By Matthew Broom
All my life, I’ve been told to set goals. You probably have too. The thing is, though, setting a goal doesn’t accomplish it. It’s the follow-through that matters.
Completing a marathon is a goal. Training every day is the habit that accomplishes it. If you’re interested in achieving your financial goals, you must first practise better financial habits.
Goals versus habits
A goal is the desired outcome, while a habit is an algorithm that makes it possible. Goals have endpoints, while habits are continuous. Factors outside of our control often influence goals, while our habits are totally within our control. Goals rely on willpower, while habits become ingrained in our life.
We all know money doesn’t grow on trees. Its seeds are planted with our habits, watered with our discipline and blossom with time.
So, what habits will lead to building wealth?
Shane Parrish of Farnam Street says, “When seeking to attain something in our lives, we would do well to invest our time in forming positive habits, rather than concentrating on a specific goal.”
So, let’s not dwell on wealth. Let’s focus on the habits that will build it.
Spending less than you make
Making a habit of living below your means is essential to your financial well-being. How do you do this? You budget your money and track your transactions.
When I tell firefighters that budgeting leads to financial success, eye-rolling typically ensues. No one rolls their eyes when someone recommends performing cardio when attempting to get in shape. Budgeting, like cardio, is foundational.
We aren’t in a profession where we earn enough not to pay attention — most folks aren’t. We are blue-collar firefighters trying to make ends meet. Quit making excuses and start making a budget.
Budgeting leads to awareness. Awareness leads to better financial decisions. Better financial decisions lead to financial freedom.
Warren Buffet said, “It’s almost impossible to go broke without borrowed money in the equation.” Charlie Munger said, “Once you get into debt, it’s hell to get out. Don’t let credit card debt carry over. You can’t get ahead paying eighteen percent.”
When it comes to building wealth, the focus should be on earning interest, not paying it. So, avoiding debt — specifically high-interest debt — is an excellent habit.
If you have debt, pay it off using the debt snowball method. If you don’t have debt, keep it that way.
Save as much as you can
Create a systematic saving plan that utilizes tax-advantaged accounts. Once you are debt-free, save a minimum of 15-20 per cent of your income toward retirement.
I don’t think I’ve ever heard anyone say, “Man, I should have saved less” or “Damn, I should have started investing later.”
Most firefighters I talk to wish they would have saved more and started earlier. So, don’t make the common mistake of putting off for tomorrow what should be done today.
Put your savings habit on auto-pilot and allow the magic of compound interest to take effect.
Stay physically and mentally fit
Healthcare can be a considerable cost over a lifetime — especially as we age.
Build habits that keep you active every day. You don’t have to be a hardcore cross-fitter but a daily walk with the dog coupled with some strength training can go a long way.
Firefighters often have spare time around the station and on our off days. Create a habit of reading 30 minutes a day or do 30 minutes of a MasterClass. Do something to stay sharp and improve your mental fitness.
The fire service isn’t forever and being a highly qualified, knowledgeable individual can lead to great opportunities outside of the fire service.
Stick with it
Creating goals gives you an aim. As Seneca said, “Our goals miscarry because they have no aim. When a man does not know what harbor he is heading for, no wind is the right wind.”
But, even when you have the right wind and know what harbor you’re heading for, you’ve still got to raise the sails, steer the ship and maintain your course. And you do that through the power of habit.
Don’t let the enormity of financial freedom or debt freedom keep you from taking action. Small habits lead to big accomplishments.
Matthew Broom is a firefighter/paramedic with Gwinnett County (Georgia) Fire and Emergency Services. He has been a member of the Hazardous Materials Response Team since 2016. Prior to joining the fire service, Matthew graduated with a B.B.A. in Business Economics from Georgia State University. In 2017, he returned to school to complete the Certified Financial Planner™ coursework at the University of Georgia. Since passing the rigorous CFP® exam, he has been focused on increasing financial literacy in the firefighter community. He is also the host of The 24/48 Podcast which is focused on helping firefighters find success on and off the job.
Photo By Josh Appel