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Start Here: “The Ultimate Guide to Habits”

Code words: Why we don’t work out or handle our money

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Every time I see an Indian girl in the gym, I nearly shit my pants.

Going to the gym is not part of Indian culture. It’s like seeing an anteater casually sitting next to the receptionist in a dentist’s office. One of you does not belong here.

But beneath the surface of this hilarious finding (it’s actually not funny to my Indian guy friends) is a much-deeper pathology.

If you ask these people if they go to the gym, they will respond in code: “No, I’ve been really busy” or “I’m just not motivated right now.”

Notice that they always qualify it with external factors like time. That’s because it’s not socially acceptable to say, “I’m just not into working out (and likely won’t ever be into it).” Instead, we use code words to camouflage what will likely be a lifetime of not exercising.

You can see similar code words in money, too.

You ask people about investing, and they say: “Oh, I don’t have that kind of money right now.” They’re assuming that one magical day, they’ll have enough time and money to start investing.

What actually matters in both these cases is HABITS.

If you don’t work out when you’re single with all the time in the world, it’s unlikely that you’ll pick up an exercise habit after years of inaction, a new family, a busy job, and an entire household to manage. On its face, it’s delusional to expect to change such a dramatic life habit. Yet we assign more value to the future than to the present when it comes to changing our habits.

Same with money. “I don’t have enough money to invest” is code for “I will do this later (when I have more time/money)”. In truth, life gets busier. And it’s not about the amount you invest — it’s about the habit.

Using the Tuner Strategy

You may not have an extra $500/month to invest. But you don’t need that.

Instead, you can get started with $50/month, then “tune” that number up when you have more money to invest.

This is my 85% Solution:

Too many of us get overwhelmed thinking we need to manage our money perfectly, which leads us to do nothing at all. That’s why we the easiest way to manage your money is to take it one step at a time — and not worry about being perfect. I’d rather act and get it 85% right than do nothing. Think about it: 85%  of the way is far better than 0%. Once your money system is good enough — or 85% of the way there — you can get on with your life and do the things you really want to do.

Do you know what the hardest part of investing is? It’s not deciding the complex asset allocation (which low-cost target-date funds do for you, as I outline in my book). It’s actually getting started and sending that first automatic payment.

By tackling that now, even with $50/month, you can overcome the hardest part. Later, when you use my Tuner Strategy to slowly increase the amount you invest each month, you’ll be far ahead of your peers.

Put another way, losers wait for perfection. Winners execute by starting off simple, then ramping up, because the hardest part is not perfecting the system — it’s just getting started.

This idea of getting started is the crux of the Tiny Habits project run by one of my mentors, Stanford professor BJ Fogg, to change your behavior. (It’s free. Check it out.)

You can also get an interview where BJ and I talk about the deep psychology of behavioral change and persuasion, like how to floss more, exercise, or even how to persuade others to change their behavior. The recording is here.

For today, think about what code words you use to rationalize your behavior.

Think about how you talk about doing something “some day” in the future — and how much more you could get done by just doing it 85% of the way NOW, then tuning your behavior.

It’s better to get 85% of the way there than to dream about 100% and actually get 0%.

What code words do you use to rationalize your behavior?

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  1. Ouch! Losers wait for perfection… But you are so right about that!

    For many years I did exactly what you said – procrastinated because I despised a $50 a month start. We got lucky and got a little windfall, and after that, adding $50 a month somehow was okay. Go figure…

    Excellent post!

  2. I am an Indian & I’ve been working out for as long as I can remember. Many of my friends who work out with me are also Indian.
    It is not that rare after all.

  3. Losers do wait for perfection–I should know, as I waited a long time to start losing post-heart attack weight gain (lots of time in bed with none of my usual exercise). My words were: “When I’m feeling well I’ll start exercising and dieting again.”

    Then I read a book about making tiny changes in the right direction, and started gradually changing my behavior. I’m not where I want to be yet (more heart attacks and bed time for injuries), but I don’t wait until I’m “all better” to start getting in shape. I do what I can with the shape I’m in. For example, I may not be able to lift heavy weights, but I can increase the number of steps I walk (using a pedometer as positive feedback) every day that I am up. Or I may be restricted to bed rest, but I can use whatever is handy for lifting with my arms (biology books make excellent weights and doctors never notice them as covert exercise gear).

