My focus in 2020 is to read
more and I’m happy to report that I finished reading my first book of the year:
Good Habits, Bad Habits: The Science of
Making Positive Changes That Stick, by Wendy Wood. I’m a big fan of the public library and was
able to check this book out for free.
The best part about checking out books at the library is that I can
request any book I want and have it set aside for easy checkout. Since books need to be returned within 3
weeks, this gives me the outside incentive to finish reading the book before
it’s due. For those that like to read
and keep books, you can find Good Habits, Bad Habits on Amazon here.
Wendy Wood is a social
psychologist and the Provost Professor of Psychology and Business at University
of Southern California. Her main area of
study focuses on the effects of habits on human behavior. Her research has revealed that nearly half of
our day (43%) is spent repeating the things we’ve done in the past out of
habit.
What is a habit?
“A habit happens when a context cue is sufficiently
associated with a rewarded response to become automatic, to fade into that
hardworking, quiet second self. That’s it. Cue and response. Notice that
there’s no room in that mechanism for, well, you. You’re not a part of it, not
as you probably think of yourself. You—your goals, your will, your wishes—don’t
have any part to play in habits. Goals can orient you to build a habit, but
your desires don’t make habits work. Actually, your habit self would benefit if
“you” just got out of the way."– Wendy Wood.
A habit is a mental shortcut
that repeats what we’ve already done in the past. Habits happen effortlessly while we are
thinking of something else. When we are
distracted, feeling tired or overwhelmed, we fall back on our habits, good and
bad. This is why it’s so beneficial to
establish good habits – you can perform those actions regardless of how
stressed out you are.
Habits outweigh willpower, self-control and conscious
decision-making
Good Habits, Bad Habits
explores why many of us fail at making positive changes based on willpower
alone. We set lofty goals such as weight
loss, saving more money and strengthening personal relationships. We think that our determination and intention
is enough to cause permanent changes; and when we fail, we beat ourselves up
about how our willpower or self-control just wasn’t strong enough.
As it turns out, our conduct
is largely driven from learned habits and NOT conscious decision-making. The way we exercise, eat, drink, spend money
and respond to the people around us is largely due to repeating things we’ve
done in the past without thinking. We
may have put some thought to decisions in the beginning, but habits soon take
over. Think about our morning routines:
brushing teeth, showering, shaving, drinking coffee, etc – these tasks happen
without thought or effort. We are often
thinking about other things when our habitual morning routine kicks in.
When it comes to making
positive changes, Wood contends that intelligence, talent and motivation are
not what it takes to persist in the long term.
Willpower isn’t the issue.
Self-control isn’t the issue. Wanting
something enough isn’t the issue.
Self-control is often
confused with habits. People that score
high on self-control scales tend to weigh less, have better retirement savings,
happier relationships and are more productive at work. How can we be more like them?
People think that sticking to
a good habit involves self-control. As
it turns out, those who score high on self-control measurements aren’t really
relying on their willpower at all. They
are not practicing self-denial by white-knuckling it through life. Instead, they are very efficient at forming
positive habits that meet their goals.
Wood says that people who are thought to have high self-control “seem to understand the influence of
situations and choose ones in which it’s easier to repeat desired actions. They don’t have much “Friction” in their
lives and so are not tempted to act in counterproductive ways.”
“They
have a set pattern, and they follow it. They are not making decisions. Here’s
the very happy implication: the worst, most effortful run will be that first
one. Or the second, perhaps. But effort doesn’t last (in fact, if it does,
you’re doing it wrong). Habits will form and take the effort off your hands.”
Self-control is easy
when it involves placing yourself in the right situations to develop the right
habits. Healthy eaters have made fattening foods more difficult to reach - by not
stocking their pantries with unhealthy snacks or by moving them towards the top
of the cupboard. They don’t constantly
struggle to avoid eating unhealthy food - it’s simply not an option.
How to develop a habit
So how can someone make
positive changes and get them to stick?
Wood suggests that repeating something and getting instantly rewarded
for it helps us learn a habit. Consistently engaging in repetitive action
will eventually lead to new behaviors that become second nature without us
having to actively make decisions. Being
surrounded by a like-minded community can help perpetuate habits.
Stacking new habits on top of
existing ones can be extremely powerful, since we are already have our everyday
routines set up. Want to floss more?
