As I work with people one-on-one as a high-performance coach, I have found that the most important aspect to their wealth accumulation, is their habits. Good habits create good results, and bad habits create bad results. The good news is, habits are learned.

You were not born with any of your habits; you learned them somewhere along the way. That means you can unlearn your bad habits and learn some new habits that produce better results. Simply changing some key habits will set you on a new trajectory that may be a lot more appealing.

Today we look at three bad habits.

Bad habit #1 is lifestyle creep.

Advertising surrounds us everywhere we go. We see it in television programming, not only in the commercials, but also woven into the story. We find it in the periodicals we read. When we look at an app on our phone, ads pop up. Many blogs and articles have ads sprinkled in. We drive down the road and see signs. We walk out into our driveway and see our neighbor’s new truck.

All of this advertising has the same end goal, to get us to buy something. Often times it is even something we were not interested in before seeing the ad. I experienced this recently when I saw a new RV and suddenly was thinking about replacing mine. I wasn’t thinking about it the day before. Nothing makes our car look worse than a better car in our neighbor’s driveway.

All of this leads us to increase our lifestyle. Each time we get a raise in pay, we feel we need to do something to improve our lifestyle; a bigger house, a better car, a fancier vacation, private school for our 2nd grader. The money is “burning a hole in our pocket.” This is especially prevalent at the point when a doctor leaves residency and has a big income jump with his or her first job.

Why is it that we don’t have the desire, with a pay increase, to boost our savings account? Or increase the children’s college fund? Or become debt free? Or start our IRA? Or increase our emergency fund? Or buy the right amount of life or disability insurance. Well, those aren’t advertised much, so they aren’t the first things on our minds.

We have developed the habit of spending our money as fast as it comes in. When more comes in, we spend it faster. We let our lifestyle creep up to and often exceed our income.

This is a bad habit that is very detrimental to our wealth. We cannot amass more wealth and security by buying more, bigger or better things. We cannot spend our way into wealth. This is a habit we need to recognize and stop dead in its tracks.

Bad habit #2 is not paying attention to money.

Almost no one who contacts me for personal help on correcting their finances has been keeping a budget. When asked what their monthly expenses are, they do not know. Spending money without a plan is often a habit born from one of two reasons. The first is fear; they do not want to see that their expenses exceed their income. They know they are overspending and don’t want to see how bad it is. The second reason is a good income; they feel they make so much money that they do not need to keep track of their expenses. Everything will just work out.

Both of these reasons lead to the same bad habit of not paying attention. When you do not look at what you spend, you tend to overspend. Often, just the act of getting my clients to track what they spend, creates a lot of extra money. One doctor recently realized he had a family gym membership at two different gyms. One his wife liked, and another he liked. That was a silly waste of money that could be used for something on their bucket list, or to pay off debts or balance their budget…

Don’t be in the habit of just spending money without counting the cost. Everyone needs a spending plan of some sort (a budget). Planning where each dollar goes will have a profound effect on your future wealth. No one becomes accidentally wealthy; it is part of a plan.

Bad habit #3 is relying on debt to cover emergencies.

You can’t believe what interesting things I have heard classed as an emergency. A blown transmission is not an emergency; it is part of expected car maintenance. A broken washing machine is not an emergency; it is an expected part of home maintenance. A daughter’s wedding is not an emergency; you knew it was coming.

There are many things in life that pop up at an unexpected time. But does that make them an emergency? NO! I had a nurse who was fond of saying, “Poor planning on your part does not make an emergency on my part.” Poor planning does not make something an emergency.

Many people don’t plan for future expenses (back to bad habit #2). Even though we don’t know exactly which repair expense is coming first, we know one is coming. So we need to be ready.

Having a credit card with a high limit, is not being ready for these costs. Having a large cash value in a whole life insurance policy that can be “borrowed,” is not being ready for these costs. A clause allowing us to borrow against our 401(k), is not being ready for these costs.

Many doctors have advisers who are incorrectly telling them not to have any cash around, but to keep all their money invested and working for them. This is bad advice and a bad habit as well.

I understand that getting 0.01% interest on your cash or your emergency fund is not ideal, but that is just the cost of being prepared. Consider it an insurance policy premium. Just like hating to have paid life insurance premiums for many years on a policy you didn’t use, you will hate holding money for an emergency you didn’t have. Better safe than sorry (or deeper in debt).

Debt is not your friend, and it is especially bad if you use it for an emergency, or a so-called emergency, when you didn’t need to. There needs to be enough money available in cash to cover these unpredictable expenses that pop up. I recommend you work toward having a minimum of six months of expenses available in cash. Having a cushion is also a sign that you have learned to live within your means.

Never being able to save any money is a sure sign of not living within your means. You are spending all of your income and often more than your income. That is what causes debt. If you have any debt, it is almost always because you spend more than you earn. Eliminate this habit of relying on debt to pay your expenses.

What great thing have you noticed happen when you stopped one of these bad habits?

Cory Fawcett is a general surgeon and can be reached at his self-titled site, Dr. Cory S. Fawcett.  He is the author of The Doctors Guide to Starting Your Practice Right, The Doctors Guide to Eliminating Debt, and The Doctors Guide to Smart Career Alternatives and Retirement.

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