Adventures in Mental Time Travel

I took the title of today’s post from a chapter in Annie Duke’s book Thinking in Bets: Making Smarter Decision When you Don’t Have All the Facts.  This is the latest book I have finished reading.  I found the information I gained from this book so useful that I wanted to share some excerpts and insights with you.  Today I will discuss how we can use mental time traveling on our journey towards financial freedom.

To quote a passage from Annie Duke’s book, “For all the scientific research on the battle between our immediate desires and long-term goals, a particularly succinct explanation comes from Jerry Seinfeld, on why he doesn’t get enough sleep: “I stay up late at night because I’m Night Guy.  Night Guy wants to stay up late. ‘What about getting up after five hours of sleep?’ ‘That’s Morning Guy’s problem.  That’s not my problem.  I’m Night Guy.  I stay up as late as I want.’  So you get up in the morning: you’re exhausted, you’re groggy. ‘Oooh, I hate that Night Guy.’  See, Night Guy always screws Morning Guy.”

Why do we have such a difficult time preparing for our future and planning for our future-selves?  Why do we spend (sometimes frivolously) now instead of saving in our retirement accounts?  Investing towards financial freedom means that we need to find ways of saving money or earning more money now, instead of placing the responsibility on our future self.  Don’t let your current self screw your future-self.

Temporal discounting is the tendency to favor our present-self at the expense of our future-self.  In a way, we are built to behave this way.  We use up the resources available to us right now instead of saving those resources for a future self that we don’t have any strong connection to right.  

So how can we get to know our future-self right now?  The future we can imagine for ourselves is usually based off our past.  One way we can get to know our future-self is to remember past experiences.  Putting our past memories together can help us remember and construct an idea of our future. 

Annie Duke goes on to say that “Night Jerry can access memories like oversleeping and missing appointments or dozing off during morning meetings that he can use to imagine how tired Morning Jerry will be or what’s going to happen to Morning Jerry’s schedule when he doesn’t want to get up or how his day will go when he can’t pay attention.”

“Wouldn’t it be great if Morning Jerry could travel back in time and tap Night Jerry on the shoulder to tell him to go to bed?”  

Studies find that when participants are shown software created images of their aged, older looking selves (complete with wrinkles, hair loss, and white hair), subjects allocated extra money towards their retirement accounts.  Getting a glimpse of how we will look in the future can be a powerful reminder of the importance of saving up in the present.  Thinking about our future situation can get us to think about the consequences of not properly saving for that future.  

Annie Duke says these types of apps can be a: “tap on the shoulder from our future-self. “Hey, don’t forget about me.  I’m going to exist and I’d like you to please take that into account.”

We’re not perfectly rational when we ponder the past or the future and engage our deliberative mind, but we are more likely to make choices consistent with our long-term goals when we can get out of the moment and engage our past- and future-selves.  We want Night Jerry and Morning Jerry colliding on the decision of when to get some sleep.

And we want our aged, wrinkly self colliding with us when we decide between spending more money now on something like a nicer car versus saving more money for retirement.”

Do you have older family members, colleagues, or friends that have failed to save for their own future?  What are their struggles?  Are they working much longer than they’d like because they don’t have a nest egg that can support them?  Are they dependent on their children or family members to take care of them and help them pay their bills?  Imagine if you were put into a similar situation.  Would you have any regrets?  How can you avoid the mistakes that led to these outcomes?

Harness the power of regret
While many consider regret to be an unproductive waste of time, Annie Duke argues that regret can be a powerful motivational tool.  Instead of sulking over something that has already occurred, she suggests moving regret to the front of our decisions.  This way regret can help us alter choices that could lead to poor outcomes.  

Look into your future.  Will you be struggling to get by due to poor retirement savings decisions when you were younger?  Will you be dependent on government checks to cover your daily expenses?  Will you be a burden on your family and friends?  Will you regret what you see in this possible future?  Are there any decisions that you’ve made in your past that you regret?  These moments of decision interruption can get us to imagine how we will feel in the future based on the decisions we make today.

Moving regret forward can also help us come to terms with accepting a bad outcome.  If we know what to expect, we will be less likely to be blindsided.  No one likes to hear the phrase “I told you so” - especially from themselves.  

The 10-10-10 question
Author Suzy Welch came up with the 10-10-10 guideline to help us think about our future situation, during our current situation.  When considering decisions, ask yourself the questions:

“What are the consequences of each of my options in ten minutes?  In ten months?  In ten years?”

