7 Habits of Highly (Financially) Effective People
Molly Triffin
Tagged in:
Tap to Read Full Story

Just like bacon ice cream and “Call Me Maybe” parodies, self-help trends come and go. But Stephen Covey’s game-changing book “The 7 Habits of Highly Effective People,” which has sold more than 25 million copies, is one of a handful of titles that’s still as relevant today as when it was first published 28 years ago. 

Bonus: It’s also a pretty useful blueprint for managing money. Here’s how you can use the book’s touchstone habits to up your financial game.

Habit #1: Be proactive.

Want to be wealthy—or just financially stable—someday? (Who doesn’t?) Get in the driver’s seat now. “The earlier you form good habits, the easier they’ll be to maintain and the better your long-term returns will be,” says Certified Financial Planner Jill Schlesinger, senior CFP Board ambassador.

Rather than worrying about conditions over which you have little or no control—whether it’s a downturn in the economy or fluctuations in the stock market—writes Covey, work on the things you can do something about. Think: putting together a debt repayment plan, diverting money from each check automatically to build up a savings cushion and diversifying your investments to lower your risk exposure.

Habit #2: Begin with an end in mind.

As Covey writes: “If you don’t make a conscious effort to visualize who you are and what you want in life, then you empower other people and circumstances to shape you and your life by default.”

It’s also hard to create a financial road map if you don’t know where you’re going. Visualizing the prize helps when motivation wanes, too. Think about your long-term vision and work backwards to lay out the steps to achieve it.

Up your odds of success by breaking big goals down into smaller efforts and celebrating your progress along the way, says Mary Gresham, PhD, a financial therapist in Atlanta.

Habit #3: Put first things first.

Covering your expenses and saving whatever’s left at the end of the month is a common money fail. To build serious wealth, pay yourself first by by having each paycheck automatically deposited into your bank account then setting up automatic transfers to your retirement and any other investment accounts, and to a savings account. You’ll learn to live on less and give your money time to grow, so you have more of it in the future. 

Habit #4: Think win-win.

If you graduated in the post-recession economy, you might feel so lucky to have a job that you hesitate to negotiate for more. But if you don’t ask, you won’t get it.

Emphasize a win-win mindset when you negotiate by focusing on mutual benefits. “Base your argument on how you add value—not that you’ve been there for years and haven’t received a raise,” Schlesinger says. If the answer’s ‘no,’ ask what you can do to receive a pay bump and then check back in six months.

Get the Grow Newsletter Every Week
The best money advice you never got, delivered to your inbox weekly.
The best money advice you never got, delivered to your inbox weekly.

Habit #5: Seek first to understand, then to be understood.

Money is the top source of relationship stress—but it doesn’t have to be. “Typically when romantic partners discuss financial issues, each person is preparing what they’re going to say next while the other is speaking,” Gresham says. Instead, take your time and pay attention. When it’s your turn to talk, focus on your experiences. “Use more ‘I’ messages than ‘you’ messages, and take responsibility,” Gresham says. And look for areas of common ground (see #4).

Habit #6: Synergize.

Yes, blame Covey for that annoying business buzzword. But his thinking is sound: teamwork can make a big difference to your bottom line. “Certain people can successfully tackle a financial goal [alone], but the vast majority of us need someone to cheer us on and hold us accountable,” Schlesinger says. That can mean asking a friend to be your sounding board, creating a “get out of debt” support group or hiring a financial advisor.

Habit #7: Sharpen the saw.

This means taking care of what Covey calls “the greatest asset you have”—you. It can include regular checks to make sure the actions you’re taking are still bringing you closer to the goals that are important to you, and looking for areas where you can accelerate your progress. But it’s also about taking time to recharge and reward yourself for your progress.

That can be as simple as budgeting some “fun money” each week to spend on whatever you want, celebrating money milestones with people you care about or giving yourself incentives to complete financial tasks (like cueing up your favorite show to watch after you finish updating your budget). It also means making sure you take care of your physical and mental wellbeing, not just your financial health, so that you can fully enjoy the fruits of your wealth-building efforts. 

Related

17 comments

    ALL Financial Advisors steal your money!!!! They take 30% of your retirement in BS fees and hidden fees. Just invest in low cost index funds. You do t need a financial advisor to do this for you. A trained monkey 🐒 can teach you this plus they don’t STEAL 30% of your wealth in FEES!!!! Bottom Line…Financial Advisors got us into this mess why should we EVER trust them again??

    You’re thinking of hiring an advisor to everything for you all the time. You can hire one to explain to you your best options with your current income. Like how to invest, how to pay off your debt, what a wise house payment would be at your income, how to save for a future childs college fund, and how large your rainy day fund should be… All without them getting 30% of your retirement.

