UNDERSTANDING HABITSThe Purpose of HabitsHabits have a purpose. They save the brain from work. It’s really quite extraordinary that thebrain created habits at all. By isolating certain repetitive functions to a very small, almostfractional area, the brain freed itself to expand and perform higher level functions. Thisexpansion gave birth to toolmaking, then speech and finally cooperation; humans workingtogether for a single purpose.Physiologically, habits are a series of interconnected neural pathways networked togetheralong the neural fibers underneath the neocortex to a central neural hub inside our brain knownas the basal ganglia. The basal ganglia is a golf ball size mass of brain cells (neurons) that hasmany purposes, one of which is the triggering of habitual movement and behavior. The momenta neural pathway becomes linked to the basal ganglia, it is magically transformed by the braininto a permanent habit. According to a famous London study performed on 99 people over a oneyear period, this process can take anywhere from 18 to 254 days, depending on the complexity ofthe behavior forming the habit. The more complex the behavior, such as washing your faceverses swinging a golf club, the more time it takes for the habit to form.In another study on habits (Duke University in 2006) it was determined that an average of40% of all daily human activities are habits. These daily habits unconsciously control our lives.

4Our daily habits, as boring as they may be, are the secret to success, failure or mediocrity. Ourbehaviors, the choices we make, our thinking, our habits are the cause of wealth and poverty.Those who learned good daily habits from their parents, a mentor or through the school of hardknocks, excel in life. Their lives are outstanding. They rule the world. They command respect,make most of the money in this world, and control the lives of millions who do not have gooddaily habits. Our daily habits are the reason we live in a beach house or a slum. Our daily habitsare the reason we make millions of dollars a year or eke out a living and are forced to livepaycheck to paycheck. Our daily habits are the reason we are happy or unhappy. Our daily habitsare the reason our children go to the best colleges or struggle to graduate from high school. Theblueprint of our life and the lives of our children are determined by daily habits. That’s howimportant habits are. If we want to change our life we must change your daily habits.Habits save the brain from work. When the brain engages in a habit, it requires almost nothinking. It’s an unconscious act. This is important because thinking and other conscious actsconsume a great deal of glucose and oxygen. Glucose fuels every cell in the human body. All thefood we consume is eventually converted into glucose, or stored for later use in our fat ormuscles. Glucose passes through the cell wall (outer membrane) and once inside the cell, it isviolently ripped apart and converted to use as fuel. Converting glucose to cell fuel requiresoxygen. Each day our little 3 1/2 pound brains consume 20% of the entire body’s supply ofglucose and oxygen. Unlike the rest of the body, which can store glucose in fat and muscle, thebrain cannot store glucose. For this reason, glucose is considered a precious commodity to thebrain.

In the beginning of the formation of any habit, the brain invests precious glucose to helpforge the neural connections (synapses) between neurons that create a habit. Creating this “habitsynapse” inside the brain is a lot like building a house. A lot of work goes into constructing thehouse, but once the house is built, the work ends. It’s the same thing with habits. Once the habitis formed, there’s very little work required of the brain in maintaining or engaging in a habit. It’svery efficient. And the brain likes efficient. Existing habits also require less brain fuel. For thesetwo reasons, the brain naturally likes habits, encourages habits and fights us when we abandon ortry to change an existing habit. That is why habit change is so hard - our own brains go to warwith us, each time we try to change a habit. And almost always, the brain wins, unless you knowthe secrets to habit change, which I will share with you in this workbook.

