Good Money Habits as an Evolutionary Advantage

Good Money Habits as an Evolutionary Advantage

Contrary to other personal finance bloggers out there, I have no big debt or financial emergency story to tell. It’s one of the main reasons why you won’t find any “how to get out of the red” advice or a “from financial zero to hero” narrative on my blog. I do, however, enjoy reading those kind of stories and I’ll tell you why.

The main reason for my vicarious enjoyment of debt success stories lies in the fact that they add a lot of sincerity and credibility to the person talking about them. Just look at Alicia from Financial Diffraction’s progress or Kate from Goodnight Debt’s success, not to mention Weenie from Quietly Saving’s life story – they all seem like great and interesting people because of the way they dealt with their financial emergency.

As such, I really do love their stories. For some reason they’re exciting and invigorating, even though I’m glad I never was and hope I never will be in debt myself.

When I take a step back and look at my own life, it’s pretty bland on the financial front in comparison – in this case that’s a good thing. While my parents aren’t financial wizards, they did a good job of teaching me a few basic money principles, of which saving was by far the most important one.

“Get yourself a summer job and make sure you save half your salary”, I remember my dad telling me when I turned 16. I listened obediently and did as instructed.

Somewhere along the way my father’s words stuck with me. Saving 50% of my income soon turned into a habit rather than a conscious effort, a perk which I reap the rewards of to this very day. I have found that these kind of habits have given me a huge edge or advantage over many of my peers.

But what is a habit exactly and what does it do?

If you were to open any ol’ dictionary you’d find something like “a repeated and regularly recurring routine of behaviour” following the lemma “habit”. Obviously that definition doesn’t even cut it close. For example, habits are also hard to change.

In fact, habits become so ingrained in our own being over time that we often aren’t aware that they exist let alone influence our actions. Indeed, almost all people practice a handful of routines outside their conscious judgement. Like a pilot flipping on the auto-pilot during a long transatlantic flight, so does your brain deal with recurring patterns of behaviour.

Many habits have mastered the art of stealthiness to the point that the large majority of our actions are governed by internal or external stimuli without us even being aware. Just think, for example, about your morning routine before you set off to work. Chances are that you perform the same tasks in the same order day-in, day-out without giving them the slightest thought.

That’s because habit formation teaches your brain not to think anymore.

And that’s how performing automatized tasks unconsciously could very well give you a competitive edge, an evolutionary advantage if you will, over your fellow man. It’s true! Doesn’t it feel pretty good to know that you’re able to leave for work without even applying a fraction of your enormous brain power to a series of actions to get you there?

As usual there’s also a downside to this huge potential, namely the fact that automaticity of a series of actions in a consistent environment could lead to a lack of awareness, strong unintentionality or even uncontrollability. All bad of course, because your morning routine might start with seventeen cups of coffee simply because your habit is programmed that way rather than out of nutritional necessity.

As such, the key in succesfully leveraging habits and routine formation lies in developing habits that offer you competitive advantages in life.

And the sooner you start, the better! Children are quick to form habits, especially so-called keystone habits, which influence the formation of other habits. Just take a look at the outcome of the Marshmallow experiment conducted by Walter Mischel at Stanford University, in which children that were able to self-impose delayed gratification were considered more succesful later on in life as opposed to children who couldn’t.

Another, rather anecdotal example from my own childhood is to be found in the video game RollerCoaster Tycoon. Not only did I play the theme park builder to death, to this day I believe it is the main reason why I’m so debt averse. Dialling down the in-game loans turned into a habit early on in my life to the point that it pays dividends even now that I am an adult – legally at least.

Maybe you’ve experienced something similar? Habits are formed out of past actions, after all.

Now, don’t worry if you’re not a six-year-old anymore! Although bad habits are harder to get rid of when we’re older, it’s not impossible to reprogram our brain cells.

You see, I was taught to try and save as much as possible, but that doesn’t mean I was a natural born talent. I had to teach myself the habit of saving, just like I had to teach myself all about investing and getting into the habit of not worrying about market gyrations.

Although I still track my income and expenses rigorously, I do so not to keep tabs on my budget, but more for the sake of the data itself – gotta love data analysis. That’s because through habit formation in the past I no longer have to consciously think about when or how to spend my money. Living frugally now comes naturally to me.

My brain simply turns into one lazy grey mass when I think about buying something. My brain power turned the act of spending into a frugal habit, like an automatized process in the back of my head. And that’s exactly what you want.

Find out which financial practices apply to you and really make them your own. After a while you’ll find that you won’t have to pay attention to them anymore at all.

According to research it will only take you 66 days to form a new habit, which is nothing compared to how long you’ll reap the benefits of good money habits. So why not give it a try?

Remember though, even with all the advice and tools in the world at your disposal, it will take a lot of willpower to deactivate, reactivate or form a new habit. And as we all know, willpower comes from within ourselves, as beautifully illustrated through the Marshmallow experiment mentioned above. It takes perseverance to make such an endeavour a success.

