The One Keystone Habit That Changed My Finances for 18 Years — Transcript

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1. 0:00Now, there's one thing I do that I think
2. 0:02has made the biggest difference to our
3. 0:04financial situation over the last 18
4. 0:07years. It's a keystone habit. A keystone
5. 0:10habit is a habit that kind of controls a
6. 0:12bunch of other habits and behaviors.
7. 0:15It's a bit like the one ring in that
8. 0:17way. And my keystone financial habit is
9. 0:21let's talk about it.
10. 0:27So, I've noticed that there are a few
11. 0:30habits that make more of a difference
12. 0:33than other ones. Those are the ones that
13. 0:35kind of remind you to do things, that
14. 0:37motivate you, that trigger other habits.
15. 0:41James Clear writes about this in his
16. 0:43book Atomic Habits. He talks about
17. 0:46bundling habits, where one habit, like
18. 0:49brushing your teeth for example, might
19. 0:51trigger another one, like doing some
20. 0:53squats. I call these habits keystone
21. 0:56habits. A keystone is an architectural
22. 0:59feature. It's the stone at the top of an
23. 1:02arch that keeps all the other stones in
24. 1:05place. Without the keystone, the arch
25. 1:08falls apart. And in the same way,
26. 1:10keystone habits keep entire sectors of
27. 1:13your life in place. For me, my keystone
28. 1:16health habit is going to jujitsu class.
29. 1:19As long as I go to jujitsu class, I'm
30. 1:21more careful with what I eat, I'm more
31. 1:24consistent with my weight lifting, I
32. 1:27remember to do stretching and mobility
33. 1:30work. And all of those basically don't
34. 1:33happen if I don't go to jujitsu class,
35. 1:35because I don't notice the need for
36. 1:38them. I also have a keystone financial
37. 1:41habit. Every month, on the 1st of the
38. 1:43month, I fill in my spreadsheet. It is a
39. 1:47very basic spreadsheet. It's the kind of
40. 1:50spreadsheet that people who are good at
41. 1:52spreadsheets look at and kind of
42. 1:54snigger.
43. 1:55>> [laughter]
44. 1:56>> There are no formulas, there's no fancy
45. 1:59functions. It's basically a bunch of
46. 2:02rows and columns. Each row is a
47. 2:04different account, each column is a
48. 2:07different month. Every month I open up
49. 2:09the spreadsheet and I fill in the
50. 2:12balance for each of our bank accounts,
51. 2:15our broker accounts.
52. 2:17Uh I've put in the mortgage in there
53. 2:19now. I've got a small cryptocurrency
54. 2:21position that's in there as well. And
55. 2:24I've been doing this since June 2012.
56. 2:27So, this month was the 170th
57. 2:32entry on
58. 2:34the financial spreadsheet. Now, the
59. 2:36spreadsheet on its own doesn't do
60. 2:38anything. It just shows where we are
61. 2:40each month. But, that act of filling in
62. 2:43the spreadsheet, which takes 5 or 10
63. 2:46minutes every month, makes me aware of
64. 2:48our financial situation. It reminds me
65. 2:51to move money to savings, to move money
66. 2:54to investments. It shows me how far
67. 2:57we've come cuz I can look back a year, 2
68. 2:59years, 5 years, 10 years and see how
69. 3:02much progress we've made. And it really
70. 3:05motivates me to keep going. It's a
71. 3:07keystone habit. When we run our course
72. 3:10every year, Your First 10 Million Yen,
73. 3:12the first thing we ask participants to
74. 3:14do is to create a kind of snapshot of
75. 3:18their financial situation. So, we ask
76. 3:21them to write down their income, any
77. 3:24debts they have, what they spend money
78. 3:26on, any kind of savings, investments,
79. 3:29assets, and so on. So, they have a good
80. 3:31picture of where they are right now. At
81. 3:34the end of the course, we ask them to
82. 3:36make a financial plan for the future.