6UNDERSTANDING HABITSHabit FormationHabits are formed over many years of repetitive behavior and thinking. This repetition createssynapses inside our brains. A synapse is created when two neurons (brain cells) begincommunicating with each other. The more frequent the communication, the stronger the synapsebecomes. Neurons that fire together wire together. Over time these synapses link up with thebasal ganglia, the command and control center for habits in the brain. The synapses that createhabits never go away. They can be weakened, when we abandon a habit, but they never truly goaway.Thanks to the research of Charles Duhigg, author of The Power of Habit, we have a betterunderstanding of the process that drive habits: the cue, the routine and the reward. The cuerepresents a familiar environmental point of reference that sends a message to the basal gangliathat it is time to engage in a habit. This is one of the reasons why environmental changes candisrupt habits, which we’ll get into a little later. Once we see this environmental trigger, the basalganglia takes over and directs us to engage in the routine. At the end of the routine is a rewardwaiting for us. Example: You’re driving in the car with your kids and one of them screams out,“McDonalds. I want to go to McDonalds.” Your child just noticed the golden arches andimmediately began thinking about the delicious chicken mcnuggets inside the building behind

the golden arches. So you turn right at the golden arches (the cue), pull into McDonalds (theroutine), and your kids gorge themselves with mcnuggets (the reward).This process repeats itself with every habit. Instead of golden arches, it might be a pot ofcoffee (time for the coffee habit) or your Friday after work (time for the beer or wine habit), orturning on your computer (time for the check email habit). Every habit has a cue, a routine and areward.

8UNDERSTANDING HABITSKeystone Habits vs. Ordinary HabitsThere are two types of habits:1. Ordinary Habits and2. Keystone HabitsOrdinary Habits are simple, basic, standalone habits; the time we wake up in the morning, theroute we take to work, how we hold a fork etc. Keystone Habits are more complicated habits.They are unique because they affect other ordinary habits. Keystone Habits are like pac men;they move around searching for and eating up other ordinary habits. Let me give you anexample:It’s New Year’s Day and one of your resolutions is to lose weight. You’re about 50 poundsoverweight. A close friend, who is a runner, says the fastest way to lose weight is to run. So youdecide to start running (Keystone Habit). You hate running, but after doing it a little while you’redown fifteen pounds. One night you attend an annual social event and someone you knowcompliments you on your weight loss and how amazing your look. You go home that nightfeeling happy, like you’re floating on air. That compliment really got you pumped up. The nextmorning you decide to cut back on junk food (Ordinary Habit) and stop overeating (OrdinaryHabit). You also want to run more in order to lose more weight, so you decide to quit smoking(Ordinary Habit). Adopting just one Keystone Habit, running, causes the elimination of three

Ordinary Habits: junk food, overeating and smoking cigarettes. That’s why Keystone Habits areso important.

10UNDERSTANDING HABITSHabit SeesawVisualize a seesaw. Now imagine on one side of your seesaw are all of your good daily habitsand on the other side are all of your bad daily habits. If you are wealthy, this means that morethan 50% of all of your daily habits are good habits. If you are poor, this means that more than50% of all of your daily habits are bad habits. If you are in the middle-class this means that youhave a 50/50 split of good habits and bad habits on your seesaw.Getting your seesaw to tip in the right direction may be a simple as changing a few dailyhabits. For example, if you are in the middle-class and you want to become wealthy you willhave to add two or three good habits or eliminate two or three bad habits. If you are poor and youwant to become wealthy you will have to add a few good habits and eliminate a few bad habits.The point I’m making here is that the difference between being rich or poor requires onlya few minor changes to your daily routine. As mentioned previously, 40% of all of our dailyactivities are habits. This means 40% of the time we are all on auto pilot. 40% of the time wedon’t even think about what we are doing during the day. We are all in zombie mode 40% of thetime. Now, if you have good daily habits, then this is a good thing. But if you have bad dailyhabits, then this is a bad thing. Without much thought you are all either on the path to creatingwealth or poverty. Daily habits are responsible for our wealth, poverty, happiness andunhappiness. The key is to get that Habit Seesaw tipping in the right direction and in SectionTwo, I will show you exactly how to make that happen.

