There is one fundamental habit that will transform your relationship with money. Granted, there are events in this world that you can’t control. But managing your money is definitely within your grasp.
It seems ridiculous that one habit can be so powerful. But it’s true. There are other skills you should develop, but it all starts with learning one key habit.
The Karate Kid
If you remember the original version of The Karate Kid, the Mr. Miyagi has Daniel perform a litany of tasks. Wax the car. Paint the house. Sand the deck. Paint the fence. As Daniel’s patience runs out, Mr. Miyagi demonstrates the value of these mundane chores. They were a teaching tool for basic karate moves.
As Mr. Miyagi tries to attack, Daniel effortlessly blocks each punch and kick that comes at him. The motions had become internalized. The repetitive work made the beginner motions natural and easy to perform.
Learning how to block with “wax on, wax off” movements isn’t enough to win tournaments. But without knowing the basics and fundamentals, Daniel would have been a terrible competitor. Good thing he learned how to do a crane kick.
In the beginning, The Beatles played grueling performances in Hamburg, Germany. They played all-night shows with songs that would last twenty minutes. The band was on stage for hours every night. Malcolm Gladwell attributes these nights in Hamburg to the band’s later success. The torturous schedule helped The Beatles develop stamina and reduced performance anxiety.
When you play in a band for six hours, no one will remember any single wrong note. No one at tomorrow night’s show will hear the wrong chord you just squeaked out. If trying a new tempo tonight doesn’t go well, don’t do it tomorrow. The lesson is that if you keep going, you’ll get more chances to improve.
The Beatles learned that it’s okay to be imperfect. Making mistakes is normal, and mastering music takes time. The band learned how to be entertaining and put on a show because they did it over and over and over again.
Coach John Wooden
John Wooden is the best coach in the history of men’s college basketball. Coach Wooden led the UCLA Bruins to 10 national championships. In fact, his team won seven titles in a row. One of the first lessons the famous coach taught each season to his players was how to lace up their shoes.
Lacing up shoes seems like a minor lesson for such a prestigious coach to teach each season. But the lesson that Coach Wooden taught was how small errors add up over time.
Basketball is a fast-paced game. Healthy feet and ankles are important. If you have wrinkles in your socks or your laces aren’t tight, you can get blisters. Blisters cause pain, and you can lose focus. Once you lose focus, you start missing shots. Missed shots lose games. You can’t win a championship if you keep losing games.
The habit of putting on your shoes is fundamental to the rest of the game of basketball. Get the wrinkles out of your socks. Make sure your laces are tight. Tie a good knot so it doesn’t come undone during a game. Putting on your shoes is the first step to becoming a champion. Failing to do it right can snowball into far worse trouble.
The One Money Habit
I know it sounds too good to be true. There can’t possibly be one money habit that will change your life. Well, there is.
Track your money.
When I say tracking, I mean that you need to know where every dollar came from and where it went. And I’m not talking about budgeting or planning. Both of those skills are important to learn, but they come after tracking.
Tracking is also having a way to organize your money. You need to know where your money goes, how much moved, and why it moved.
Tracking money might sound like tedious accounting. Unfortunately, it is. Tracking money can get monotonous. But so can putting on your shoes the right way. Or waxing the floor. Or performing for hours on end. Tracking is necessary for financial success, and you just need to do it.
Four Pieces of Good News
First, technology is our friend. You don’t–I repeat, you do not–need to take an accounting class or learn QuickBooks. Below, I list some of my favorite apps that make tracking your money automatic and simple.
Second, it gets easier over time. It takes less than five minutes a day to label your trip to Chipotle as “Restaurants.” You’re already texting on the toilet, so I know you have the time.
Third, you will end up fixing mistakes before they become giant problems. Tracking your money on a daily basis helps you catch fraudulent charges. It helps you stick to financial goals because you get more frequent feedback.
Finally, all this tracking is the skill you need to start making better decisions with money. Knowledge is power. Knowing how you spend helps you decide faster when faced with other financial dilemmas.
Apps I Suggest
When I look for an app to help me manage my money, I want five features:
- Automatic transaction download so I don’t have to manually enter receipts.
- Linking with other bank accounts so I can see all my money in one spot.
- A mobile version so I can check budgets and categorize transactions on the go.
- A desktop version in case I want to dive deeper into the details.
- A free version so that I can try before I buy.
Now that you are convinced to try an app, here is my list of apps to try. Not every app has all five features listed above. To help you out, I’ve listed my suggestions with the favorites on top:
Want to Start Right Now?
If you want to start immediately, I have all my coaching clients try Mint first because it’s 100% free. If you find an app you like better, at least you haven’t wasted any money.
Here are your next steps if you want to start tracking your money right now: