How to Create Life-Changing Wealth by Changing Your Money Habits

The average person in the UK has approximately £10,000 in savings, so imagine having £100,000 at your disposal.

Would you use this amount of money to buy your dream home, start a business, retire early, or travel? It is not just a fantasy but an achievable goal that could become a reality if you change your money habits today.

Better still, your path to even more significant wealth may open as you feel more comfortable with your money habits.

In this post, I explore how you can create wealth over time by freeing up cash through intelligent budgeting, learning to “pay yourself first,” and changing your mindset around money.

The Power of Small Habits: Free Up Cash for Investing

For many, the concept of budgeting feels restrictive, but it can be a powerful tool for allocating resources in accordance with goals.

Imagine that, by reviewing your monthly spending and making some adjustments, you can free up £250 a month to repurpose into savings and investments.

To make this happen, you may need to make a deal with yourself first. That deal would involve making small lifestyle changes, doing some things differently, cutting back on some recurring expenses, or being more intentional with your spending.

However, making that deal can significantly impact your money mindset and move you toward the £100,000 goal.

By making that deal and finding £250 that you can regularly set aside for investing or saving, you are taking the first step toward building that £100,000 pot.

Think of budgeting as the foundation for investing in your future self. You are not depriving yourself; it is your money, after all. If you care about your future, then you need to see it as redirecting your precious resources towards it.

I have used £250 per month and a £100,000 pot goal to illustrate essential points. Your own numbers may be different. However, the principles outlined hold whether you can find more or have less than £250 per month for your future. Based on the current average UK earnings, £250 per month equates to approximately 10% of net pay; 10% is often used as an example when looking at paying yourself first.

Compounding and the Magic of Time

Having freed up the cash, your next step is understanding how compounding works to reach your goal as quickly as possible.

When you invest money, you earn returns on your initial and subsequent investments. Over time, this compounding effect can lead to exponential growth in your wealth.

For example, if you start with £250 a month and invest it with an average annual return of 5%, in 20 years, you could end up with around £100,000. Add in the potential tax efficiencies of investing through ISAs or pensions, and the pot grows even more, with compounding having a more significant effect.

Tax-efficient investment wrappers like ISAs and pensions allow your money to grow tax-free or tax-deferred, accelerating the compounding effect. While this blog is not advising you where to put your money (you will need a Financial Adviser for that), it is helping you understand what you should be doing to put yourself in a good place for advice.

£100,000 may seem like a distant goal, but regular investing and the magic of compounding can make it a reality, turning that monthly investment into a life-changing pot.

You might start with £250 each month, but as you get comfortable with your new approach to money, you will find yourself looking for ways to accelerate or even increase your goal.

“Paying Yourself First”: The Habit of Building Wealth

The principle of “paying yourself first” is crucial to building wealth. Instead of saving whatever, if anything, is left over each month after spending, set aside a fixed amount at the beginning of each month and put it somewhere out of immediate reach.

This may be easy to say but harder to do, but this slight shift in habits prioritises your financial wellbeing and helps you build consistency over time.

It is like treating your future self as a bill that must be paid every month rather than only with whatever you have left. By behaving in this way, you are creating security, opportunity, and freedom for yourself in the future.

Trust me, you will look back and thank your younger self for taking on this significant responsibility and making the necessary changes.

By making this a non-negotiable part of your routine, you are not just building wealth; you are building a positive money mindset. Over time, your commitment grows, transforming your finances and your confidence in managing them.

Changing Your Money Mindset: Emotions, Beliefs, and Behaviours

Our relationship with money is often emotional and shaped by deep-seated beliefs, habits, and fears.

Many people view money as something to be spent now, fearing the discipline of saving or thinking it is impossible for “people like me” to build wealth.

However, you can reframe your internal dialogue by examining your thoughts, triggers, and behaviours around money.

Try asking yourself:

• What beliefs do I hold about money, and where did they come from?

• How do I feel when I save money, and why?

• What are my biggest spending triggers?

With increased awareness, you can start to make intentional changes. Instead of viewing budgeting as restrictive, see it as empowering. Instead of thinking wealth is unattainable, understand that small, consistent actions are the key to long-term success.

Your First Steps to Your £100,000 Future

Building a pot of £100,000 begins with small, manageable steps you can sustain. Here are some ways to start:

1. Analyse your spending: Identify expenses that do not align with your values or goals and start reducing them.

2. Set up automatic transfers: Pay a portion of your income directly into a monthly savings or investment account.

3. Educate yourself: Learn about tax-efficient wrappers like ISAs and pensions and consider how they might benefit you.

4. Review and adjust: As life changes, so should your financial plan. Regularly review your spending, investments, and goals to stay on track. This is especially true if you start earning more through a promotion or job change; that is the perfect time to increase the amount you put away every month before you get into a new habit of spending it all.

By making these small, intentional changes, you will be amazed at the progress you can achieve over time.

Wealth-building does not require a lottery win (although that might be nice);  it can be accessible to anyone willing to take control of their money and commit to the process outlined here.

So What Will Your £100,000 Buy?

Your journey to £100,000 might feel long, but the reward is worth it. Imagine the freedom of knowing you have a solid financial base, whether you put it towards securing your dream home, providing for loved ones, or having more choices to spend your time as you wish. Changing your habits around money is not just about the money itself but about the security, confidence, and freedom that financial independence can bring. So why wait? Start today, and you might be surprised how quickly your dreams begin to take shape.

This article is intended as guidance and should not be read or interpreted as financial advice or otherwise. Working on money habits is where a financial coach like me excels.

I am Justin Walton, an Executive and Financial Coach and Consultant working with ambitious entrepreneurs and business leaders who want to become their best selves at work and at home. My approach is to help my clients gain alignment between Meaning (sense of self), Money (sense of wealth), Mind (sense of health) and Momentum (sense of growth). My ideal clients will be doing well, and yet something will be bothering them that needs to be corrected, creating misalignment. They're doing well and they want more fulfilment, crave deeper connections and are ready for the next level of success, on their terms.

Photo by Nubelson Fernandes on Unsplash