Most money advice is all about cutting back, but true financial success is about making smart choices and shifting your mindset. Top financial performers focus on what matters, take bold steps, and optimize every part of their financial life.
In this post, we’ll cover 8 powerful money habits to help you start living your Rich Life today — and show you exactly how to get started.
1. Build a Conscious Spending Plan
Most people don’t know where their money goes each month. Top performers take control by planning their spending before they even get paid. This is what I call a “Conscious Spending Plan” — deciding in advance how much you’ll allocate to savings, investments, fixed costs, and guilt-free spending.
Here’s an example of a Conscious Spending Plan, with some rough percentages as a guide:
- 20% to long-term savings and investments
- 10% to short-term savings for irregular expenses
- 50-60% to fixed costs and bills
- 10-20% for guilt-free spending on things you enjoy
The key? “Pay yourself first.” Prioritize savings and investments and set aside money for fun so you don’t feel deprived.
To create your plan:
- Analyze your current income and spending to see where your money is going.
- Set target percentages for each category (savings, investing, fixed costs, guilt-free spending).
- Gradually adjust your spending to align with your goals.
- Review your plan regularly, but don’t overthink it — stick with it and make changes only when necessary.
Once you have a plan set up, you’ll have a good grasp of your money habits going forward. No matter your starting point, I recommend you start immediately or you’ll risk ending up like Jennifer and Andrew, a couple in their 30s with two kids who are facing significant communication challenges regarding money.
Jennifer and Andrew approach managing money differently. Jennifer looks at long-term goals and potential future income, while Andrew focuses on short-term, paycheck-to-paycheck planning. This leads to poor saving and investment decisions, like a whopping $600/month going to GrubHub.
[00:39:08] Ramit: Thirty, 40, 50 bucks a month is actually really meaningful at this stage. Forty five bucks a month. Fantastic. All right. That’s $245 a month already freed up for credit card debt. That’s a lot. Okay. Finally, your guilt-free spending is 35%. I’m not so sure I believe that. That’s just the money left over. How much do you actually spend on guilt-free spending every month?
[00:39:35] Andrew: It’s food. It’s target. It’s pet stuff.
[00:39:39] Jennifer: Wait, I don’t even really shop at Target. Yeah, ordering on Grubhub because we got tired of that type of stuff.Â
[00:39:43] Andrew: Well, that would be food. Yeah.
[00:39:45] Ramit: How much do you order? How often?
[00:39:49] Andrew: Two times a week at 50 to $75.
[00:39:58] Ramit: Okay. How much is that?
[00:40:01] Andrew: Uh, that’d be 200 to almost $600 a month.
[00:40:11] Ramit: How do y’all think about that? What’s that look on your face, Jennifer?
[00:40:16] Jennifer: I don’t love that. That’s a big number.
[00:40:17] Ramit: I don’t love that.
[00:40:19] Jennifer: I don’t love it. I, um, yeah, I think it’s, uh–
[00:40:26] Ramit: Can I just point something out? $600 a month towards delivery, and you’re currently paying off $110 a month towards your credit card debt.
[00:40:36] Jennifer: I know. It’s really embarrassing.
Creating a Conscious Spending Plan is crucial for effective money management. Ideally, fixed expenses, including credit card debt payments, should make up about 50-60% of your budget. However, in my conversation with Jennifer and Andrew, it’s easy to veer off course.
They were allocating $600 monthly for takeout while dedicating only $110 to tackle their credit card debt. This imbalance shows the importance of thoughtfully directing your money towards financial priorities, like paying down high-interest debt.
2. Automate Your Finances
Once you’ve built your Conscious Spending Plan, the next step is to automate it. Automation takes willpower out of the equation and ensures your money goes exactly where it needs to, every single month.
Start by setting up direct deposits from your paycheck to fund your “buckets” according to your plan — savings, investments, bills, and guilt-free spending. Open the necessary accounts, like a high-yield savings account for emergencies or a Roth IRA for retirement, and set up automatic transfers between them.
Here are some examples of what to automate:
- A percentage of your paycheck into savings and investment accounts
- Your bills on auto-pay, so you’re never late and risk paying penalties
- Debt payments to make sure you’re consistently reducing your balance
Most banks and credit unions offer free tools to set up these automatic transfers. Apps like You Need A Budget can help manage your automated finances.
