A Lifetime of Riches – Is it as Simple as a Few Habits?


As a Mr. Money Mustache reader, you are on the straight and narrow path to considerable wealth. You’re actively soaking up financial knowledge and putting it into play in your day-to-day life.

Unless you are very new here, you probably don’t need convincing of either the value of creating a golden financial situation, or the methods by which we pursue it. Understand and optimize your spending with happiness as the prime directive, while improving the rest of your life and increasing your ability to earn money as a side-effect.

It sounds easy when you put it that way, but to newcomers there are many roadblocks.

First is the issue of basic financial knowledge itself. Most of your neighbors believe that borrowing money for cars and kitchen renovations is a perfectly reasonable thing to do, a 5-10% savings rate is admirable, and credit cards are a way to borrow money when life’s little expenses temporarily outpace their salaries. With assumptions like these, wealth will always prove unattainable.

But even with a solid understanding of financial concepts, you still have to get over an even bigger hill: changing your behavior in a way that sticks.

After all, we already know that to get rich on an average income, you need to have lower-than-average spending.

But to use just one common example: But a big part of average spending goes into car ownership. So that will be one of the first things you’d want to address, by doing less pointless driving around in your car, right?  But you’ve become very comfortable with habitual car trips.

It will mean making fewer visits to restaurants, bars, and coffee shops. But that has become a pleasant and comfortable habit too.

Booze, drugs, cigarettes, TV watching, video game playing, procrastination, unhealthy eating, sedentary living, convenience and comfort-seeking and unnecessary shopping are other habits that are widespread in US society. And most of these stand between the average person and a truly wealthy life as well.

Throughout this blog’s lifetime, I have been trying to attack these habits from a variety of angles in order to create more happy, wealthy people. Beneath my usual drill-sergeant routine and threats of face-punching, I have laid out logical and numerical justifications for some of the changes, and issued emotional calls to action in other ones.

Sometimes the articles work, and sometimes they don’t. So what is it that makes a good change-creating piece of advice?

Recently, some important heavy iron plates of missing knowledge have been clunking into place in my mind, due to a string of really interesting practical psychology books I have read in recent months. Blink, Nudge, The Tipping Point, 59 Seconds, Switch, and most recently The Power of Habitwhich is a great book.

As simple as it sounds, the missing piece has been the concept of habits, and how ridiculously important they are to the human life – every human life.

If someone asked you to define “habit”, what would you say? Until recently, I probably would have said something like “a repeating pattern of behavior, which is hard for some people to change, and easier for others. And the ability to change habits is sometimes called “willpower”.

But I was surprised to learn habits are much more than that. As it turns out, habits are little chunks of auto-pilot behavior that get burned right into your neurology – permanently. Once you develop a habit, you can never truly erase that groove that has been worn into your brain, even if you manage to deactivate it.

It gets even crazier than that: when your brain starts running one of its many habit scripts, a good part of your conscious judgement is shut off for the duration. The habit takes over, controls you until you get to the end of the script, and then dumps you out at the end.

And this is not just a rare occurrence – depending on who you ask, habits are in at least partially in control for between 50 and 90% of our waking hours.

This has been a popular field of scientific study for several decades, although recent breakthroughs in the area have brought it into the public eye (and the bestselling book list, as shown by the examples above).

Consumer marketers have been all over the concept of habit formation, as it is the basis for much of the sales and profits in the world’s vast Unnecessary Products industry. But now the cat is out of the bag, and the fruits of this scientific study are available for you to use to your own advantage, instead of Coca Cola and Apple just using them on you.

If we can gain a more accurate understanding of what habits are and how to change them, we can get much more control over our own lives. And the studies that figured all this out have been fascinating.

In one study, researchers watched the brain activity of lab rodents, first as they learned their way though a maze to some cheese, then as they eventually repeated the maze run effortlessly every time they were released. Neurological activity was massive at first, but after the habit had been formed, they could race through with very quiet brains, making no decisions between the initial click sound that marked the opening gate and the moment they finished their relatively complicated quest and kicked back with a fine meal as their reward.

Even if removed from the maze and trained for other things, the rats could re-activate the old maze program much later in their lives. And even if the maze was booby-trapped, with sickness-inducing cheese or an electric floor, the rats still played out their habit scripts to their own detriment.

Why is this relevant? Because as smart and fancy as we all are, the human brain is just a bigger collection of the same basic neurons as a rat or any other mammal. Which means we are subject to the same auto-pilot “chunking” of behavior.

Arranging your towels and clothes, starting the shower, and going through the full routine of washing and drying yourself is probably one good example of something you do automatically.