This line of questioning gets us to mentally time travel in the future.  On the same concept, you can also use these questions to ask yourself how you feel about certain decisions you’ve made 10 minutes ago, 10 months ago, and ten years ago.  The 10-10-10 question can lower your risk of making poor choices that lead to unwanted consequences.  

I highly recommend reading Annie Duke’s book Thinking in Bets: Making Smarter Decision When you Don’t Have All the Facts.  It’s changed my outlook and perspective on many things in my life.  You can buy the book here on Amazon or check it out at the library for free like I did.

Atomic Habits

James Clear is an author, entrepreneur and one of the leading experts on habits.   James Clear writes on JamesClear.com and read his email newsletter on a routine basis.  I found his new book Atomic Habits to be helpful and enjoyable.  Atomic Habits is designed to help anyone improve any aspect of their lives including health, productivity, finance, relationships and more.

What is a habit?James Clear defines a habit as “a routine or behavior that is performed regularly – and, in many cases, automatically.”

“Changes that seem small and unimportant at first will compound into remarkable results if you’re willing to stick with them for years.  We all deal with setbacks but in the long run, the quality of our lives often depends on the quality of our habits.  With the same habits, you’ll end up with the same results.  But with better habits, anything is possible.”

The core of the Atomic Habits book is going through the four-step model of habits and then going through the four laws of behavior change.  James Clear lays out his guidelines in a clear and concise manner.

The four-step loop of habits that underlies all of human behavior are: cue, craving, response, and reward.  The cue triggers your brain to notice a reward and initiate a specific behavior.  A craving is the motivational force behind every habit – our reason to act based on motivation or desire.  The response is the habit that we perform, which can either be a thought or an action.  The reward is the end goal of every habit – the reward satisfies the craving and tells our brain which actions are worth repeating in the future.    

How can small habits make a big difference?James Clear emphasizes the importance of the aggregation of marginal gains, a philosophy of striving for just a tiny bit of improvement in everything you do.

“It is so easy to overestimate the importance of one defining moment and underestimate the value of making small improvements on a daily basis.  Too often, we convince ourselves that massive success requires massive action. … Meanwhile, improving by 1 percent isn’t particularly notable – sometimes it isn’t even noticeable – but it can be far more meaningful, especially in the long run.  The difference a tiny improvement can make over time is astounding. 

Here’s how the math works out: if you can get 1 percent better each day for one year, you’ll end up thirty-seven times better by the time you’re done.  Conversely, if you get 1 percent worse each day for one year, you’ll decline nearly down to zero.  What starts as a small win or a minor setback accumulates into something much more.”

While daily habits may not seem much on their own, James Clear describes habits as “the compound interest of self-improvement.”  The effects of your habits multiply as you repeat them, with huge impacts over time.  Because huge results don’t seem to happen right away when implementing small changes in routine, many people give up and go back to unproductive routines.

“A single decision is easy to dismiss.  But when we repeat 1 percent errors, day after day, by replicating poor decisions, duplicating tiny mistakes, and rationalizing little excuses, our small choices compound into toxic results.  It’s the accumulation of many missteps – a 1 percent decline here and there – that eventually leads to a problem.”

“Making a choice that is 1 percent better or 1 percent worse seems insignificant in the moment, but over the span of moments that make up a lifetime these choices determine the difference between who you are and who you could be.  Success is the product of daily habits – not once-in-a-lifetime transformations.”

The importance of setting up good systemsJames Clear wants you to know that no matter how successful you are now, the most important thing to know about your habits is whether they are putting you on a trajectory of success or failure.  The journey is more important than your current results.  Tiny improvements, even 1 percent improvements will push you towards the results you want to achieve.  While setting goals can help define the results you want to achieve, James Clear stresses that one should focus on systems and processes instead of goals.  Developing and sticking to good systems is much better for making progress than just having a goal.

“If you’re having trouble changing your habits, the problem isn’t you.  The problem is your system.  Bad habits repeat themselves again and again not because you don’t want to change, but because you have the wrong system for change.

You do not rise to the level of your goals.  You fall to the level of your systems.”

Choose behaviors that align with the type of person you wish to be“Behavior that is incongruent with the self will not last.  You may want more money, but if your identity is someone who consumes rather than creates, then you’ll continue to be pulled toward spending rather than earning.  You may want better health, but if you continue to prioritize comfort over accomplishment, you’ll be drawn to relaxing rather than training.  It’s hard to change your habits if you never change the underlying beliefs that led to your past behavior.  You have a new goal and a new plan, but you haven’t changed who you are.

The ultimate form of intrinsic motivation is when a habit becomes part of your identity.  It’s one thing to say I’m the type of person who wants this.  It’s something very different to say I’m the type of person who is this. 