If paying down debt is a priority, don’t guess your way through it. Use our Debt Payoff Calculator to get a clear plan for tackling your debt efficiently. It’s a simple tool that can show you exactly how long it’ll take to pay off your balances by staying committed.
With this automated approach, you can simultaneously build wealth, cover your necessities, and still enjoy life — all while your money management runs on autopilot in the background.
3. Focus on Big Wins
Frugality tactics like skipping lattes are well-intentioned but misguided. The real gains come from optimizing the big expenses and income drivers in your life. Instead of sweating the small stuff, focus on “Big Wins” — actions that can significantly impact your finances.
Examples of Big Wins include negotiating a higher salary, landing a better-paying job, starting a profitable side hustle, or cutting down on major costs like housing or transportation.
To achieve your own Big Wins, identify the areas that will impact your financial situation most and direct your energy there. That’s where the real results are. To help you get started, you can check out my Ultimate Guide to Making Money, where I’ll show you how to build the financial freedom to do the things you love… and never have to choose between paying bills, automatically saving for your future, or living a Rich Life today.
4. Work on Your Own Money Psychology
While tactics and strategies are important, your mindset often is the biggest obstacle to financial success. We all have unconscious beliefs and “Invisible Scripts” about money that shape our behavior:
- “I’m just not good with money.”
- “Money changes people.”
- “Rich people are greedy/evil/lucky.”
- “I don’t deserve to be wealthy.”
- “I’ll never have enough.”
These scripts often come from our families, communities, and cultures without us even realizing it, but they can sabotage our financial habits and keep us stuck.
The first step to rewriting these scripts is to identify them. Pay attention to the thoughts and beliefs that come up around earning, spending, saving, and investing. Once you’re aware, start challenging and reframing them. For example:
- “I’m just not good with money” becomes “I’m learning and improving my financial skills every day.”
- “Rich people are greedy” becomes “Building wealth allows me to be more generous and make a bigger impact.”
- “I don’t deserve to be wealthy” becomes “I am worthy of abundance and financial success.”
Beyond scripts, our money habits are often driven by emotions like fear, guilt, and shame. Being mindful of these emotions helps us make more rational, values-aligned choices. Techniques like journaling, therapy, and open conversations with friends or family can help unpack your money psychology.
Another key aspect is developing an abundance mindset—focusing on opportunities and potential, not limitations and scarcity. Practice gratitude and positive self-talk, and surround yourself with successful people while continually learning and growing.
Remember, your financial success starts with your mindset. Understanding and optimizing your money psychology lays the foundation for all your other wealth-building habits.
Everyone has invisible money scripts, and you’re not alone – meet Cristina and Ron, a couple who have been married for four years and have money management issues that stem deep from how they were raised.
As our conversation unfolds, Ron reveals how he often feels overwhelmed by expenses. Despite Christina’s careful budgeting, he admits to frequently imagining worst-case scenarios regarding their spending. This anxiety seeps into their day-to-day interactions, causing Christina to feel frustrated by his immediate negative reactions whenever she brings up financial plans.
[00:03:29] Ron: I’m not cheap because I don’t mind spending money when we have it. I’m frugal because I just see dollar signs, dollar signs, dollar signs, and then I just imagine these numbers in my head like, we’re going to be spending this huge amount when in reality, she’s already got it budgeted because she’s good at doing that where it’s only going to be a small amount. So I’m already imagining the worst.
[00:03:50] Ramit: What’s the frugal part of that?
[00:03:55] Ron: Okay. Maybe cheap.
[00:04:35] Ramit: Cristina, I’m curious, from your perspective, that same conversation, what do you remember happening?
[00:04:42] Cristina: I told him about it and his automatic response was no. I know every time I approach him, I already have a game plan with him. I tell him like, this is how it’s going to be. This is how I’m going to save money. But before I get there, when he says no, it really frustrates me, and I get really sad that before I can even tell him how I can save money and enjoy my time, it almost seems like he is raining on my parade.Â
[00:05:10] And I can’t even plan with him or make proper decisions with him of like, if I give him a plan of, well, I’m going to use this, and I’m going to do this to save us money, so I can afford this, I can’t even have that with him. Automatically, the end of the conversation is, okay, you know, the money. If you say we can do it, then do it.Â
[00:05:32] Ramit: Okay. Out of curiosity, Ron, if I asked you how much is in your checking account, within 25,000, how much?
[00:05:45] Ron: Well, it’s not 25,000.