Reversing a car out of your driveway or driving or biking very familiar route that you’ve done hundreds of times is another.

Coffee drinkers (myself included) are certainly familiar with the process of habit formation. And smokers can be some of the modern world’s most dedicated creatures of habit.

And it goes beyond that. The way the average person responds to certain luxury products and makes purchases is highly habitual as well.

  • Need to go somewhere more than a block away? Grab the car keys.
  • Hungry at work? Head out to one of the usual restaurants.
  • Have a problem with your house? Begin worrying immediately as you try to find a professional who can fix it for you.
  • Uncomfortable or Inconvenienced? Find a product to address it.
  • Mr. Money Mustache telling you to start riding your bike around town for local errands? Immediately think of why you can’t do it, and start typing complaints to that effect.

And here we get to the meat of the issue as it pertains to financial success: because habits become so automatic, they become effortless. This is a bad thing if the habit is destroying you, but wonderful if the habit is a life-boosting one.

In my recent experiment where I tried to spend money wildly, I had to expend great daily effort and still didn’t manage to match the average high-income person’s automatic routine. Not buying unnecessary stuff during trips is an age-old habit for me, and it would be hard to break even if I wanted to.

In fact, the habit extends to every financial transaction I make: I tend to run through a routine with these steps:

“Will this really make me happier?

Is there any other way to get the same happiness?

Can it be delayed?

How can it be optimized to get the most at the lowest cost?”

Anything from a piece of pie right up to a house or investment property gets this automatic scrutiny, and the result is usually fewer, better purchases.

So if habits are so automatic, biological and hard to break, how do we do it? Distilling all the books and the science down to a tiny list, the answer seems to be this:

Habits are like little loops. They start with a trigger, which sets off your automatic behavior. They end at a reward, which is the little pleasant occurrence that reinforces your habit.

For a standard consumer/car driver, the habit might look like this:

Figure 1: The Consumer Habit Loop

Figure 1: The Consumer Habit Loop

For a Mustachian, you can see the habit loop is different:

Figure 2: The Mustachian Habit Loop

Figure 2: The Mustachian Habit Loop

This difference is vividly illustrated right on my own street, where my neighbors each make several short car trips around our tiny city each day, while my friends and I make a smaller number, usually by bike.

Neither group is expending effort to make its choices – cars are just a habit for them, and bike transportation is ours. But if either of us tried to change our habits, that is where there effort would come in.

Luckily, enough research has been done that we now do know how to make habit change easier. It involves keeping the same cue and a similar reward, but substituting in a different routine. And this is how it is done:

1: Find the trigger point of your habit: You do this by describing your own behavior in detail, searching for clues you might have missed before. My habit of making coffee is triggered by entering the kitchen. Every time I walk in in the morning, I feel like firing up the espresso machine to make some lattes. If I wake up or spend the day in an unfamiliar setting (for example, at a campsite or out at a construction site), the coffee craving doesn’t happen. But if I spend the day at home and return to the kitchen to make some lunch – hey, there’s that nifty espresso machine again.. maybe I need to fire it up! Similarly, some people smoke in response to a lull in their afternoon’s office work, eat in response to boredom, or buy stuff in response to desires. Find your own trigger.

2: Take the same cue, but trick yourself into triggering a different behavior: If I wanted to quit coffee, I could give away the coffee machine and put a box of herbal tea on the countertop in its place. Then I’d make tea instead of coffee. Or I could put a nice water glass, or even a pair of boxing gloves on that part of the countertop. Each morning could trigger a nice round of boxing practice with a heavy bag in the garage, and I’d be better off for it.

3: Try to make the new reward similar to the old one: With coffee, the reward is a warm, tasty beverage and an excuse to sit still, contemplate, or talk for a while. Caffeine may be a secondary part of it, but the physiological part of habits is only a tiny part of the reason they form (this was big news to me). So the tea would probably work, but boxing would be a bit of a stretch.

That’s the basic Habit Substitution trick, and you’ll go far just by understanding that. But for even more power, add the following two ingredients:

4: Get your foot in the door – with Keystone Habits:

Some habits shake things up so much that they automatically trigger other changes. I believe that embracing Bike Transportation is one of these things, as explained in “What Do You Mean, You Don’t Have a Bike!?“. It eliminates spur-of-the-moment shopping, sedentary living, and Weather Wussiness all in one stroke. To make the change even easier, I once suggested starting by using bikes for just one initial purpose: getting your groceries. This has a keystone effect because you already live close to a grocery store, and you always need groceries at least once a week. By forbidding yourself from taking the car out for this errand, you automatically start to build a biking habit.

