“Enough is enough,” I said to my financial adviser Dan.
“We just can’t keep spending more than we earn! And I truly don’t even know if that’s what we are doing, but I just feel like we have no control over what we spend and what we save.”
This was my 2015 self. A hard-working mother of three teenage children, working full-time married to an equally hard-working husband, Berry also working full time.
Eighteen months earlier, in our late 40s, we had kicked off this chapter in our careers following the sale of the family farming business (of which we had no ownership) and the sale of our two pizza franchise businesses (which had been sold at a fire sale prices). It was not where either of us had expected ourselves to be financially at this stage on our lives.
This conversation with our financial planner Dan turned out to be one of the most pivotal conversations I could have had.
It set us on a path of control, education, empowerment and growth due to one simple habit. This monthly habit has allowed us to grow our net wealth from a measly $360,000 to over $1.2 million in less than 5 years. A 3.4x growth!
This quote by James Sherman became my new mantra:
“You can’t go back and change the beginning, but you can start where you are and change the ending.”
What is that habit?
It is what we call our SOP habit. SOP or Statement of Position is one of the simplest yet most potent pieces of information anyone can create to get a ‘bird’s eye’ picture of their financial position. The 3 reasons this is so potent:
- It gives you an instant snapshot of what state your finances are in. Do you always want to see what that picture is? No, but without seeing what you starting point is, how can you decide in which direction to travel to get to your desired end? It also required you to go through all your finances to see what cash you have, what loans do you have and really get clear on your financial standing.
- It is a simple piece of information for your broker or lending institution to get a gauge on not just what sort of borrowings you can have, but how serious you take yourself as a potential money partner
- It is a tracking mechanism to keep you accountable and see progress. It is said we measure what we treasure. If you are measuring how your net assets is growing, it helps you to keep your eye on the prize.
So what are the elements of a SOP habit?
Your SOP is simply a list of all your assets less all your liabilities. This figure is your net assets. If you were to sell everything up today, what actual cash would you have?
Your habit is to connect the process of creating and then updating your SOP to a regular trigger. For us it is now the first day of each month. On that day I schedule 30mins to run through all of the bank accounts and get their balances. I also review the value of our other assets. In the beginning this took a lot longer but now I have streamlined everything as I habitised the process.
Why habitise the process?
Put simply, so that I don’t have to think about it. I want to automatically update my S.O.P each month so that I can use the valuable energy in my conscious mind to problem solve, analyse and choose my next investments. All heading me toward financial freedom!
Did you know that up to 95% of our behaviours are habitual – that is they are done on auto pilot. This is a brilliant super power that humans have but in my experience they don’t use this to their advantage. Creating habits that help us to be who we need to be, to have everything we want to have in our lives is what I call a Habit Mindset. It is all about using our biological process of automaticity to our advantage.
Incredibly automaticity is already playing a huge part in your daily life but unless you are aware of it, this process is ‘using’ you rather than you ‘using’ it. If the behaviour we are wanting to create is of value to us and we don’t want to have to think about it every time, then make it a habit – saving your mind valuable energy for all the things in life you want to choose to think about!
All you need to do is to use the habit loop to create a trigger (cue for when you want to do your SOP) and spend some time detailing all the rewards you will have from doing the SOP. Fill out The habit loop with all these details and start a tick sheet to kick it all off.
I have helped literally hundreds of people to create brilliant habits in their life that now help them to have what they want in life. My habit mindset has made me a wealthier, healthier and happier human.
Have a go and let me know what you learn.
My mission to is to create a tribe of habit masters around the globe by bringing the habit loop to life.