12UNDERSTANDING HABITSRich Habits vs. Poor HabitsAs previously stated, habits represent unconscious behaviors or thinking we engage in regularly.This is a good thing if those habits are good habits. Unconsciously, through our good habits, weare creating a good life: good financial health, good physical health, good mental health and anoverall feeling of happiness. But if we have bad habits, we are creating a life with financialissues, health issues, depression and unhappiness.I spent five years studying the daily habits of the rich and the poor. From my research Idiscovered that daily habits dictate how successful or unsuccessful you will be in life. Byfocusing my research on rich people ( 160,000 income per year plus 3.2 million in net liquidassets) and poor people ( 35,000 income or less per year plus 5,000 in net liquid assets) I wasable to identify common habits possessed by the rich and the poor. This research is importantbecause it gets to the heart of the cause of wealth and poverty. I learned five key things from mystudy:1. Daily habits dictate your long-term financial circumstances in life.2. Certain habits that we have are Keystone Habits. Keystone Habits are unique habitsbecause they affect other ordinary habits. I identified, in my research, certain KeystoneHabits that are responsible for creating financial success and happiness in life.

3. There is a cause and effect associated with daily habits. Having more Rich Habits (gooddaily habits) than Poor Habits (bad daily habits), will positively impact your financialcondition and level of happiness in life. Having more Poor Habits than Rich Habits, willnegatively impact your financial condition and level of happiness in life.4. Most of our habits are learned from our parents, our environment and who we associatewith.5. 30% of the population are poor in America. 65% are middle-class. Most of the middleclass (70% of this 65%) barely get by in life. They are one job loss away from beingpoor. Only 5% of population are financially well off in America.What are some of the Rich Habits and Poor Habits that are creating a good life or a badlife? Thanks to my research, I was able to identify nearly three hundred habits that separate therich from the poor. Within each group I uncovered certain, specific habits that either lift you upor pull you down. On the following page is a sampling of a few of these habits:


TIMEMANAGEMENTI WATCH NO MORE THAN 1HOUR OF T.V. A DAYI WATCH 2-3 HOURS OF T.V. ADAYDo any of these Poor Habits look familiar? In Section Two I will show you how to get ridof your Poor Habits and how to adopt the Rich Habits that will create automatic success andincrease happiness, not just for you but the lives of your family.

16CHANGING YOUR HABITSChanging just one habit is hard. As I mentioned above, the brain fights us when it comes to habitchange. Most newly formed habits fall apart after a few weeks. The same thing happens whenyou try to end an old habit; once your motivation or willpower wears off, the old habit rears itshead again. Because habit change can be hard, it typically requires an extreme level of disgust inyour current life circumstances which prompts you to action. Disgust is normally a negativeword. But when it comes to habit change, disgust is one of the most potent habit change catalyststhere is. Disgust is that line you draw in the sand when you have had enough. When you are sounhappy about your life that you become extremely disgusted, that is when you are ready tochange your habits. Extreme disgust creates a formidable type of willpower that does not fadeaway. The more disgusted you are with your habits, the more willpower you will have to makehabit change stick.In order to change your habits, you need to first become aware of them. Awareness requirestracking your daily activities from the moment you wake up to the moment you go to sleep. Twodays of tracking is all it takes. You want to do this during the workweek because most habits aretriggered during periods of stress and work creates stress. On the following page is an exampleof a Habit Awareness Tracking Schedule:

1Wake up at 8am2Have cup of coffee with a buttered bagel3Smoke a cigarette4Shower and get ready for work5Commute to work in car. Smoke a cigarette6Listened to music while commuting to work7Have cup of coffee at work along with a croissant8Check email9Respond to emails10Check voicemail11Respond to voicemails12Start work13Talked to colleagues about football game for 15 minutes, while smoking a cigarette14Responded to emails as they came in15Answered the phone 7 times16Went to lunch with some colleagues17Gossiped during lunch about people at work, while on cigarette break18Checked emails and voicemail when I got back from lunch19Responded to emails and voicemail20Answered the phone 9 times21Responded to emails as they came inBack to workSmoke break: gossiped with colleagues re: screw up of a colleague. This lasted for for 1023 minutes2224Did some Internet surfing, checked my Facebook and Twitter. This took about 20minutes25Back to work26Leave work at 5pm27Commute home listening to radio talk shows, while smoking a cigarette28Eat dinner, smoke a cigarette after dinner29Watch T.V. for 3 hours, while smoking cigarettes30Go to bed, check Facebook while in bed