The ultimate Keystone Habit can be simply “Waking Up”, because you know that is going to happen each day. So if you set out a note for yourself that you’ll see when you first wake up, and find a way to compel yourself to take a tiny step in the right direction (stretch down to touch toes or do one pushup before breakfast), you have accomplished the hardest part – performing something on a daily basis.

5: Reinforce habits with belief and community: This is the reason Alcoholics Anonymous works for so many people, and probably a big part of this blog’s success in changing habits as well.

I tell stories of my own life to show that financial changes are not only possible, they are easy and fun to make. That creates belief. Then readers chime in with their own stories as we see in the reader case studies, showing that others are achieving the same thing.

The inevitable response is “Shit, if Mr. Money Mustache can do it, AND all these readers can do it too, then so can I.”

Interestingly enough, both AA and MMM stumbled upon the success formula without much scientific study of habit change. But because we happened to get certain parts of it right, we stuck around.

And thus my new understanding of habit has been born.

I used to wonder why I seemed to have less trouble than others with bad habits. Now I understand that certain people are more prone to habit-formation than others.

For example, while others can drive to work automatically without even being conscious of what happened during the drive, I have always been hyper-conscious of every moment in the car, thinking about traffic speed, route selection, engine speed, and even wind direction as part of an always-on driving optimization game.

Routines at home are rarely automatic as well – when I eat, I’m always tabulating nutrients, calories and protein in my mind and adding or subtracting components from meals in response to how much stored fat I see on the belly. Spending and investing has always been an optimization game too.

So while the individual routines might not look like habits, I might be stuck in an overarching habit of Relentless Optimization of Everything. This is a good one, as long as your “Everything” includes “Fun and life satisfaction for me and everyone around me”.

Whatever your individual style may be, it seems that understanding habit formation is useful for everyone, so we’ll be using the new tricks around here often.

  • Daddy Pig March 23, 2013, 5:05 pm

    I’m going to attempt to use this info to form a new habit starting this week. I’m going to carry no money OR debit cards with me Monday through Thursday. That will mean no I unscheduled visits to the work cafe. No stops by the vending machine. No instant gratification of any kind. I’m finding it is taking a lot of planning this weekend but hoping to save $40-$80.

  • Tony@WeOnlyDoThisOnce March 25, 2013, 4:53 pm

    MMM, I am so happy that you have mentioned habits here, because that is what it ultimately comes down to as far as life-changing personal finance (or anything, for that matter) is concerned. Some people have expressed disappointment that my blog has “evolved” from a personal finance to a “habits based” one. MY contention is that anyone can take the “correct info” and pour it into a listener’s (or reader’s) brain…we all know what we are supposed to do… Only a few of us are able to modify behavior in order to execute! It’s all behavior-based education, and I am glad to see you embracing it!

  • Mark Ferguson March 27, 2013, 8:35 am

    Great article. Habits are what make us who we are. Breaking those habits and doing things that are uncomfortable help us grow and become better people.

  • Sarah April 3, 2013, 1:44 pm

    So I read this yesterday and went to google maps to see if I could get from my house to work without dying multiple times. Turns out there is a bike trail that runs pretty close to parallel with the road I drive. The bad news? It’s 21 miles. The good news? There’s a shower at my office. I’m going to have to work my way up to it and I make no promises for bad (especially cold) weather. But the seed is germinating. For good measure I went home last night and busted out the bike to ride 4 miles round trip to the store for beer.

  • Kevin April 6, 2013, 1:53 pm

    Hey there Mr. MM!

    I’ve been reading a myriad of personal finance blogs over the past week, came across yours today. Great article, I know about habits all to well. I like the idea of walking or biking more. Unfortunately when your destination is 10-15km away it’s a little harder to do so. Last summer I experimented parking 1-2km away from my destination and walking the rest. I’ll have to start picking this back up again now that spring is here. :) Every little bit will add up.

    Another change for me to make is going to a cash only method of payment. Start leaving the ole credit card at home.

  • Matt September 3, 2014, 11:49 am

    Can’t believe I hadn’t read this excellent post before – thanks for featuring it. I will have to dedicate some time to pondering some of my habits and seeing where they can be modified.

    On another note, minor nitpick from a Cincinnatian (where P&G is headquartered) – it’s Procter and Gamble, not Proctor. It feels wrong because proctor is a word and procter isn’t, but Procter is a surname in this case.

  • BetsyS November 11, 2014, 8:05 am

    I just came across this old post and realized that the illustrated Mustachian in Fig. 2 does not actually have a mustache!! Oversight, or subliminal message that everyone can be Mustachian?