    I think this blog post is leaning towards this explanation because the two previous examples in the same sentence are both simply about talking over your finances with other people. Not about having someone else take care of them for you.

    Never heard someone charging 30%. Head funds only charge 10% of capital than 30% of profits but that means u profited by around 60% so i dont c the problem. In my opinion this comment was based on emotion not fact. The article was about personal growth to achieve financial security in my opinion.

    Hedge funds don’t actually beat the market, warren buffet challenged them to do such and they failed over 10 years I think it was. Just invest in low cost index funds like the S&P 500. Vanguard my friend… look it up.

    I agree , if you are a reader which I assume you are if reading these blogs. Try “money” by tony Robbins or books on investment. Not hard to do. Good post.

    I’m a financial advisor and I charge 1.2%. No one charges 30% and you’ve obviously never had someone compare an active vs passive morning star report to show why active and passive management are cyclical in out-performance and both should be utilized to properly diversify your investment strategy. So answer me this Steven, how much money do you need to ensure you never run out of money and have rising income during your retirement? What’s your bear market strategy?

    I think 1.2% is a hefty fee. What’s your minimum AUM? Most people probably don’t have enought money to even work with you. I charge per hour or per plan so people without assets to manage can get fiduciary advice as well to help them get ahead.

    *giggle*
    Looking at the table of contents of that book….it reads like a motivational speaker’s talking points.

    Look, folks, want some free financial advice? Invest what you can afford into stocks and EFTs that pay out dividends (favorably quarterly, but yearly works too). If the investment platform has some kind of ‘dividend reinvestment’ USE IT!

    What stocks/EFTs? Preferably ones of companies you know a decent amount about. — For me, it’s tech/software.
    ((Though, I also dabble in cryptocurrency: Bitcoin, Ethereum, and Litecoin, at the moment.))

    Also, never invest more than you are comfortable with losing. But wait, doesn’t that contradict the above about investing what you can afford?? Nope, it means if you can stand to invest $10…you don’t invest that $10 into one thing*.
    *Unless you plan to invest in something else the next time; maybe that initial investment requires $10. But the next time you go to invest money..pick something else.

    And the biggest, best (-est?) advice? NEVER, EVER TOUCH THE PRINCIPLE. It’s even better if you can get by with only a portion of the amount gained (ie if you have a 15% return and get by on 10%…but avoid ‘getting by’ on 16%+ or you’re going to run out).

    There, saved you the money for that book, the time it took to read it, and the frustration when things don’t “immediately begin improving, even though you followed every thing in this ‘stupid book'”.

    Want more? Use Google, there’s so many things about being smart with your money.

    Principal. Hopefully, principles evolve to the better. If you invest in stocks/EFT’s, they can lose value, so the PRINCIPAL can shrink. Ask anyone who was in the market in 1929.

    lol…whoops, I should have double checked it a little better. At least I spelled ‘principle’ right! 😀

    However, yes, the initial investment can shrink. But, that’s why you should go with a company you’re familiar with. For example, I invested rather heavily (overall percentage of the portfolio) into Activision (ATVI). Because I knew that their studio Blizzard Entertainment was going to be launching the next expansion of World of Warcraft.
    …at that time it was ~$20 per share; today it’s ~$55 per share.

    The underlying rule I invest by is the investment option must pay out a dividend. I will never buy Google or Amazon, even though they’re a pretty decent investment option, simply because they don’t payout dividends (as far as I can tell).

    The feeling is, you can only make money in stocks that don’t pay out dividends by hoping they go up in value. Where as, with dividend paying stocks, you can still make money or come close to breaking even if the value drops. — Obviously a drastic drop is bad, but that’s unlikely to happen…especially if you watch the market (what else would you do during lunch break? ;P)
    …and even then, there’s safeguards now in place that didn’t exist in 1929.

    As a whole the portfolio is up ~67%, strictly because I went with stocks of companies I’m familiar with or ETFs that are largely composed of companies I’ve heard of.

    And the crypto-currency..well…I started when Bitcoin was ~$300 per “coin”….it’s now over two grand. — Man, talk about a bad case of “Wish I Would Have”. I could have freaking retired a multi-millionaire if I had paid more attention to “this thing called Bitcoin” back when I heard about it (circa 2011). But was more concerned with getting my college degree….what a fucking waste that was. :\

    On the flip-side…the company that the place I work for has for their IRA/ROTH is down ~48%. — So glad I didn’t give them a lot of my paycheck to “invest” with.

    Apparently, I’m better at investing than people paid to do it. 😛

Leave a Comment.