Connect it to brushing your teeth.
Want to go to the gym more? Stop
by the gym on the way home. Want to
invest more? Connect payday with an
automatic contribution to your investment account. Want to stop staring at your cell phone and
build stronger relationships with family or friends? Make it habitual to first send a nice message
or make a phone call to a loved one every time you want to mindlessly pick up
your cell phone. Get a watch so you
don’t need to look at your cell phone to see what time it is (and get
distracted by notifications, emails, social media, etc).
Changing our perspective on
self-control can help us not be too harsh on ourselves when don’t succeed at
reaching our goals. Recognize that
willpower alone is not enough to develop strong habits. Creating a healthy environment can help
facilitate and nurture our positive habits.
Creating some friction can stave off negative habits. It’s important to find some joy in what
you’re doing, otherwise it will be painful to keep repeating things.
It can take about two to
three months to form a habit. This is
when some action becomes so automated that no thought or effort needs to be
done – we simply just do it out of habit.
To quote Wendy Wood: “self-control
is simple when you understand that it involves putting yourself in the right
situations to develop the right habits.”
Policy changes can introduce new habits
Information and willpower
alone are insufficient to drive change. Policy
makers can use science to introduce new habits.
To cut back on public
smoking, the government made some big changes.
Cigarettes were taxed at higher amounts, laws were enacted to ban
smoking in public places, and cigarettes were placed behind the counter (so
customers needed to actively request a pack of cigarettes instead of grabbing
them off the shelf or from a vending machine).
The results forced a widespread change of habits that led to a national
decline in smoking.
Countries that automatically
enroll their citizens as organ donors (with an opt-out decision) such as Spain,
Austria and Singapore have highly successful organ-donation programs. In the United States, the default is that
citizens are not enrolled as organ donors (they need to actively opt-in). As a result, there is an organ shortage here in
the United States.
Many businesses now
automatically enroll their new employees in retirement plans (with an opt-out
decision). This has led to significantly
increased retirement savings since employees now need to actively decide not to
contribute. They need to go out of their
way to sign forms that basically say they would not like to invest in their
future retirement.
A little bit of friction can
be enough to get people to stop smoking, donate organs and automatically
invest.
Here are some ways that I’ve formed good financial
habits:
-
Listening to
financial podcasts such as ChooseFI, Afford Anything and Stacking Benjamins and
reading blogs such as Mr. Money Mustache helps me stay motivated and encouraged
to keep pursing financial freedom.
-
Unsubscribing
from mailing lists and not checking on deal sites has reduced my temptations to
buy random crap.
-
I set up my
office lunch hour to only be 30 minutes long.
This forces me to bring lunch to the office since there simply isn’t enough
time for me to go out to eat. This also
allows me to spend more time with my family every morning (I start working 30
minutes later than everyone else).
Bringing lunch to work is healthier, saves time and saves money.
-
Slowly increasing
my savings rate 1% at a time. These 1% increases in our savings rate occur so
slowly, with so little friction in our day-to-day finances that we don’t have
trouble adjusting to less take home pay.
If you can increase your savings rate by 1% every 2 months, by the end of
the year you having increased your savings rate by 6%!
-
Automating our
investment contributions. When we get
our paychecks, a portion of money gets automatically invested into our 401K,
IRAs and savings. Less money ends up in
our checking account and as a result, we end up spending less money.
-
Paying off credit
card balances as soon as transactions post.
As you all know, I am a big fan of paying for everything with a credit
card whenever possible. This allows us
to save up tons of points and miles, which we can redeem towards free travel. By paying off credit card balances as soon as
they clear, we remove the risk of building up credit card debt.
-
Whenever the
stock market has a minor pullback, I make an extra contribution into our
investment accounts. I’ve been
accustomed to seeing drops in the market as opportunities to purchase more
shares at a discount. This softens the
pain of seeing our investment account balances drop.
Good financial habits can
help make saving money automatic and not a struggle – even when life overwhelms
you.
I thoroughly enjoyed the
science and studies presented by Wendy Wood that get behind the how and why
habits develop. This book was an easy
read and I never found it boring at any time.
My only criticism would be that I wish the author added a concise
summary of all her ideas on one page, for easy future reference.
You can get a copy of Good
Habits, Bad Habits from your local library for free, or at Amazon here.
How can you make financial
improvement habitual?
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