How Your Behavior Impacts Your Future Wealth


They say money is a science. Yet, one of the most undervalued skills doesn’t involve math.

It doesn’t involve formulas.

And no, it doesn’t involve hot stock picks.

It involves your behavior. 

How you behave with what you earn is more important than how much you earn. 

Our behaviors influence the daily habits that make or break our systems of generating and maintaining wealth. These behaviors can be as simple as ensuring you spend less than you earn or as complex as breaking down your beliefs about money. 

Whatever your behaviors are with money, creating awareness around them is key to your financial success.

1. Not considering all the costs of a situation 

With any purchase, there is often a non-monetary cost associated that many fail to consider. For example, starting a new business can be a fulfilling and financially fruitful venture but is a demanding, time-consuming endeavor. The price is taking precious time away from friends, family, and other opportunities as countless hours are required to build a financially successful business. 

When the COVID-19 pandemic happened, the market experienced a nail-biting correction with a 34% market loss. Couple this with the terrible human loss of the pandemic, it was a time of immense emotional and financial stress for many. In 33 days, the market recovered but many paid a large psychological price. 

Not every price you pay involves money. Consider the cost of your time, relationships, and hassle to get the full picture.

2. Never-ending desiring for more

Many derive more pleasure from the idea of acquiring something than they derive from the actual acquisition of the thing itself. This is the hedonic treadmill of adaptation. 

This is evident throughout the media. Much of the media is a highlight reel not reality.

A study by psychological scientist Cameron Anderson explored the relationship between different types of financial statuses and well-being in college students. The study found that there was greater overall happiness for participants with a higher sociometric rating and a lower happiness score for those with a higher socioeconomic rating. 

Researchers concluded that the reason money doesn’t buy people happiness is that people adapt so easily to new levels of income. It’s why lottery winners’ long-term happiness returns to what it was before winning because the winners have already adapted to their new level of income.

If money bought was the barometer to happiness then every wealthy celebrity, actor, and movie star would be happy.

We know this is not the case.

Wealth exists not to those who want more, but to those who desire less. 

3. Delayed gratification – avoid spending it now 

Much of the problems that exist today are the result of the inability to delay what we want today for something greater tomorrow.

Since we can’t experience what we delay today, we default to our impulses and kneel to our desires.

What pain that is not felt today is pushed off until tomorrow. The human brain isn’t wired to solve problems that don’t exist yet, which is why it’s easier to not save the amount you should. 

You run into issues where pain not experienced today silently increases in magnitude until later when you’re ready to retire.

It’s only at this point, you realize the path you’ve traveled hasn’t served you.

What you value today and what’s good for you aren’t always the same.

To achieve what you want you must increase the perceived value of delayed gratification so its price is worth paying.

4. Perception is illusionary but we believe it to be the reality

Our perception of money is not a one-size-fits-all package of standard beliefs. We all come from different backgrounds and have different experiences that shape our unique perceptions of money.

For example, someone who experienced the stock market crash of 1987 (Black Monday) may have a different perspective on investing than someone growing up in 1995 during a booming time for the stock market. 

Our perceptions are a product of our collective past experiences and thanks to human’s innate need for certainty, we tend to cling to these beliefs to make sense of the world around us. However, this doesn’t always mean that our perceptions accurately represent reality. 

When our perceptions only represent a small portion of reality, it can be difficult for us to explain or understand everything around us. It’s like a missing puzzle piece. 

This may help explain why we may question the decisions of others that don’t align with our money beliefs.

Understanding where our perceptions were formulated and how they impact us (ex: a desire to overspend or become price extreme frugality) can not only help us rewrite our own money beliefs (if desired) but to understand others’ beliefs as well. 

5. Overlooking the power of compounding

Compounding is an incredibly powerful tool, not just with money, but with many things in life.

The problem with compounding is that it’s not instant and you won’t see results immediately. Instead, compounding requires patience as it builds to something greater. 

Take personal health for example. You won’t see results after your first few workouts, it may even take months of working out before any results become visible. It’s easy to get frustrated as what you expect and what is reality is separated. It’s only with patience, time, and consistency, you will see results. 

The same concept can be applied to money.

It’s easy to let your emotions get the best of you when investing and it’s hard to see the long-term potential of compounding interest. Compounding does its best work uninterrupted. Be patient.

Money is a tool to amplify more of what you are.

If you’re kind, more money will make you more philanthropic.

If you’re arrogant, more money will enhance your ego.

In personal finance, how you behave matters more than what you know.

We make decisions constantly without recognizing how they are influenced by the psychology of money.

Weigh down Usain Bolt’s ankles enough and I can beat him in a 100 meter dash. 

Similarly, adopting maladaptive Money Scripts could weigh down your ability to build wealth.

How are your beliefs around money holding you back from financial independence?