The secrets to changing your habits

Homer_SimpsonWe humans are habit machines.  We get into habits and then run on those habits every day.

There is a good reason for this. Habits allow us to make decisions on autopilot. Good habits help us get things done efficiently without having to think and agonise over decisions.

Habits can also have big downsides.  Ridiculous spending can become a habit. Bad habits can turn into addictions. And habits mean we can end up sleep walking through life.

So its important to be aware of our habits and know how to break bad habits and make new ones.

Let’s take a specific example for people on the path to financial independence. I used to compulsively check the prices of my portfolio, at one stage doing this many times a day.  And I know from giving financial coaching that it’s not just me!

It may not seem like a big deal to spend 20 minutes a day looking at your portfolio (or Facebook).  But over a 50 year investment horizon, that’s equivalent to a year of your life. Which is long enough to get a lot of useful stuff done.

Just as watching a kettle obsessively does not make it boil any faster, checking portfolio prices does not get you to financial independence any quicker.

Actually, lifting the lid off the kettle to look inside slows the heating process. Screen watching can have a similar effect if you then trade more and incur costs.  And the more you screenwatch, the more you risk panic selling when the market is volatile.

There’s nothing wrong with occasionally checking into your online broker account to get that warm glow when you see how much the number of units you own has gone up since you last checked (say 3 months ago).

But most people shouldn’t look at their portfolios very often at all. If you are an index fund investor, you should get things set up to run on automatic pilot.  It’s only if you’re stuck or you have surplus cash that you need to grab the wheel and make some changes.

Like other mild addictions, screen watching can initially be harmless. But if it interferes with your wealth or your happiness, then it’s a problem.  And time is the non-renewable resource in everyone’s life.  So it’s important to remove bad habits to free up as much time as possible for the good stuff.

The more I’ve looked into this, the more I realise that everyone can change.  You can teach an old dog new tricks.  And solving the screen-watching problem will make you calmer, happier and a better investor.

My addiction started off harmlessly enough. I used to check my online account every morning to see if any dividends had come in the day before.  I thought of this like a fisherman “checking the lobster pots” for a catch.  If I’d caught a dividend, it gave me a buzz before the grind of the work day started.

Unfortunately this daily habit proved to be the “gateway drug” to a more serious screenwatching habit.  When I got an iphone, I downloaded the Bloomberg app which allowed me to see the prices of my portfolio move in real time. It was mesmerising: like watching the flashing lights on a fruit machine. Now, if I wanted, I could waste my entire day watching each tick up and down in the shares in my portfolio.

Not only that but I also had 24/7 access to “breaking news” from all markets and all countries around the world.  So every market rumour, every natural disaster, every conflict was beamed at me in an attempt to grab my attention and keep me hooked and fearful. Aaarrrrrgggghhh!

This has the potential to be a gigantic black hole into which you could fall, only to emerge as a gibbering wreck.

Here’s how I fixed it:

1. Out of sight, out of mind

I started by ditching my iphone.  That Bloomberg app was the final straw. I realised that my “must haves” from my mobile phone were email, calls and texts.  Everything else was unnecessary and a potential distraction.  So I went back to the old skool charm of a Blackberry with its reassuringly clunky keys and no Angry Birds app.

I started to treat my brain like my baby daughter: I protected her from predators, advertising and junk food.  I only allowed benign influences into “her” life. So, for example, I signed up for MMM emails (regular encouragement) but unsubscribed from the formidable outbound marketing machines of companies like Hargreaves Lansdown, Moneyweek etc.

2. I experimented

Everyone is different so you need to experiment and find what works for you. Some people need a period of cold turkey: complete removal from the triggers and the addictive behaviour.

For me, that didn’t work – I still wanted to keep an eye on my shares.  But rather than check multiple times a day, I initially brought it back down to once a day, outside trading hours (this removes the ability to trade in a knee jerk reaction to price movements).  Sometimes you need to start with baby steps.

3. I identified the triggers

Over time, I took notice of my own emotions and figured out the things that seemed to make me want to check prices more frequently. Like a comfort eater, I was checking on my stocks when I wanted a mood boost.  This can work when you’ve just received a dividend or the market has ticked up.  But it doesn’t work when the market has gone down. Which it does on about 49% of days. As Homer Simpson would say: Doh!

As well as emotional state, other triggers include: time (its beer o’clock!), location (sitting on couch => watching TV), other people (it would be rude not to!) and certain events (I got dumped => ice cream!).

4. I didn’t rely on willpower

Willpower is a wonderful thing but think of it like a rechargable battery.  It runs out quickly in everyday use. Yes, you can then recharge it overnight but there is only far you can stretch it between recharges.

If you’ve used up your willpower being patient with clients or resisting the temptation to eat sweets, then you’ll have less willpower to resist checking your stocks.

Better to put the temptation out of sight (see points 1 and 3 above) than to use willpower to consciously resist.

5. I identified the reward

There is a reason why people use screenwatching as a comfort blanket, a distraction or a displacement activity.  It may not be a good reason…but there is always an underlying need that your sub conscious is trying to meet.