[00:05:50] Ramit: Ballpark it.
[00:05:54] Ron: Seven to 10.
[00:05:55] Ramit: All right. And within, let’s say a savings account, how much would you say is in there? Your savings account.
[00:06:02] Ron: Oh, I mean my personal savings, I don’t know, 2,000, but we’ve got a couple of different accounts though.
[00:06:09] Ramit: All right. And your joint savings account, how much would you say? Cristina is looking at this like this is literally the most entertaining reality show she’s ever seen. Cristina, am I getting this right?Â
[00:06:23] Cristina: Yeah.
[00:06:24] Ramit: She cannot stop smiling for the last two minutes. All right. Sit tight. Ron, joint savings account, ballpark it for me.
[00:06:31] Ron: 10.
[00:06:32] Ramit: All right, fine. Cristina, what do you say?
[00:06:35] Cristina: Off. Completely off.
[00:06:38] Ramit: Like how much off?
[00:06:39] Cristina: A lot off. Accounts are not even right.
[00:06:43] Ramit: Okay, well, the checking account, I think Ron said 7k.
[00:06:47] Ron: Yeah, seven to–
[00:06:48] Ramit: What was he talking about?
[00:06:49] Cristina: So his personal checking account is at 2,200.
[00:06:53] Ramit: Okay.
[00:06:55] Cristina: My personal checking account is around four because I just got paid.
[00:07:00] Ramit: All right.
[00:07:00] Cristina: Our joint savings account is about 8,500, and then our joint checking account is about 4,600.
[00:07:11] Ramit: He’s not that far off. Ron, I think you’re in the universe. He didn’t say $200,000.
[00:07:18] Cristina: Yeah, that’s right.
[00:07:19] Ramit: All right. You know what? Ron, I’m giving it up for you. You were closer than I thought. That’s impressive. Cristina, how come you think he’s wildly off?
[00:07:29] Cristina: Because every time he talks, he has two mentalities. It’s either we’re poor or we don’t have money.
Ron’s anxiety around money can be traced back to how he grew up which significantly shaped the invisible scripts he has today. As he reflects on his past, he begins to recognize how deeply these early experiences continue to affect his financial mindset and decisions.
[00:19:47] Ron: I’m nervous just because of the way that we grew up. We had some really good times, and then we had some really bad times. So I never want to put us in any financial troubles. That’s why I am the way that I am.
[00:20:02] Ramit: The troubling times happened, what, in your teen years?
[00:20:06] Ron: Great school middle school. High school, we had real good and then real bad. My dad was a contractor, so we’d have a good year, then we’d have a bunch of really bad months, and so fluctuated.
[00:20:17] My dad was the only one that worked in the family, so when he wasn’t in a contract, 23 still had bills to pay, so we had to borrow money from family sometimes. We almost lost the house, but grandparents helped out with that. I’ve got two older brothers, mom, and dad. We didn’t do a lot when we were kids because we didn’t have the money.Â
[00:20:44] We didn’t go on vacations. We didn’t go out to dinners. We still had a lot of fun because it was growing up in the 80s, but seeing the way that my parents fought about money or the lack of, I don’t want us to be like that. So those are things I just don’t want to have happen, and I would hate to ask for handouts from people.
And Ron isn’t the only one who’s strongly affected by childhood experiences. Christina, too, brings her own money scripts into their financial conversations, shaped by a much different upbringing in the Philippines, where money was often scarce, and survival was the priority. Their contrasting perspectives create tension which make it hard for them to implement practical tools like the Conscious Spending Plan.
[00:21:11] Cristina: So whenever he said he was poor, he was cheap, he was this, not to diminish what he experienced because I get it, but it’s like, you don’t know war until you go in the Philippines. We were homeless at some point. I would have to beg neighbors for food, for dinner, so that our family could eat. That’s how poor we were.Â
[00:21:36] Ramit: Do you think that there’s a way to be a sensible spender without being cheap?
[00:21:44] Ron: Yes, if we have a budget set aside for each of us for each month. We can only spend this amount. You can spend this amount. I can spend this amount. And if that’s the case, then she can go do whatever she wants to with it as long as we’re still saving at the same time.
[00:22:02] Ramit: Okay. Uh, just a quick question for you. When was the last time you kept a budget for longer than two weeks?
[00:22:09] Ron: We actually just started it a month ago.
