He stared at the scale, his brow furrowed in a familiar grimace. Two pounds. Up. How was it even possible? He’d been hitting the gym, trying to cut back. Sure, there were a few slips – that late-night pizza, the extra cookie – but everyone had those, right? The cold, hard numbers on the display felt like a personal insult, mocking his effort.
His thoughts, quick and cruel, began their well-worn descent. “I’ll always be overweight,” a voice whispered, heavy with resignation. “I guess this is just who I am. Guys like me never win.”
Dan was trapped in a cycle. Overweight, grappling with a creeping depression, and utterly defeated by his inability to make any changes stick. His internal script was one of defeat, resignation, and self-doubt.
His real struggle wasn’t his inability to shed pounds. It was far deeper: he simply couldn’t shake the ingrained belief that he was, at his core, someone who would never be fit.Maybe you can relate?
Starting a program, losing steam, experiencing some setbacks and before you know it, you have reverted to old habits.
As James Clear in Atomic Habits says, “The key to building lasting habits is focusing on creating a new identity first. Your current behaviors are simply a reflection of your current identity. What you do now is a mirror image of the type of person you believe that you are (either consciously or subconsciously).
To change your behavior for good, you need to start believing new things about yourself. You need to build identity-based habits.”
Imagine how we typically set goals. We might start by saying “I want to lose weight” or “I want to get stronger.” If you’re lucky, someone might say, “That’s great, but you should be more specific.”
So then you say, “I want to lose 20 pounds” or “I want to squat 300 pounds.”
These goals are centered around outcomes, not identity.
To understand what I mean, consider that there are three levels at which change can occur. You can imagine them like the layers of an onion.
The first layer is changing your outcomes. This level is concerned with changing your results: losing weight, publishing a book, winning a championship. Most of the goals you set are associated with this level of change.
The second layer is changing your process. This level is concerned with changing your habits and systems: implementing a new routine at the gym, decluttering your desk for better workflow, developing a meditation practice. Most of the habits you build are associated with this level.
The third and deepest layer is changing your identity. This level is concerned with changing your beliefs: your worldview, your self-image, your judgments about yourself and others. Most of the beliefs, assumptions, and biases you hold are associated with this level.
Outcomes are about what you get. Processes are about what you do. Identity is about what you believe. When it comes to building habits that last—when it comes to building a system of 1 percent improvements—the problem is not that one level is “better” or “worse” than another. All levels of change are useful in their own way. The problem is the direction of change.
Many people begin the process of changing their habits by focusing on what they want to achieve. This leads us to outcome-based habits. The alternative is to build identity-based habits. With this approach, we start by focusing on who we wish to become.
We all have those ingrained beliefs that hold us back. In finance, I hear them daily: “I’ll never be good with money,” “I don’t do numbers,” “My spouse handles it because I’m awful with money,” or “I’ve accepted I’ll never be rich.” This “money mind trash” is incredibly common, but it doesn’t have to be your reality.
It’s time to flip the script on these limiting beliefs. Here’s how you can transform your financial future:
1. Define Your Outcome
Start by clearly stating what you want to achieve. Make it specific and tangible.
- “I want to save $10,000 for a down payment.”
- “I will have $100,000 invested within three years.”
- “I will buy my first investment property by 2026.”
- “I will be completely debt-free.”
2. Change Your Process
Break down your big goal into manageable steps. Remember the old adage: “How do you eat an elephant? One bite at a time.”
- To save: Open a high-yield savings account and set up automatic transfers. Start small, then increase it.
- To invest: Dedicate time to learn the basics, open an investment account, and set up regular, automated contributions.
- To buy property: Network with local investors, attend open houses, and immerse yourself in learning about real estate investing.
- To become debt-free: Implement a proven debt reduction strategy (like the debt snowball or avalanche) and commit to it.
3. Transform Your Identity
This is the most powerful step. At your core, you need to believe that you are capable of financial success and that you deserve it.
- Craft a mantra: Write down affirmations that resonate with your goals and values, and place them where you’ll see them daily. Something like: “I am financially intelligent and in control of my wealth.” or “Money works for me to create the life I desire.”
- Create a vision board: Visually represent your ideal life once you achieve your financial outcomes. Let it inspire you.
- Affirm your new self: Consistently tell yourself: “I am good with money. Money is working for me. I am in control of my financial destiny.”
Celebrate Your Wins
Along the way, make sure to acknowledge and celebrate every milestone, no matter how small. This positive reinforcement tells your subconscious that you are succeeding, building momentum and motivation to keep going.
The most incredible part about embracing an identity-based approach to your finances is the ripple effect it creates. As you uplift your own financial narrative, you’ll find it positively influences other areas of your life and even those around you.
Amazing awaits when you truly believe it’s possible. What financial identity are you ready to claim?
