The Power of Habit

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Years ago, I started working for a consumer products company in the lawn and garden business. When they promoted me to a management role, one of the perks I was most excited about was the company car. I was in my early 20s, so I was elated that someone would give me a brand-new car for free! And pay for gas, insurance, repairs, and I could even expense car washes.

I quickly discovered that a salary and a “free car” meant they could ask me to work whenever, wherever, and for however long they wanted. I soon found myself driving, A LOT. The average American drives about 12,000 miles a year, and that was pre-COVID-19—before working from home was nearly ubiquitous. I was driving somewhere between 30,000 and 40,000 miles per year. The radio and my CDs got old real fast. 

Thankfully, I discovered automobile university. I became immersed in the idea of real estate investing by listening to a 12-CD course by Dolf de Roos. I listened to biographies, history, personal development, leadership skills, management, negotiation skills, investing expertise, theology, you name it, I listened to it. I moved from dreading long drives and traffic to genuinely enjoying all my windshield time. I became an audible fanatic and couldn’t wait for my next monthly credit to arrive so I could immerse myself in another book or course.

A book that captured my interest, as few have, is The Power of Habit by Charles Duhigg. It was a fascinating read (listen) and as soon as I finished, I immediately started over at the beginning. It opened my mind to how our brains form habits and how the various regions of the brain function to move behavior from conscious, to semi-conscious, to almost completely unconscious. A brief reflection at the end of the day, or even at the end of an hour, will reveal that we engage in many behaviors, pretty much on autopilot. Some have estimated that by the time we’re in our mid-30s, 95% of our behaviors are hard-wired and we do them with little conscious thought.

This is a beautiful thing if those behaviors are positive, and serve us well, and depressing if they’re not. Duhigg beautifully dissects the mountain of neuroscientific research that is being done which reveals the neuroplasticity of our brains, and their ability to change. What fascinated me most is that once a habit is wired in, it doesn’t take nearly as much mental, emotional, or physical energy to sustain it. It led me down the habit rabbit hole, becoming mildly obsessed with how I could form and sustain good habits, and break (or at least reduce) my bad ones. In this learning phase, I stumbled on another book called Atomic Habits by James Clear, which I cannot recommend highly enough.

Clear beautifully built upon Duhigg’s work to dissect habit formation into four key areas that when properly applied, work wonders. See figure 1 below. 

Figure 1

When you form a good habit, you make it obvious, attractive, easy, and satisfying. To break a bad habit, you invert. It’s so simple. And what’s beautiful (or devastating) about habits is that they have a compound effect. Where people often fall off the good habit wagon is in the “plateau of latent potential.” (See figure 2.) 

Figure 2

A fancy way of saying that you’ve been putting in the work but not seeing the results. That’s when most people quit, and why it’s easier to eat ice cream on the couch (instantaneous reward) than it is to go to the gym (delayed reward).

Why do I share all this? Two reasons… 1 – There’s a beautifully direct correlation between habit formation and investing. I talk to many of you each week, and I rarely hear, “I’ve achieved all my financial goals.” Many of us are on a journey but have not arrived at the destination. We’ve been working hard, investing consistently, and sacrificing instant gratification for a longer-term vision. 2 – If you haven’t formed good habits in your life, then your enjoyment of your hard work and sacrifice to build wealth may be short-lived, and less enjoyable. Our mission is to build wealth alongside you, our investor, for decades. We want to live and enjoy full lives and we want the same for you.

So, if you’re not already…

1. Make it obvious. Lay out your gym clothes the night before and fill your fridge with healthy food. 

2. Make it attractive. Bundle it with something you love to do. Go for a walk with a loved one, listen to a book/podcast you enjoy while you’re at the gym.

3. Make it easy. Aim for five minutes on the treadmill or a five-minute walk—something that you’ll easily do repeatedly, and then build on it.

4. Make it satisfying. Reward yourself with something immediately afterward putting a good habit into action.

If you don’t want to read these books, send me an e-mail and I’ll share the cliff notes with you.