True behavior change is identity change.  You might start a habit because of motivation, but the only reason you’ll stick with one is that it becomes part of your identity.  Improvements are only temporary until they become part of who you are.”

How does one create a good habit?
Make it obvious, make it attractive, make it easy and make it satisfying.  James Clear goes into extreme detail with the steps involved with creating a habit and making sure that habit sticks.  In the beginning, small changes seem meaningless.  But over time as small changes continue to stack on top of each other, a tipping point is reached and the habits compound.  At some point, your system keeps you consistently sticking to your good habits.  The process is continuous as you always look for the next step to get 1 percent better.Breaking a bad habit involves doing the opposite of creating a good habit
Make it invisible, make it unattractive, make it difficult, and make it unsatisfying.  Bad habits “repeat themselves again and again not because you don’t want to change, but because you have the wrong system for change.”
Applying principles from Atomic Habits to your finances
1. Make good financial habits obvious.  You can start improving your finances by first tracking your spending.  This can be done manually with ClearCheckbook or automatically with Mint and Personal Capital.  You can implement intentions such as “I will save 20% of my income.”

Make bad financial habits invisible.  Unsubscribe from all mailing lists from retailers and deal sites.  Saving 20% off something is often spending 80% on something you don’t need.

2. Make good financial habits attractive.  Join a culture where saving and investing is considered normal behavior.  This includes following financial bloggers such as Mr. Money Mustache and JL Collins.  This includes listening to financial podcasts such as ChooseFI and Afford Anything.  You can join online financial communities such as Bogleheads.  Saving and investing consistently is easier when everyone around you is doing it.

Make bad financial habits unattractive.  Reframe your mindset.  Think about how having a low savings account balance or a high credit card balance can make you feel like you have lost control of your finances.  The benefits of financial peace outweigh the detriment of financial stress.

3.  Make good financial habits easy.  Automating your saving and investing locks in consistent behavior.  Investing in your 401K is a perfect example of sticking to a great financial habit with zero effort.  Every time you get a paycheck, a portion of money is automatically taken out and invested in your 401K – you don’t even see that amount on your paycheck so there is no temptation to spend it.  You can set up automatic transfers into a savings account as well as contributions into an IRA.  Setting up autopay for your bills ensures that you never miss a payment. 

Make bad financial habits difficult.  If your savings and investments are automatically taken out of your checking account, your account balance will be lower.  You will be less likely to spend money if you have less money in your account.  Consider moving your savings account into an online bank, which typically offer much higher yields.  When you link your checking account to an online savings account, it takes longer to access that money.  By increasing the friction of access to your online savings account, you will be less tempted to access the money.

4.  Make good financial habits satisfying.  Watching your savings and investment accounts grow can be extremely satisfying.  Having a large amount of savings can provide a great deal of comfort and safety, especially in times of financial uncertainty.  Keeping your credit card balances at $0 can provide excellent peace of mind.

Make bad financial habits unsatisfying.  Having an accountability partner such as your spouse or significant other can help keep an eye on your financial behavior. 

Atomic Habits makes it crystal clear on how to create and maintain good habits.  James Clear is an excellent writer.  He provides plenty of science and research behind his claims.  His storytelling is fluid and easy to read.  The best part of this book was the chapter summaries that really helped to concisely tie everything together.  I’ve been able to slowly integrate many of his strategies into my daily life.  Atomic Habits is the most influential book I’ve read in a long time; I highly recommend it.  You can pick up your copy of Atomic Habits from Amazon here or check to see if your local library offers a digital copy for loan.

Meet the Frugalwoods

Elizabeth Willard Thames (aka Frugalwoods) is a financial independence blogger I follow from time to time.  She is an excellent writer and her blog discusses the benefits of simple living on the path to financial independence.  The Frugalwoods have had success with high incomes, a profitable rental property, as well as a popular online blog.  Their financial success has allowed them to purchase a homestead in Vermont, where the young couple work from home and raise their 2 children.  Towards the end of 2017, Mrs. Thames wrote a book titled Meet the Frugalwoods: Achieving Financial Independence Through Simple Living.  This book has been on my reading list for a while and is the second book I’ve finished reading in 2020.

Meet the Frugalwoods is a memoir of the choices Mrs. Thames and her husband took along their journey towards financial independence.  The book reads very much like a short story rather than an educational textbook.  The writing is deeply personal with wonderful storytelling.  It feels like Mrs. Thames wrote this book to help get her family and friends to understand her mindset on the choices she’s made on her own journey.  The book aims to get people to rethink their whole lifestyle by sharing how frugal living can help you live a dream life.     