Good money habits don’t come out of nowhere, but even if you’re currently a spend-it-all, you can adopt them if you apply yourself. The three bloggers previously mentioned in this article have shown as much.

Are there any money habits that you apply without even thinking twice? And do you feel like they give you an advantage over people who don’t apply them?


  1. I was just talking with a coworker who was telling me about how a couple guys at a bakery that my organization is trying to organize were to receive $6,000 severances, and they immediately spent it all on the news. Then they go fired from their jobs and now the severances are in limbo because they got fired. Stories like these just befuddle me. The fact that you and I received some small token of financial advice/guidance from our parents is a jackpot of good luck that many people don’t seem to get in life.

    1. Steve,

      Pretty sad story! I heard a similar one lately in which someone lost his entire pre-retirement fund (special Belgian solution for older workers losing their job) because he got himself fired for something completely different. I believe it was to the tune of €80,000, which is a ton of money. The worst part? He already spent some of the money on a brand-new car.

      Education is by far the most important factor in good financial practices, so I’m really glad my parents took the time to teach me the value of money and basic money principles.


  2. Love the article. Been reading Kahneman´s “Thinking fast and Slow” recently, where he also picks up on some of the concepts you mentioned. He distinguishes between System-1-thinking, which is fast, effortless and instinctive and System-II-thinking that requires effort and is responsible for what we call rational behavior. Knowing about the process of why we behave the way we behave has helped me a lot to comprehend my own decision making.

    While these System I decisions are helpful in a lot of situations that require speed they are especially dangerous in the stock market. The same goes for topics like saving, where more thought through purchase decisions will save us a lot of money over time. So far I haven´t done a good job in overcoming my own System I when it comes to saving and bought a lot of, in retrospective, unnecessary sh***! I feel like I am a far cry from training my System I and acquiring the habit of reasonably treating my everyday finances.

    Keep it up!

    1. Philip,

      Ha, I’ve read Kahneman a while ago already – really interesting stuff. I’ve always found visceral decision-making interesting from a psychological point of view. And it’s interesting to see how easily you do it when you start paying attention.

      When investing it’s really dangerous to be ruled by emotions, so I would never want to do that through instinct rather than intellect. Saving, however, could perfectly work as an effortless and fast decision-making mechanism, but only if you’re not a spendthrift of course.

      I’m sure you’ll find a way to become good at your System I-thinking, just keep at it and don’t give up.


  3. Nice article, NMW.

    A habit I am happy to have picked up is thinking about my habits. I have a peculiar tendency to pick up when I am starting to develop a habit and–sometimes–nip it in the bud if it is not helpful. What I really want to get better at, is the reverse. Seeing places where a habit would be good and trying to get it into place. I am ok, but still loads to work on!

    The spending habit thing is important and quite easy to develop. Getting an aversion to unhelpful (and unpleasing) spending is a great one to pick it up!

    1. DD,

      Pretty good habit you’ve got going there, buddy! Thinking about and reviewing your habits and actions from time to time is a good way to optimize your life – I like to call it auditing my own lifestyle. 🙂

      The opposite is much more difficult, however, but it can be done. For example, I’m always up early and wide-awake because I’ve trained myself to do so. I hardly ever sleep in, so my body is accustomed to being full of energy right when the sun comes up. It sounds silly, but the habit of waking up also brought about other good habits, like making a healthy breakfast in the morning.


  4. I made a habit of writing down my expenses as soon I buy something. That helps keep me aware of what I’m spending on money. It’s nice not to have to think about doing it.

    1. Henry,

      Excellent habit if you’d like to get a handle on your spending! And the best part is that you can go back and review your progress over time.


  5. Hey NMW you sound a lot like me in the fact we both have no ‘overcoming the hurdle’ story so to say, but I believe we still have stories to tell!
    And I loved the Roller coaster tycoon reference !

    1. ChasingGains,

      You won’t hear me complain about it though – I can’t imagine what it must be like to crawl out of a hole of debt so deep you can’t even see the sky anymore, for example.

      Glad to hear you loved the RCT reference! I absolutely love(d) that game and played it to death when I was younger. (Pro tip: umbrellas for $20 when it starts raining!)

      Best wishes,

  6. I played RCT a lot too but IIRC my strategy was quite different. Most of the times I played the game I think I kept on building and ramped up debt so hard that I had to get a bailout (game trainers) to fix the situation 😉 Fun times.

    In real-life my debt situation is quite manageable, our down payment on the house was quite large and its a fixed-rate mortgage with an interest rate of only 2.4%.

    1. DAC,

      I don’t think we’re the only ones since RCT was so popular back in the day. Everyone who owned a PC back in the day was talking about

      Ha, interesting strategy! 😀 Too bad we don’t have any trainers or cheat codes in real life to bailus out of mountains of debt.