[00:22:14] Ramit: How about before that? Never?
[00:22:18] Ron: No.
[00:22:18] Ramit: What a surprise. Ron, is it possible that maybe a budget is not the solution?
[00:22:29] Ron: There’s a possibility, but I think the budget is the solution. And nothing’s ever 100% in this world, so I can’t say no.
[00:22:41] Ramit: I like it. I like the pushback. All right, let’s play it out. So you have the budget, and how did you both create this budget?
[00:22:50] Ron: Off of you, actually.
[00:22:52] Ramit: Okay, you used my conscious spending plan. Okay. First of all, that’s not a fucking budget. All right. Whatever. Used the CSP. You came up with some numbers which are forward-looking not backwards-looking. You have some guidelines. All right, cool. I’m happy to hear that. What was the process like creating the conscious spending plan together?
[00:23:14] Ron: Probably kick it over to her.
[00:23:16] Ramit: Oh, why is that? Wait, I want to hear from Ron. Ron, tell me, what was it like creating it? Did you create it together?
[00:23:22] Ron: No.
[00:23:23] Ramit: What the f– all right, okay. Even though the instructions explicitly say you must create this together. So how did that go down? Cristina, you applied to talk to me, right?
[00:23:38] Cristina: Yes. So we actually have had this CSP for three months, not one month, and we actually sat down together, not just me telling him. Don’t know if he remembers that. And even though we’ve created a budget, and this is not the only time we’ve done a budget, we’ve done it in the first few years of our relationship, it’s now coming up to itself as well, where we have a budget and Ronnie says, baby, we have a budget. We have to stick with the budget. We can’t spend that. So even if we have a budget, he still says, no, we can’t spend money.
[00:24:15] Ron: At least if I know that we are not going over that each, and even if she goes over and I still have some in mine, I always told her, just take some of mine. I’m not spending it. If you need to do it.
[00:24:28] Ramit: Okay, so does it make you feel better?
[00:24:32] Ron: To have the budget?
[00:24:33] Ramit: Yeah.
[00:24:34] Ron: It does.
[00:24:35] Ramit: All right, and do you still caution her about overspending now that you’ve got this budget, which is not a budget?
[00:24:43] Ron: Yes, because once she goes over the budget, then that’s when I chime in. I’m like, we’re over the budget, or she’ll tell me that we’re over the budget, and I’m like, okay, then why are we spending more?Â
[00:24:55] Ramit: So let me give some perspective. When you first start using the conscious spending plan, you try to get everything you can, but the whole point is it’s 85% of the way accurate. You’re never going to get a 100%. It’s actually prohibitively difficult to get every single expense. How much did we spend on celery? It’s irrelevant.
Ron and Christina’s experiences show the profound impact of deeply ingrained money scripts on financial behaviors and relationships. These unconscious beliefs about money, often formed in childhood, can significantly influence our financial decisions well into adulthood.
By recognizing these scripts and understanding where they come from, Ron and Christina can take the first crucial step towards rewriting their financial stories and begin adopting better money management strategies, such as implementing a Conscious Spending Plan.
5. Earn More, Don't Just Save More
You can only cut back so much, but there’s no limit to how much you can earn. Forget the latte sacrifices and penny-pinching — it’s way more rewarding (and fun) to focus on making more money.
To boost your income, think beyond your 9-to-5. Negotiate a raise, switch to a higher-paying job, start a side hustle, or take on freelance work. The opportunities are endless if you’re willing to look for them.
But where do you start?
- Negotiate a raise: If you’ve been delivering results in your current job, don’t be afraid to ask for a raise. Research your market value, prepare a strong case, and schedule a conversation with your manager.
- Switch to a higher-paying job: Sometimes, the easiest way to make more money is to change jobs. Look for roles in your industry that pay better or consider a different field altogether.
- Start a side hustle or freelance: Tap into your existing skills or passions to create additional income streams. Whether freelance writing, graphic design, tutoring, or consulting, there are countless ways to monetize what you already know.
- Invest in yourself: Consider taking courses, attending workshops, or hiring a coach to develop new skills that can lead to higher-paying opportunities. The more valuable you make yourself, the easier it will be to command a higher income.
Adopting a “Growth Mindset” is the belief that your skills and earning potential can continuously be improved. When you think this way, you’re always looking for ways to increase your income rather than just cutting back.