18Use the blank schedule below to create your own Habit Awareness Tracking Schedule:

The next step is to identify all of your daily habits as good ( ) or bad (-). This is importantbecause until you can identify the habits that are holding you back in life, you will be unaware ofwhy you have the life you have:Wake at 8am-Coffee-Buttered bagel-Listen to music during commute-Check email first thing in morning-Respond to voicemails in morning-Gossip-Work Smoke cigarettes-Croissant-Surf the Internet, check Facebook and Twitter during work-Listen to radio-Watch 3 hours of T.V.-Check Facebook in bed-

20Now create your own Habit Identification Tracking Schedule:

This Habit Identification Schedule is your springboard for changing your habits. Don’t worrythat most of your habits are bad habits. The purpose of this exercise is to become aware of yourbad habits. Awareness comes first in the habit change process. When you know which habits areholding you back, you have the information you need to transform your life. Most people,unfortunately, skip this step entirely and jump directly into adding new habits. Millions do thisevery year when they set New Year’s resolutions. They never become aware of the existinghabits they have, which are creating the foundation for the life they have. Habit change requiresthat you eliminate bad habits and then add new good habits. The goal is to tip your individualHabit Seesaw in the right direction. In order to do that you need to become aware of the habitsyou currently have, and then identify them as good or bad.

22Now that you have identified all of your good and bad habits, it’s time to begin creating yourown customized Rich Habits Checklist. This checklist will eventually become part of your newdaily routine. Habit change is a process. It takes time. The best approach is to focus on changinga chunk of habits first. Chunking enables you to tackle a smaller number of habits at a time.Phase One in this process is to select some morning habits you would like to change over a 30day period. Here is an example:RICH HABITS CHECKLIST - PHASE ONE: MORNINGI woke at 6amI read for learning for 30 minutesI exercised for 30 minutesI prepared my “to-do” list for the dayRich Habits Tips:44% of the wealthy, successful people in my Rich Habits Study woke up 3 hours or more beforetheir work day began. This morning time was earmarked for self-education reading, exercise andother activities such as pursuing a goal, pursuing a passion, planning their day, writing, workinga side business they were passionate about, studying for night school etc. Those early morninghours represent an investment you make in yourself, every day.

Take some time to create your own Rich Habits Morning Checklist:RICH HABITS CHECKLIST - PHASE ONE: MORNINGSUNMONTUEWEDTHUFRISATFor the next four weeks this becomes your own customized Rich Habits Checklist. For 30 days,or more, check off each new Rich Habit you follow each day. This checklist will help forceaccountability in following your new morning Rich Habits. After 30 days these habits will beginto take root, creating synapses inside your brain that grow stronger every time you repeat them.If you are able to check off 30% or more of your new habits, pat yourself on the back. It’simportant to understand that just changing a handful of your daily habits will have a profoundimpact on your life.

24After following your Rich Habits Morning Checklist for at least 30 days, you are now ready tomove on to the next phase, changing your daytime habits using the same Rich Habits chunkingprocess. Here is an example:RICH HABITS CHECKLIST - PHASE TWO: DAYTIMEI listened to educational audio book or podcast during commuteI did not smoke a cigarette todayI did not gossip todayI did not eat any junk food todayI checked and responded to email/voicemail 1pm-2pmRich Habits Tips:63% of the wealthy individuals in my study listened to audio books or podcasts during theircommute to and from work. 95% of the poor individuals in my study listened to radio talk showsor music during their commute. 79% of the wealthy individuals in my study did not smokecigarettes, while 46% of the poor did. Gossip almost always is negative. 94% of the wealthy inmy study did not engage in gossip, while 79% of the poor in my study engaged in gossip on adaily basis. 70% of the wealthy in my study ate less than 300 junk food calories a day, while97% of the poor in my study ate more than 300 junk calories a day. The wealthy in my studydedicated specific time slots for responding to email and voicemail. This allowed them to focus