      A fixed-rate mortgage that low sounds like a good deal, well done. Besides, I don’t think taking out a mortgage should be considered relatively good debt. It’s the one type of debt that I personally would take on.


  7. Hi NMW,

    Great article, when I turned 16 I also got summer job and my mom told me the same. Back in those days it was a big lump of money ( for a 16 year old) and I ended up saving almost everything. This money did form the seed money for my current investments. In the end I’m very happy I had to save money and I learned to buy the things you can afford and don’t buy them by using borrowed money. The only exception I have here is a mortgage for a house.

    I can calculate pretty fast so everytime I buy something I calculate how much the money would be worth in x-years. So I can see what impact the bigger purchases can have on my future budget. My co-workers are talking about buying iphones and other expensive crap they don’t need like it is nothing and I’m sitting there congrats you wasted x€’s and they don’t realise that the money could be working for them.

    Let them waste their money I will shovel mine as fast as possible in my brokerage account so my money starts working for me.


    1. Geblin,

      It seems like our parents thought us similar lessons! Many people get a summer job when they’re sixteen, but they almost always blow it on stuff instead of saving.

      Just like you my first paycheck is still working for me, 10 years later. It should be really interesting to see how much that money has increased, but there’s sadly no way to accurately do that – or I’m just a lazy bum. 🙂

      Keep it up over there, pal!


  8. Thanks very much for linking my blog, NMW and I’m glad you found my story interesting.

    You are so right about habits though.

    During my debt-accumulating days, I had a bad habit of going shopping every weekend when there was nothing that I really needed to buy, so I just ended up buying things because…well, just because! Honestly in those days, I felt bad if I came home empty-handed, like I’d failed or something – how clueless I was then!!

    These days, I hardly ever go shopping unless I have to and when I’m about to buy something, I automatically ask myself whether I ‘need’ it or just ‘want’ it. So questioning myself has become habit now, a good habit!

    1. Weenie,


      Your comment reinforces why I find your story interesting: you completely turned your mindset and habits around. From a spendy shopper to a frugal overthinker, love it.

      Keep up your good habits, they’re putting you closer and closer to financial freedom and retirement every single day.

      Best wishes,

  9. From reading the comments, A few of us, including me, need to thank our parents for the good habits they installed in us. My parents encouraged me to save the money from student work, to think about spending money, but also let me free when I told them I would save up money for a brand new computer myself. It teaches some valuable lessons to get financial responsibilities when still in high school.

    Habits I got over the year: follow up monthly spending, plan ahead for bigger expensens and have fun money to have fun in life!

    1. ATL,

      You’re absolutely right. I am grateful for my parents teaching me about saving as much as possible. Without that knowledge my life probably would have been a financial trainwreck. It seems you enjoyed the same basic education from your parents.


  10. My wife and I have been shopping frugally for so long we could never pay for clothes without them being on clearance or some sale/coupon. Even then we don’t buy expensive clothes. I am just as happy with a $12 pair of jeans found at Target as I was buying $100 pair of jeans as a teenager.

    1. DFG,

      Indeed, expensive isn’t necessarily better. As long as you’re happy with the quality of clothes you’re buying, why bother spending twice as much for the same item? Doesn’t make any sense to me whatsoever.


  11. I have only recently realised just how many ingrained financial habits I have and how detrimental a lot of them have been to my overall money situation!

    Breaking the habits can be hard but through time and dedicated research into alternatives, I know that I will be better off and able to apply some PF knowledge to my future.

    1. Jenna,

      Breaking old habits is hard, but it feels so good when you do! I’m someone who really enjoys routine so getting a kick in the butt once in a while really helps me to question them and propell myself forward.


  12. Hi NMW,

    You touched on a very interesting topic and got me thinking about how the games I have played are influencing my investing decisions. Specifically, Starcraft, Starcraft II, WoW and Red Alert are all games in which you have to manage yourself economically.

    I had never considered that my tendency to seek 100% “efficiency” of available capital could stem from the games I’ve played.

    The Starcraft games especially are excellent examples of games where you have to learn pin-point accuracy of resource acquisition and spending while multi-tasking between your army’s movements and observation of the enemy’s movements, always keeping maximum focus. Having resources sitting in the bank in these games is considered as loss of efficiency.

    This is likely one of the things that has led to the habit I have of always allocating my available cash to investment positions.

    I’ve been wanting to correct this habit because sometimes I’ve gone to the extreme and put in capital in places where the opportunity had not yet come.

    Thank you for giving me one more lever to use when seeking rationality and patience! 🙂


    1. Alex,

      Video games have thought me a lot throughout the years, especially the sim and building ones. It also explains why I find it so hard to use real life “consumable” items. You never know when you might run into more! 😀

      The 100% efficiency you’re refering to is what I like to think of as min-maxing. Getting as much as possible out of as minimal effort or capital as possible! RTS games like C&C and Starcraft or Turn-based games like Civilization really help you learn that skill.

      Best wishes,

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