6. Build Multiple Income Streams
Relying on a single job or income source is risky in today’s economy and limits one’s potential. The wealthy know this, which is why they almost always have multiple income streams—from salaries and freelance work to business income, investments, rental properties, and more.
This might sound complicated, but it doesn’t have to be. Depending on where you are in your career, here’s how you can start building multiple income streams:
- If you’re earning minimum wage: Focus on finding a higher-paying job while exploring side hustles. Consider jobs with tips, commissions, or opportunities for overtime. Alternatively, look for a second job that leverages your special skills, such as delivery driving, bartending, or retail management.
- If you have a white-collar job: Think about the skills you already use daily — could they earn you money outside of your 9-to-5? Maybe you have experience in writing, graphic design, project management, or data analysis. Freelancing, consulting, or teaching these skills online can provide an extra income stream. Platforms like Upwork or LinkedIn can help you find clients who value your expertise.
- If you’re a business owner or entrepreneur: Look at ways to expand your offerings or create additional revenue streams. Could you launch a new product, start a subscription service, or monetize your knowledge through courses or workshops?
Another example from my personal experience is that one of my multiple income streams is selling online courses. Readers find value in my blog and sign up for my newsletter, where I share insights, expertise, and stories from my podcast.
Whatever your current situation, remember that building multiple income streams takes time and experimentation. Start small, test different ideas, and see what works best for you.
Over time, make your money work for you. Don’t just let it sit in a savings account. Invest it, diversify your assets, and create new cash flow streams.
If you want more tips about improving your money habits that you won’t find anywhere else on the blog, consider signing up for my Insider’s Newsletter and join over 800,000 readers building their Rich Life today.
7. Think About Your Money Dials
Your spending reveals your true priorities and passions. I call these your “Money Dials” — the areas where you’re willing to spend big while ruthlessly cutting back on what doesn’t matter to you.
Here are the 10 key Money Dials:
- Convenience
- Travel
- Health/Fitness
- Experiences
- Freedom
- Relationships
- Generosity
- Luxury
- Social Status
- Self-Improvement
Identifying your top Money Dials lets you align your spending with your values — what truly matters to you. Once you know your Money Dials, give yourself permission to turn them up and spend unapologetically in those areas. At the same time, dial back hard on the stuff you don’t care about.
For example, if your top Money Dial is Travel, maybe you stay in 5-star hotels and fly first class, but you cut your clothing budget to the bone. Or if Health/Fitness is your priority, you might spend big on the best gyms, trainers, and organic food while living in a modest apartment and driving an old car.
Aligning your spending with your Money Dials is the ultimate form of Conscious Spending — using your money to bring you maximum joy and value. So, take a hard look at where your money is going, identify your top Money Dials, and permit yourself to go all in on what you love. Cut costs everywhere else.
8. Protect Your Wealth
Many people focus solely on building wealth but neglect to put proper protections in place. This can lead to financial catastrophe if unexpected events occur.
Get the Right Insurance
Insurance is your first line of defense. At a minimum, you need:
- Health insurance for medical expenses
- Disability insurance to replace income if you can’t work
- Life insurance to provide for your dependents
- Liability insurance (like umbrella policies) to protect against lawsuits
Don’t just go for the cheapest policy. Make sure your coverage matches your needs — a good insurance broker can help with this.
Plan Your Estate
Estate planning is crucial for protecting wealth. This involves:
- Creating a will to outline asset distribution
- Designating power of attorney for financial decisions
- Creating a healthcare directive for medical wishes
- Establishing trusts to manage and protect your assets
Without estate planning, your assets could get tied up in probate, face heavy taxes, or not end up where you intended.
Advanced Asset Protection for High Net Worth Individuals
If you have a high net worth ($1M+), consider advanced strategies:
- Setting up an LLC to shield personal assets from business liabilities
- Establishing an offshore trust to protect against creditors and lawsuits
- Using sophisticated tax strategies to minimize taxes
These strategies are complex but essential for safeguarding significant wealth. It’s worth working with a specialist attorney and financial advisor.
Make Wealth Protection a Priority
Remember, it takes a lifetime to build wealth but only a moment to lose it. Protect your wealth by:
- Reviewing insurance coverage annually
- Updating your estate plan every 3-5 years or after major life events
- Exploring advanced asset protection strategies as your wealth grows
By taking these steps, you can ensure your wealth benefits you and your loved ones for generations to come.
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