on being productive, helping them avoid distractions. The poor in my study responded to emailand voicemail throughout the day.Take some time to now create your own Rich Habits Daytime Checklist:RICH HABITS CHECKLIST - PHASE TWO:DAYTIMESUN MON TUE WED THU FRI SATOnce again you want to devote at least 30 days to following your new daytime habits. You wantto continue to follow your morning habits while simultaneously working on incorporating thesenew daytime habits into your routine. You may want to consolidate both the morning anddaytime new habits onto the checklist on the following page.


After another 30 days you are ready for Phase Three. In Phase Three you will be adding newnighttime habits to your daily routine. Once again, the springboard for creating your newnighttime habits will be the Habit Identification Tracking Schedule you completed earlier. Hereis an example:RICH HABITS CHECKLIST - PHASE THREE NIGHTTIMEI watched one hour or less of T.V. todayI spent one hour or less on recreational Internet useI spent one hour pursuing a dream, goal or developing a side business ormarketable skillI got to bed at 10pmRich Habits Tips:67% of the wealthy in my study watched less than 1 hour of T.V. each day while 77% of thepoor in my study watched more than 1 hour of T.V. each day. 63% of the wealthy in my studyspent less than 1 hour each day on recreational Internet use while 74% of the poor in my studyspent more than 1 hour a day on the Internet recreationally, visiting sites like Facebook, Youtubeor Twitter. 62% of the wealthy in my study devoted time every day pursuing some goal, versesonly 6% of the poor. Getting at least 7 to 8 hours of sleep every night is critical for your health,particularly brain health. The wealthy in my study averaged about 7 1/2 hours of sleep a night,while the poor averaged less than 7 hours.Take some time to now create your own Rich Habits Daytime Checklist:

28RICH HABITS CHECKLIST - PHASE THREENIGHTTIMESUN MON TUE WED THU FRI SATOnce again you want to devote at least 30 days to following your new daytime habits. You wantto continue to follow your morning and daytime habits, while simultaneously working onincorporating these new nighttime habits into your routine. You may want to consolidate all ofyour new habits onto the checklist on the following page.

RICH HABITS CHECKLIST - CONSOLIDATEDSUNMONTUEWEDTHUFRISATOnce your Consolidated Rich Habits checklist is complete, use it every day to hold yourselfaccountable. Over time your new Rich Habits will become automatic. They will not require anywillpower or thought. These habits will create a foundation for success in your life. They willpay dividends that will dramatically improve your financial circumstances, make you more

30confident and automatically put you on a path towards success. They are an investment in you, inyour growth and in your happiness.Think of your Rich Habits as snowflakes on a mountainside. Over time your Rich Habits,like snowflakes, will accumulate. You will not notice the accumulation from day to day, but atsome point they will create an avalanche; an avalanche of success event. It might be a bonus,raise, promotion, better job, big customer or clients or simply better health.

SHORT CUTS TO HABIT CHANGEThere are three powerful shortcuts to habit change that speed up the process: Habit Merging,Law of Association and Changes in Your Environment. Each one of these makes habit changeeasier, quicker and requires less willpower.Think of an existing habit (existing neural pathway) as a train on a track, except it’s inside yourbrain. If you add your new habit to that same train, as if it were a new passenger, the brain won’tput up a fight because you’re not trying to take control of the train or the track. You’re justtaking a ride. When an old habit does not perceive a new habit as a threat, it does not wage waragainst the new habit.Here’s how it works: Let’s say you want to add a new Rich Habit of reading 30 minutes everyday for self-education and let’s say you have an old habit of exercising aerobically on the stairmaster 30 minutes every day. If you were to put a book on the stair master and read that bookwhile you’re exercising, you will, almost immediately, form a new joint habit that sticks. Thetrigger for the habit will be the book on your stair master. Here’s another example: If you havean old habit of drinking coffee every day and you want to add a new Rich Habit of drinking aglass of water every day, you could drink a glass of water every time, either before or after you

