3 Lessons From the Bestseller 'Atomic Habits' That Will Grow Your Wealth

Don't let the sting of failure hold back your true potential.

My alarm went off -- the first day of 2023 has come and gone. Fear of missing out on fresh New Year's resolutions hits harder than a holiday parade float. Fortunately, it's not too late to invest in a wealthier future.

Financial resolutions are top of mind. Over half of Americans (53%) with financial New Year's resolutions want to pay off debt. One-third want to save for a life milestone, such as a wedding. My big 2023 resolution is to build a three-month emergency fund.

One of the best ways to achieve these goals is to create sticky money-stacking habits.

Atomic Habits by James Clear is a NY Times bestseller, thanks to its straightforward, practical, habit-building advice. Whether you're paying off debt or constructing a stable stock portfolio, you can apply the lessons within to your financial goals.

Here are three top lessons from Atomic Habits that will grow your wealth.

1. Start small

Atomic Habits asks readers to start small. Often, it's not significant, gut-wrenching lifestyle changes that impact lives five years from now. It's the slow, sonorous stacking of harmonic habits that crescendo to a melody worth hearing: a habit formed, a goal surpassed.

The power of small, recurring investment compounds. For example, say you invest $25 per month and earn 10% per year, which is approximately the average stock market return over the last 50 years. By year 20, you'd have invested $6,000 and earned a chunky $12,901 in interest.

Financial gurus like Dave Ramsey advocate for starting small when paying off debts. His debt snowball method is a simple, effective strategy for paying off multiple debts. By paying off loans one by one, starting with the smallest, you can build motivation to continue making payments.

I'm starting small by only contributing money from my side hustle to my emergency fund. That way, I don't burn myself out by over-contributing and staring down an empty bank balance.

2. Focus on progress, not perfection

Atomic Habits suggests readers focus on progress, not perfection. According to James Clear, "The most practical way to get what you want is to become the type of person who can get it." He asks habit-builders to consider whether failure to reach perfection matters as much as sustained effort.

Observe the wisdom of progress versus perfection via the stock market. Over a year, the return on stock market investments only beats cash returns 60% of the time. Risky. But ride out investments over 25 years, and stock market returns exceed cash returns 98% of the time.

My emergency fund has fluctuated a lot in the past year. I've had to spend thousands of dollars paying off unexpected debt. Even though it sometimes feels like I'm going backwards, the most important thing right now is to focus on making payments -- that's how I'll achieve my goal.

3. Create an environment that supports your goals

Atomic Habits claims that willpower isn't enough to maintain habits. Creating an environment that supports your goals is key to sticking with them for longer than a day or two.

For example, hanging out with friends who constantly dine out makes the resolution "cut down on dining out expenses" difficult. To create a supportive environment, you could request that, once a month, everyone cooks together. That way, eating in more often becomes easy and automatic.

Start small, focus on progress, and create supportive environments. Here are three more examples of how you might apply these lessons to growing wealth:

1. Invest 1% of paychecks in long-term wealth. (Start small)
2. Use a budgeting app to track how much debt you've paid. (Focus on progress)
3. Unsubscribe from shopping sites to reduce impulse spending triggers. (Create a supportive environment)

James Clear gives excellent advice when it comes to building habits. My favorite bit is this: just start. Navigate away from the article and give yourself space to digest a simple game plan. Saving is hard. I've already run into roadblocks, but the goal isn't perfection -- it's progress.