Atomic Habits: An Easy & Proven Way to Build Good Habits & Break Bad Ones.
In this week's blog post, I review Atomic Habits by James Clear.
Compound interest for behaviour and finance
There are two hot topics are on my mind at the moment. The first is that of habit changing and the second is finance and savings.
I’m currently reading a recently published book by self-improvement expert, James Clear, called Atomic Habits: An Easy & Proven Way to Build Good Habits & Break Bad Ones. Like Hal Elrod who wrote The Miracle Morning, James suffered a life-changing baseball accident in his late teens which devasted his prospects for continuing to play the sport he was passionate about. The lessons he taught himself during his long recovery have underpinned his subsequent success. He learned that making changes, however, small, build over time to transform our ability to do almost anything.
My other area of research is one which troubles me a lot and that is the lack of realistic financial advice given to new start-ups. It appears to me that the prevailing wisdom is that anyone can leave the 9 to 5, come up with a ‘good’ idea and turn it into a sustainable career which will not only bring riches but also everlasting happiness – seemingly without putting in the hours. Bloggers, vloggers and Instagrammers are all peddling the vision of the ‘perfect’ entrepreneur lifestyle.
So, what do these seemingly diverse topics have in common? They both hinge on the benefits of compound interest. The book talks eloquently about how the benefits of making routine 1% improvements in our habits build into major positive changes over time. Just like small, regular savings turn into a nest egg without being a daily drain on our spending. It’s the multiplier effect.
The book is a practical guide based on many years of evaluating academic research. James shows us how to instill good habits and banish bad habits from our personal and professional lives. It’s based on the idea that making big leaps of faith by setting a goal for our desired state is usually going to fail. He turns goal setting into process optimisation. Make forming good habits easier by following his 4-step action plan.
The 1st Law – Make it Obvious
James outlines the importance of setting yourself up for success by designing the right location and time for habit change by making the cues stand out. The right location may be somewhere new which isn’t associated with an old habit or simply right in front of you. For example, putting a few bottles of water around the house to encourage drinking more without the need to think. He advises linking a desired behaviour to a daily activity we enjoy. This is known as habit stacking.
The 2nd Law – Make it Attractive
In this section, he turns to examining the difference between ‘needs’ and ‘wants’ and link them to a current habit. The anticipation of a reward for completing necessary action is enough motivation to get it done and receive the actual reward of the second desire-based habit.
For example, you might need to finish a report but really want to research a holiday. Stack the report writing on to of your early morning existing habits. The ‘make it attractive’ law could result in:
“After my first coffee of the day. I will work on my ‘most important task’ in my office and then take my iPad into the sitting room and research a two-week break in Greece.”
The 3rd Law – Make It Easy
I enjoyed his idea that you can start a new habit by implementing the Two-Minute Rule. You can start by breaking it down into the smallest of chunks or phases turning a mammoth uphill struggle into simply putting one foot in front of another daily, turning it into a ritual. Once you start then it’s a matter of tweaking the details.
Law 4 – Make it Satisfying
By repeating the new behaviour daily, you form a streak and one of the ways James suggest we monitor this is with a habit tracker. His is an annual chart but we have the Homepreneur Habit Tracker which you can personalise and monitor your daily habits.
His rule is that you should never ‘miss twice’ If you miss one day then get back on the horse the next.
I’m a great fan of being accountable to someone else. In our writing group, which meets fortnightly, we had become lazy. Whilst we had originally agreed to bring a passage we’d written in the intervening two weeks, we had let the agreement slip and consequently our determination had waned. Over the past few months, since we introduced a penalty pot for failure to bring at least 1,000 words, our output has risen dramatically. So much so that our meagre £25 total so far is unlikely to provide us with the gourmet meal we are all hoping for this upcoming December!
The simple knowledge that I would not only have failed myself but also my lovely writing buddies as well as having to hand over a fiver has been enough of an incentive to ensure I haven’t missed a submission (yet!) – even when I haven’t attended due to other commitments I have submitted my ramblings.
‘Professional stick to the schedule; amateurs let life get in the way.”
The one thing I like about Atomic Habits is that the author explains a four-step approach to making changes which are simple and easy to implement but what he doesn’t do is to underestimate the difficulty of making these habits stick long term.
As far as I’m concerned, when it comes to good financial habits, building a saving habits at a young age will pay off in the long run as we are all made to be more financially independent and less reliant on state welfare. I'll come back to the issue of have firm financial goals in a future post.
Buy a copy of Atomic Habits
You can find Atomic Habits: An Easy & Proven Way to Build Good Habits & Break Bad Ones on Amazon
Download the Homepreneur Habit Tracker by clicking on the image below.