcaster Gretchen Rubin's bestselling book“Better Than Before: What I Learned About Making and Breaking Habits,” she explores the science of habit formation and offers advice for making positive changes.

“What you do every day is more important than what you do occasionally,” she wrote. You can apply that to investing by consistently contributing to your investment accounts, even if it's just a small amount each month.

Another quote from Rubin, “Happiness is not a destination, it's a way of life,” can be applied to investing by recognizing that building wealth is not just about achieving a certain financial goal, but about creating a more secure financial future for yourself and your loved ones. loved ones.

My opinion: Establish routines that support financial goals. Make a choice to get serious about saving by developing good habits — including creating and following a budget, making saving every paycheck a priority, regularly replenishing your investments and paying off credit card debt.

Set specific financial goals and stick to them and automate as many things as possible, including savings and recurring bills like insurance and mortgage payments. Make an appointment with your financial advisor at least once a year to ensure you stay on track.

5 Ways to Build Habits That Improve Your Finances

You can develop the habits that will help you achieve financial success by consistently following these steps:

  1. Identify the signals, routines and rewards that drive your financial behavior.
  2. Make small adjustments to your investment strategy.
  3. Set specific goals.
  4. Contribute to your accounts regularly.
  5. Recognize that building wealth is a long process.

– By Winnie Sun, co-founder and principal of Sun Group Wealth Partners, based in Irvine, California. She is a member of CNBC's Financial Advisor Council.

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