In other words, try to identify the reward that the bad habit is giving you. For example, some smokers may get the reward of becoming calmer.  Smoking drops the tension in their shoulders and gives them something to do with their hands.  Smoking is a self-calming ritual.  No it’s not healthy, but smoking has value for many people.

For me the reward of screenwatching was feeling I was getting closer to achieving financial independence. But better to get that same reward feeling by doing something that is actually getting you closer to FI, like cutting spending.  Remember: every £1 you cut from your spending reduces the amount needed for enough by £25.

6. I replaced it with something else

Research cited in The Power of Habit suggests that the trick to ditching a bad habit is not just to give it up but rather to replace it.

When I started a blog, I found a new habit that virtually eliminated my residual compulsion to check stock prices.  I started to check my blog’s page view stats regularly instead.

True, this is mostly a waste of time and a distraction from writing good content. But for me, a “bad” days page views was far easier to deal with emotionally than a “bad” days market plunge.  And thankfully you can’t place trades based on your blog’s page view stats. So by replacing a bad habit with a more benign one, I moved in the right direction along The Path.

Like I said, baby steps.

7. I got help from other people

I told a few of the people around me that I’d ditched my iphone and why. By putting it “out there” I explained the shocking fact that I didn’t have an iphone whilst putting myself under some gentle pressure to stay on the wagon.

Peer pressure and accountability are powerful forces. Often these are the things that keep people in bad habits. If you are surrounded by spendy people, you will probably end up spending more.

So why not turn the tables and recruit these powerful forces to work for you?

One way that personal trainers and coaches help their clients is by providing accountability. It’s an endearing feature of people that they will often try harder for other people than they will for themselves.

Conclusions

Here’s what I learnt from the experience of breaking a bad habit.  It always feels a bit uncomfortable at first. But that initial discomfort is all part of the process and makes it all the more rewarding in the long run.

And here’s the bit I think is really interesting.  Naval Ravikant describes learning to break bad habits as a skill in itself:

Once you pick up that skill, it’s a beautiful thing, because slowly you can shed all your bad habits and make room for good habits in your life.

You could even say that regularly breaking bad habits is itself a good habit to get into!

If you’ve broken a bad habit, why not share what works and what doesn’t. You can leave a comment below or email me on TEA@theescapeartist.me

9 comments

  1. Michael · · Reply

    Inspirational as always, thanks. Keep up the good work.

  2. I used to be a massive hang nail biter, until realising that biting them makes it worse. After a long time in denial I decided to try and quit, its taken me about a year but I don’t think I’ve bitten one in about 2 months.

    I knew it was a way of getting out my nervous / anxiousness but didn’t know how to get out. So I googled it. The tips were to concentrate on one finger and not bite that one specifically. Once I’d got this into my head it worked quite well.

    But it also had an added side effect, stopping biting this one finger then stopped me carrying on biting, so effectively I stopped straight away, other than a few mindless bites.

    It really sounds trivial written down and although it’s not my worst bad habit it was one I had been doing without thinking for probably 20 years.

    Even better as well I feel less nervous / anxious for not doing it!! It must have been a complete self perpetuating cycle.

    Dom

    1. I like the comparison idea….ie just focus on one…good experimental approach

  3. London Rob · · Reply

    Hi Mr. EA,

    Its an interesting and good article again – thank you! I know I am a compulsive screenchecker (when I am not busy at work!), but like you I get a real buzz when I see the next dividend hit my account, but so far I have held at not over trading – even when some of my punts were down 50% or more, I didnt sell, just left them (thankfully they are now back, some even up 60+% – a great lesson to not sell out!), I just use the additional contributions to rebalance.
    You are spot on though, we have limited time so use it productively – I am hoping to reduce the time I spend watching and seeing it grow – end of month reporting for my results are good enough, I looked back at how much my wealth had grown over the last 12 months and that is truly inspiring compared to the odd 1p up or down on a stock!
    Keep up the good work
    London Rob

  4. When I first started buying stocks I gave myself permission to check the market once per day and writing down the prices. I did this for ohhhh, about half a year. Prices went up, prices went down. No need to panic once you saw the regularity at which it changed. When my husband finally got on board with investing, I had him do the same when it appeared that he would be a nervous nelly. Once he saw the ‘motion in the ocean’ he didn’t panic at each lil’ wave.

  5. NotKeith · · Reply

    I can really identify with this. Especially the part about looking for a mood lift. Why would we constantly seek reassurance from something that can only be positive for around half the time.

    Incentive to check markets and portfolio values is heightened once you’ve retired early, as it becomes the new ‘job’, wealth maintenance is more important, and you have more free time. I made a conscious decision, a couple of weeks ago, to check much less. I try to ask myself whether I’m likely to take an action (to buy or sell) based on the movement of the market on that day, if if the answer is no, then why look?

    1. Yes, its crazy isn’t it?!

  6. Ha I don’t know if viewing site stats daily is any better than checking stock prices, but I do it all the time too. It’s so addicting and at least you arent tempted to buy and sell on it.

  7. PhysicianOnFIRE · · Reply

    I love the line about checking blog stats. The same thing happened to me; I used to check the Yahoo Finance app throughout the day. Now it’s the WordPress app. This fall, it will be Fantasy football.

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