  • S. December 9, 2014, 3:35 pm

    What is this? The mustachian loop dude doesn’t have a ‘stache? do my eye deceive me?

  • Kris27 December 28, 2014, 3:22 pm

    I discovered this blog about a month ago, and have been reading every entry from the beginning, chronologically.

    As often happens, reading this particular blog entry coincided with something else happening in my life. In this case, today someone in a group of friends messaged us all asking for support/ideas for wight loss. She was very down on herself because she has recently gained about 25 lb. others in the group chimed in saying they, too, had been gaining and were disgusted with themselves. I shared something that has worked extremely well for my husband and me over the last year and a half: intermittent fasting (restricting calories to about a quarter of “normal” intake on two non-consecutive days per week. This is a habit we have formed, which has now become a lifestyle. Husband and I have dropped weight, built muscle, and dropped cholesterol and BP levels, and are thrilled with it. (Not to mention becoming comfortable with feeling mild hunger, which is very Mustachian.)

    Well, it was as though I hadn’t even responded. One person immediately said she could “never starve herself”, and then everyone just went back to lamenting how much they struggled with losing weight. Reading this post by MMM made me realize that their responses were all about habit formation — not just habits of eating, but habits of expecting failure. It was quite an a-ha moment, which can be applied to many areas — financial independence among them.

    • Mr. Money Mustache December 28, 2014, 4:30 pm

      To your credit and in defense of your friends, fasting is a pretty badass and advanced habit to just jump into.

      But for those wrestling with unwanted fat gain, I always suggest starting by removing sugar (including fruit juice and ESPECIALLY soft drinks) plus bread and pasta from their diets. For exercise, learn how to do squats and deadlifts (sound scary but actually fun and easy) and put those first – before anything like running and aerobics. More on good healthy living: http://www.mrmoneymustache.com/2012/08/07/mr-money-mustache-vs-marks-daily-apple/

  • nolayoungadult February 22, 2015, 11:09 am

    I have a question mmm. I live 3 miles away from work which would be great biking distance, but there is the Mississippi river in between me and my job. The only way across is either ferry (paying $2 each way), if you walk or bike, or bridge if you drive (toll free)…. With gas at $2 per gallon in my arera would it make since to drive to work? My car gets about 20 mpg (I know to low, but I early drive)

    • Mr. Money Mustache February 23, 2015, 8:10 am

      Are bikes banned from the bridge and there is no sidewalk? If so I’d probably still do the ferry and avoid driving – the cost might be roughly breakeven, but the physical and mental benefits of getting to work by muscle power are worth much more than a few bucks.

  • Felipe March 31, 2015, 12:12 am

    Since starting this blog I’ve started riding my bike for groceries and am in the process of downsizing my expensive hybrid for a less expensive high mpg car (old Prius).

    There’s been a bit of a hump to get over with biking, mostly irrational fears, but I feel way healthier, clearer, and happier to be more sustainable.

  • Karl April 3, 2015, 4:34 pm

    This is very true. I spent 6 years car-free, using my bike to commute to work and study places, and do other utilitarian jobs such as grocery hopping and going to the hardware store. By doing this, I saved a significant amount of money and increased my health and feeling of self sufficiency.

    However, during 2014 I packed away my bike and all my gear in storage, and set off on an adventure driving a 4×4 campervan around Australia. It was a great time, but being ‘off the bike’ for almost a whole year defintely messed up with my bike riding habits. It took me another two months after getting my bike, tools and bike gear/clothing back before I started to shift habits away from driving my massive, heavy, expensive-to-run van around and us my bike again for short and medium trips (2-10km).

    I remember the first trip I took to the next town for an appointment I had. In my mind I was thinking up all these excuses: “it’s too far”, “I’m not fit enough”, “there’s too many hills around here”, “it might rain” blah blah blah. All these weak, complainypants excuses that I used to laugh at other people about when I heard them myself in the past. And now I was the one doing it and seriously considering just driving instead!

    Thankfully I had the willpower to give myself a facepunch and recognise how ridiculous I was being, and, with a bit of deliberation, I suited up, checked the route on my phone, jumped on my bike and went off. And you know what? It was one of the most enjoyable rides I’ve had in years and took half the time than I anticipated! I ended up riding for a few hours that morning, enjoying the green hilly scenery and mild weather that is so common in my new hometown.

    My next step is to sell the campervan, as it’s a serious drain on my now-limited finances, due to the combined load of ownership, maintenance and running costs. By the end of this year I should hopefully be back in a position where I am car-free again and not at a disadvantage for it. It’s all about making informed, strategic choices where you live, work and study. Hint: Living in an area where you are 40km from the main employment centre, and not having work from home to do as an alternative, is not the right path to being car-free or less reliant on needing a car.

