Tiny Money Habits
Michael likes to think of himself as a responsible guy. He budgets carefully and puts away money each month. However, in the back of his mind, there are always some big responsibilities niggling at him. He knows that he needs to sign up for a 401(k), find an accountant for his taxes, and start investing.
But despite putting them on his to-do list, these tasks never happen. He doesn't know exactly which steps he needs to take, he hates paperwork, and the thought of taking care of these daunting tasks is too overwhelming to begin. It's like a part-time job he doesn't have time for.
Many people get stuck at this step. It's easy for them to be responsible and consistent, but they tend to procrastinate on big projects. And they're not alone. Fortunately, there's a formula for dealing with it; it's called "tiny steps."
Every project can be broken down into individual tiny steps. By doing so, you can accomplish your goals.
EVERY BIG GOAL STARTS WITH A SMALL STEP
What's interesting is that these steps will naturally grow larger and expand into other areas,
A tiny step isn't a contradiction to a big goal-you need goals to be motivated to start your tiny steps. However, the implementation and execution starts with baby steps.
B.J. Fogg, a Stanford professor and leading researcher on habits, explains. For example, if one's tiny step is to go for a 10-minute walk every day to lose weight, they will soon find that they have more energy, enabling them to do more exercise, and they have more of a motivation to eat healthfully.
But even if that doesn't happen, just taking those small steps consistently can lead you to your goal much faster than if you try to tackle everything at once.
Case in point: B.J. Fogg himself wrote one sentence a day on his doctoral thesis. It didn't matter if he came home each day at three in the morning-he wrote that sentence. As a result, he finished months or even years before his friends.
Creating a Habit
Starting small feels counterintuitive. You need to make a big, drastic change, take care of a huge project. Why would starting small help?
It's simple. The more initial resistance one feels, the harder it is to form a habit and the easier it is to stop it. In our exercise example, if someone starts off by going to the gym for an hour and then comes home achy and exhausted, they won't be happy and won't be motivated to continue. Why should they repeat an unpleasant experience? If someone tries to do a complicated task in one afternoon and ends up frazzled and worn-out, they won’t want to finish it the next day.
Studies show that the easier you make it to form a habit, the more likely you are to continue with it.
Here are a few examples:
IBM had the highest sales records for decades but extremely low sales quotas for their agents.
Starting small feels counter-intuitive. When you need to make a big, drastic change, take care of a huge project, why would starting small help?
Setting the quota so low gave the reps the confidence to call - it wasn't overwhelming. Then, once they tasted that success, their confidence grew, leading the company to their outstanding sales rates.
One of Amazon's biggest innovations was their one-click checkout. Since it's so easy, it creates a habit and causes customers to come back for more. (Obviously, this works against the consumer, which is why I recommend not forming a habit in this area.)
One restaurant found that when the lid of the glass ice cream box was open, 30 percent of their customers purchased one. When it was closed, only 14 percent indulged. Just making it slightly more convenient upped the sales by over 100 percent.
MAKING IT WORK FOR YOU
Michael needs to start off very small. He can read one paragraph of his 401(k) form and promise to read another tomorrow. He can ask his friend for a recommendation for an accountant or look at Vanguard’s website.
Then he can do the minimum each day repeatedly until he finishes the task. As he gets into it, his interest may grow, and the task may become less confusing. He may want to do more than the minimum and finish off the task more quickly. But even if not, starting small will reduce the overwhelm and give him a feeling of success to hold onto.