83. 3:40What goals do they have? What do they
84. 3:42want to achieve? What situation do they
85. 3:44want to be in in the future?
86. 3:47And then figure out a way to get there.
87. 3:50And between those two things
88. 3:53is the spreadsheet. Now, you don't need
89. 3:56to do this every month like I do, but
90. 3:58many people find it really helpful to
91. 4:01have a spreadsheet like this and to fill
92. 4:03it in maybe once a year, maybe twice a
93. 4:06year, maybe quarterly, or even monthly
94. 4:09if you feel like doing that. I don't
95. 4:13recommend doing this
96. 4:15every day or every week. Um especially
97. 4:19if you're just starting out. So, the
98. 4:21danger of looking at these numbers too
99. 4:25much is that you can become emotionally
100. 4:27invested heh in the process. So, you
101. 4:31know, when the numbers go up, you feel
102. 4:33really happy. When the numbers go down,
103. 4:35you kind of get stressed. Uh worst-case
104. 4:37scenario, the numbers go down a lot, you
105. 4:39kind of panic, sell everything, don't
106. 4:41invest again.
107. 4:43That is a worst-case scenario. Want to
108. 4:45avoid that. So, don't look at the
109. 4:47numbers too often. Do it,
110. 4:49you know, once every few months, not
111. 4:51more frequently than once a month, but
112. 4:53probably at least once a year just so
113. 4:55that you've got a little bit of a
114. 4:57progress going on there. Anytime between
115. 5:00once a month and once a year is fine.
116. 5:03Pick a date that you're going to
117. 5:05remember, put it in your calendar, and
118. 5:07start building out your simple
119. 5:09spreadsheet. So, at first, I recommend
120. 5:11just putting in your main kind of
121. 5:13savings account and any kind of
122. 5:15investments that you have. When I
123. 5:17started out, it was just one bank
124. 5:18account. So, we had a bank account. We
125. 5:21started putting money in there as
126. 5:22savings, and I tracked that over time.
127. 5:25Very motivating. And then later on, as
128. 5:27we started opening other accounts like
129. 5:29broker accounts, ISA accounts, SIPP
130. 5:31accounts, and so on, I added those to
131. 5:34the spreadsheet. Assuming that you have
132. 5:36a kind of basic financial plan and
133. 5:38you're putting aside some money every
134. 5:39month for savings and investments, your
135. 5:41accounts will go up. So, they'll go up
136. 5:44because you put money into them, and
137. 5:45hopefully they'll also go up because the
138. 5:47investments and so on are growing over
139. 5:49time.
140. 5:51And that combination is really
141. 5:52motivating. There are keystone habits in
142. 5:55all areas of life.
143. 5:58But this one, I think, is really
144. 6:00important in personal finance. If your
145. 6:03finances are not where you'd like them
146. 6:05to be, if you have goals that you want
147. 6:06to aim for, you want to get to, this may
148. 6:10well help you get there quicker,
149. 6:13and also enjoy the process more. It's
150. 6:15always useful to have some sign that
151. 6:18you're on the right track, that you're
152. 6:19getting closer to your goals, and so on.
153. 6:22So, do you have a spreadsheet? Are you
154. 6:25tracking your financial situation over
155. 6:28time? Can you look back and see where
156. 6:31you were last year, see where you were a
157. 6:33few years ago, and see the kind of
158. 6:36progress that you've been making? If
159. 6:38not, then I really recommend trying this
160. 6:40out. Just make it very, very simple,
161. 6:42make it very, very easy to do, and start
162. 6:45doing it consistently. And you just
163. 6:47might find that this turns into a
164. 6:49keystone habit for you.
165. 6:52If you do have a spreadsheet, then tell
166. 6:55us about it in the comments, because
167. 6:57that's going to be really helpful for
168. 6:58other people to see, you know, what
169. 7:00you're doing and how it's helped you.
170. 7:03Thanks for watching,
171. 7:04and we'll see you in the next video.