    • Eldred April 3, 2015, 4:49 pm

      I have a question based on your last paragraph. I went to a conference in 2003 at Stanford University. On our free day, we explored the area. Ran into a guy who had a great job in Palo Alto, but couldn’t afford to LIVE there. So he had some ridiculous commute by train. So what do you do to be Mustachian when the jobs don’t pay enough to live in THAT area, but only enough to live 30+ miles away? Now granted, California is probably one of the most extreme cases(along with Manhattan), but I know that may also be the situation in many other areas as well.

  • Katie E. January 7, 2016, 9:29 am

    Hi MMM!

    I am a newcomer to your *AMAZING* blog, and after a year or so of searching around and implementing financial advice from others (such as Dave Ramsey), yours fits with my own values and therefore has stuck. I live in Michigan and we currently have ice-slicked roads and snow about 9 inches high, which makes biking with 2 kids in tow a bit of a challenge, but as soon thawed-sidewalks hit, I’d like to start riding wherever I can. I’m a social worker, and have to have a car (my particular company doesn’t provide them like some do) to transport myself to home visits that can be anywhere from 6-100 miles from my house. However, the rest of my life is within about 6 miles from home. Preschool- 2 miles, Stores- 3 miles, Office for days that are devoted to reports and no travel- 5.5 miles. I was wondering if you have any tips for biking with a kid (or two) in tow. The only thing that makes me nervous is that our town isn’t exactly bike-friendly like some others I’ve seen. People haven’t jumped on the wagon, yet, so safety regarding biking around town is a concern. The only other one is my 3.5 and 2 year old fighting in their little cocoon behind me. ha.

  • Jack February 20, 2016, 11:41 am

    Hey MMM!

    New reader here! I love the advice, and wisdom you offer on your blog! Reading your blog posts has given me a greater understanding of basic financial principles, and money-spending/saving habits. I want to thank you enough for that! Also, I drew my own version of the Mustachian Habit Loop :) On behalf of all visual learners – keep the drawings coming!

  • Brass the Elder March 20, 2017, 11:25 am

    This article reminded me of one of my favorite quotes:
    “The chains of habit are too light to be felt until they are too heavy to be broken”
    – Warren Buffett

  • Pontifikate April 26, 2017, 4:10 pm

    This is an old post, but I hope someone is here who might help me establish a keystone habit to keep my place clear of clutter. I’m a huge reader, both print and online and all that reading takes so much time that I tend not to deal with all the papers I collect, some of which should be filed, some read, some thrown away. My financial habits are pretty good, but wish I could figure out a way to beat this.

    • Party of 7 June 12, 2018, 7:19 pm

      Try get rid of it app. It’s a way of decluttering daily. It’s been a fabulous habit in my life over the last 4 years. I try to de-own 20-30 items daily. Even if it’s just paper. It really does add up. Life is way better with less clutter.

      A published author and creative writing professor I know thinks of books as living. They want to be read. Not enshrined. See if you can pass along 1 book daily to someone who will read it. Share that experience.

  • Heather (aka Mrs. Frugaluxurious) July 20, 2017, 12:34 pm

    I’ve been experimenting with Keystone habits too… making my bed everyday is the first one.

    I also find that those questions we ask ourselves (like yours, “will this increase happiness?”) are so helpful… As a non-car owner, I either take public transit or use a bike-sharing service to get to work in the morning. The question I ask myself after I drop off my kids or after I leave the office is, “Do I want to go underground right now?” On gorgeous days, the answer is a resounding no, so on the bike I go!

  • Jason C January 17, 2019, 3:08 am

    I’ve read this article 2 or 3 times in the last year or so. It’s great. This time I thought more about training my children. I read the power of habit book and tried to get my oldest to read it.

    I struggled with some stupid bad habits early. My first credit card was a Canadian Tire card at 28% interest and only made minimum payments. I used it for cash advances which is even more stupid.

    My oldest is getting into a consumerist habit with shoes and is now focused on Chocos at $100+. She does well with not spending more than she has, because we won’t lend, but does spend all that she has.

    I want her to establish good habits early because fixing bad habits is difficult, even with Duhug’s system you describe in the article.

    So, reading this again has helped fire me up to return myself to teaching her to set good habits.


  • Janet January 29, 2019, 1:51 am

    I am a huge believer of this philosophy and I’m constantly trying to learn new things or start new projects just to keep my life interesting. I took a break and went back to school where I made new memories and broke up the monotony of a corporate job. I’m really looking forward to what life brings my way after I finish my degree!


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