32drink a cup of coffee. The trigger for this new habit could be putting your coffee cup on thewater cooler or in the refrigerator. And that new joint habit will also stick, almost immediately.Old habits can be triggered by the individuals you associate with. If you are trying to get rid ofsome old, bad habits you need to limit the time you spend associating with those individuals whoact as a trigger for those habits and begin associating with individuals who possess the new goodhabits you are trying to adopt. You can find these new individuals in network groups, non-profitgroups, trade groups or any group that is focused on pursuing similar goals. For example, if oneof your new goals is to read more, you can join a reading group that meets periodically to discussbooks the group reads. Another example would be finding individuals who run, jog or exerciseand begin jogging, running or exercising with them. Once you open your eyes to habit change,you will begin to see that there are many individuals who have those same habits. They are allaround you. You only begin to notice them after you make a decision to change your dailyhabits.It is much easier to abandon old habits and form new habits when your environment changes.New home, new neighbors, new friends, new job, new colleagues, new cities etc., all offer anopportunity to forge new habits. When your environment changes, you are forced to think yourway through each day. Spoons, knives and forks are no longer where they used to be, so youhave to think. Your commute to work is different, so you have to think. Your new

responsibilities at work are different, so you have to think. Eventually your brain will force youto develop habits in your new environment in order to make the brain’s job easier.

34Start SmallIt is far easier to change your habits if you start with small habits. Small habits change includesadding habits that require very little effort. Examples include drinking more water during theday, taking vitamin supplements or listening to audio books while you commute to work. Smallhabit change also includes cutting back on existing bad habits. Examples include reducing thenumber of cigarettes you smoke, reduce T.V. watching 30 minutes each day, same thing forFacebook or the Internet or walking 15 minutes every day for exercise. The smaller, easier thehabit change, the higher the probability that it will stick. Small habit change gives youmomentum and increased confidence. This allows you to take on bigger, more complex habitsyou’d like to add or remove.Firewall Your Bad HabitsOne trick to habit change is to make it harder for you to engage in a bad habit by creating sometype of firewall between you and the bad habit. For example, let’s say you eat junk food late atnight while watching T.V. You eat that junk food because it’s in your pantry. If it wasn’t in yourpantry you wouldn’t be able to eat it. The way to make this bad habit harder to engage in, wouldbe to stop stocking your pantry with junk food and instead stock your pantry with healthy snacks.The habit isn’t eating junk food; the habit is snacking while you watch T.V. No junk food maystop you from snacking but more likely, when you sit to watch T.V., the cue, you will defaultinto your routine of getting a snack. This time, the reward will be a different snack, ideally ahealthy one or at least a low calorie substitute.

Another example might be spending hours on Facebook at night, after dinner. One way to makethis harder would be to turn off your computer, or disconnect it from the router and put thecomputer plug or router cord in the garage, or anywhere that requires exerting some effort toretrieve it.By using the strategies in this workbook, you can eliminate bad habits that have been holdingyou back and form new good habits that will lift you up and put you on a path towards automaticsuccess. Each good habit you add to your life has a cumulative effect. They are like aninvestment in your individual success. The key is to get your personal Habit Seesaw tipping inthe right direction, with your Rich Habits outweighing your Poor Habits. Getting control of yourhabits is empowering. It gives you a sense of control over your life. According to the latestresearch on creating happiness, having a feeling of control over your life is one of the mostsignificant drivers in creating happiness. Your new Rich Habits will not only put you on the pathto success, they will also put you on the path to happiness. Your life will never be the same.

UNDERSTANDING HABITS Rich Habits vs. Poor Habits As previously stated, habits represent unconscious behaviors or thinking we engage in regularly. This is a good thing if those habits are good habits. Unconsciously, through our good habits, we are creating a good life: good financia