    I can assure disbelievers that this works for money, too. As a kid, I earned a whopping $0.50 an hour for babysitting from sixth grade through high school graduation. By age 12, I used my savings to buy a horse. At 14, I bought (and fixed up) an old horse trailer. At 16, I sold both at a profit to help pay for college (I started a bit earlier than some folks). So even a tiny amount of money will add up–not so much in savings accounts these days ( almost as much interest is paid if you put your money under your mattress), but there are still viable investments out there. So listen to Ramit on this one, folks, it really pays to do even the tiniest bit to achieve big goals.

  4. I used this approach with trying to lose weight, and I lost 10 pounds in 5 months. Sure, it was slow, but it’s permanent. I was eating a lot of sugar, so I slowly cut back. I gave up my daily soda (is there anything better than Coca Cola??), cut back on ice cream and ate 1 cookie instead of 3. People ask me how I did it. I just say no magic, no tricks. Just regular, disciplined, boring action.

    I’m not going to get into a convo about Indian girls at the gym because I think Ramit just said this to provoke us…or possibly get us to his gym?? 😉

  5. Here’s my red-flag code phrase: “I’ve been trying to…”

    Sometimes this phrase is fine, as in “I’ve been trying to get in touch with my sister but she won’t answer the phone!” But I’ve learned to be super-wary of using it to describe any ongoing goals, desires, etc., because “trying to” is a state that can go on basically forever, and can become a pretty tempting replacement for doing things. That’s because you can get lots of credit from friends/family for “trying to” work out, eat better, write a novel, be kinder to your partner, save money, and so on.

    Rephrasing this one is scary and uncomfortable but really useful. For example, instead of saying “I’ve been trying to eat healthier,” I start over and say: “I’ve been eating way less sugar lately by only eating desserts when I’m out with friends, but still having lots of trouble eating reasonable portions. So I’m going to go buy some small containers and pre-divide snack portions.” The formula here works (for me) for lots of things: every time I find myself with that “trying to” framework, I start over and say what I’ve actually been doing, what I still want to change, and what *specifically* I plan to do next. This way, I get credit for the actual things I’ve already done (I like praise) but that credit is now tied to the actual other things I plan to do, not to the fact that I’m “trying to” do something. Uncomfortable, but effective.

    • We all need to take ourselves outside of our comfort zone to grow. It looks like you are doing just that. 🙂

    • I agree with what you said about ‘trying to’. The same thing happens with the word, ‘can’t’. Sometimes we really can’t but very often the more correct word would be ‘won’t’. It changes how I feel about something instantly to change from can’t to won’t. “I can’t get my blog post done!” Woops, looks like it’s my responsibility when I say, “I won’t get my blog post done” 🙂

    • A coworker had a post-it note on his computer that said “DON’T TRY.” I was a little horrified, until he explained that it meant “Don’t TRY to do something– either DO it, or DON’T do it.” He said that too often “trying to do something” means wasting time BY not doing it! 🙂

  6. code words we used to use: should, maybe later, not a priority

    We stopped the excuse game in our house a few years ago. ‘Should do it’, whether it is retirement savings, exercise, learning to ride a bike (I am very proud of my eight-year-old), is met with ‘do it now.’

    Success stories include:

    My wife participates in monthly money management.
    My daughter rides her bike everywhere.
    I applied for a Board of Directors position
    I updated my linkedin profile with my resume
    We upgraded systems in our home, like the furnace and the kitchen floor.

    Next barriers to conquer:

    We want to save more for retirement — my goal is 25% of gross pay!
    We want to pay all annual bills in full when we get them (car ins., home ins.,membership dues), and save 5% in fees.

    We don’t tolerate crybabies in our house!

  7. I did this before I found your book. When I was in college, it didn’t make sense to me (or my friends, for that matter) to try and get our finances in order. “Why bother when you’re so far in debt with no job?” was the common thought. Thankfully I read IWT and now my friends think I’m some sort of financial wizard, when in reality I just started crawling and now I can walk.

  8. I will start a business when I have more money.

  9. This is especially true of Indians who want to start a business but cannot gather enough courage to leave the job!

  10. code words: “I’m working on producing a short film”… as opposed to “I’m producing a short film”