How To Create Good Investing Habits

Do you always misplace your car keys or wallet? Do you eat all of the wrong foods and not get enough exercise? Most people have some very poor habits in their lives, and many are clueless on how to instill new healthier habits.

We develop habits in our investing too, and many of those are bad habits as well. We have ingrained bad investing and money management habits into our daily lives which can have far greater repercussions than biting our fingernails. But, it does not have to be that way. You can change. You can learn new investing habits.

You Have To Want To Change

Do you have bad financial habits such as not saving enough for retirement or other financial goals? The first step is admitting you have a problem or a shortfall in your money management skills and a desire to make a positive change in your life.

If you are motivated to start building a new habit, you will succeed. The hardest part is usually coming to grip with the fact that you may not have saved or invested enough. Maybe you were not always maxing out your Roth IRAs for example. You will not be very effective if you do not want to change no matter how much it is needed.


Studies have shown that it takes 21 consecutive days of repeating an action before it becomes a habit. Investing can and should be habit forming.

Dollar cost averaging is one of the best ways to start forming great investing habits. Dollar cost averaging is the systematic purchasing of shares of a stock or mutual fund with a set amount of money each and every month. Some months you will buy more shares of the stock when the price drops, and other months you will buy fewer shares when the price rises. But, the price you pay over time tends to smooth out, or averaging out the markets’ up and down swings, like its name suggests.

Make It Automatic

The fastest way to a sound retirement is to pay yourself first. And, the fastest way to save and invest for big ticket items like retire is by making it automatic. When investments leave your banking account without your input or interference and is transparent to you, it is like the money was never even in the account to start with.

It is never missed. If it is not missed, it is easy to continue investing and saving with that money every month on autopilot.

Muscle Memory

U.S. Army Paratroopers practice jumping out of an airplane before the plane even taxis down the runway. They practice on the ground how to jump out of the door of the plane, how to gain control of their parachute in the air and even what to do in the event of an emergency. They repeat these same tasks over and over again in order to build what is called muscle memory. Muscle memory helps you complete tasks without requiring you to think about it.

The same type of action should be true for your investing. If you have a long time until you need the money you are saving, you should build muscle memory with your money tasks. You should have funds for investing and saving set earmarked aside in your monthly budget. Repeating these tasks every month will make them great financial habits.

When I come home at the end of the day, I take my wallet, cell phone and car keys out of my pockets and put them in the same location on my kitchen counter. I never lose my car keys, and I am never late to work in the morning because my keys are always in the same location. The same can be said for your investing. Like other positive traits, good financial habits can be built. Your money muscles can be trained. And, before you know it, you will be well on your way to building an excellent nest egg for your financial goals.

hank-coleman-150x150Hank Coleman is a personal finance blogger and all around money and investing junkie who is currently studying for his CFP credentials. He received his B.S in Business Administration from the Presbyterian College in South Carolina in 2002 and went on to receive an M.S. in Transportation and Logistics from the North Dakota State University in 2007 and an M.S. in Finance from the University of Maryland in 2008. You can read more of Hank’s writings on his blog Own The Dollar and can also follow him on Twitter.