Right at the beginning of the book, Mrs. Thames acknowledges her privileges - which include coming from families in stable marriages, having parents that helped pay for college, and having access to higher levels of education.  She acknowledges that her and her husband have had high paying careers and that being frugal may not be enough to reach financial independence at a young age for everyone.  Being frugal can help almost anyone live a better though. 

Mrs. Thames makes an excellent case for how proud one should be of living a life of “luxurious frugality”.  Mrs. Thames emphasizes that frugality is not about giving things up, but about gaining freedom.  A big theme of her life is to rely on herself and her husband to solve problems on their own, without spending more money.  By insourcing things such as cutting each other’s hair and home remodeling, Mrs. Thames and her husband strengthen their relationship with communication and collaboration.  Frugality is good for the environment, as it involves reducing waste and reusing products. 

 Frugalwoods on being frugal:

“The key (to frugality) is to identify less expensive options that’ll yield the same or a similar end result.  Thus, you end up not feeling deprived, you save a boatload of money, and you are motivated to find even more opportunities for dramatic changes and the resulting savings.  Once you begin down the road of frugalizing, it’s nearly impossible to stop.  It becomes a game, a competition, and an invigorating challenge.  You get to win at your own life.”

“Once you eliminate an expense, you’ve eliminated it forever. It’s not just about saving an amount for one year, but saving that amount every year for the rest of your life.”

There are haters out there that complain about how much income Mr. and Mrs. Thames have made with their careers and continue to make.  But there is no doubt that the Frugalwoods are genuinely frugal.  Mrs. Thames wears no makeup – as she puts it: “no painted nails, blush, powder, concealer, mascara, eye shadow, eyeliner, or lipstick.”  Mrs. Thames stopped buying clothing for over 3 years.  She stopped going to get haircuts at the salon.  The Frugalwoods only go out to eat one meal a month.

Frugalwoods on financial independence:

“I view financial independence as the point at which you no longer have to earn money in order in live.  In other words, your assets are such that you can live off of them without the influx of a monthly paycheck.  If you want to work you can, but you don’t have to in order to pay your bills and feed your family.  You are freed from the need to earn money; ergo, you are financially independent.”

 “A very basic definition of financial independence is as follows: when a sustainable level of withdrawals from your assets is more than your ongoing expenses.”

“There are actually only three variables in the financial independence equation: income, expenses, and time.  The less you spend, the more you save, the faster you save it, the less money you need overall.  Considered in this context, frugality is a compounding proposition and one of the fastest ways to reach financial independence.  A high salary alone is meaningless if you don’t save any of it.  The more distance you can put between your earnings and your expenses, the faster you’ll reach any financial goal you set.”

Frugalwoods on savoring infrequent events:

“We’ve discovered that the rarity of something’s occurrence serves to enhance its enjoyment.  Just like eating to excess or drinking to excess, spending to excess delivers no lasting fulfillment.”

“When Nate and I go out to dinner, an infrequent event, we savor each bite.  We thoroughly enjoy ourselves and we appreciate the uniqueness of the experience.  Frugality turned us into people who feel profound gratitude for everything we have, as opposed to the people we used to be, constantly scraping and grasping for more.”

Frugalwoods is a very skilled and gifted writer.  My only complaint about Meet the Frugalwoods is Mrs. Thames’ excessive use of complex vocabulary, which I found to be a bit distracting.  She fills her book with many beautiful vocabulary words that I’ve never used in my entire life; words that one would ever expect to use in daily conversation.  I hate to say it, but this use of vocabulary took away some of my enjoyment of the book and comes across a bit arrogant, which doesn’t really seem to be the feeling I get from reading her blog.   

Here are some of the words I had to look up in the dictionary as I read Meet the Frugalwoods: ennui, gauche, suavity, elephantine, en plein air, acquiesce, canapés, doyenne, demure, mete, aggrandizement, goaded, diatribe, profligate, ramrod, kismet, apocryphal, yeoman, erstwhile, girded, rankled, haranguing, Rumspringa, tchotchkes, ersatz, vacuousness, ernstwhile, anathema, prodigious, bucolic, sleeting, dowager, ensconced, agrarian, corybantic, amalgamation, meting, mercurial, and bulwarks.  If you’re not an English major, you’ll want to have a dictionary nearby.  I do not recommend the audiobook version of Meet the Frugalwoods. 

Meet the Frugalwoods is a fun story of self-discovery, emotional growth and financial independence.  You can buy it on Amazon here or simply check it out at your local library, which is the frugal way to read this book.

Habitual financial improvement

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?