The Top Ten Mistakes in Behavior Change and what they have to do with your Money

by RJ

in Psychology

Why is it so difficult to change?

Over and over again we‘re told that it takes 21 days to change, and that the first few days are always the hardest. But are these statements really true? Or, are they just beliefs that have been passed on now for decades? What if we could change instantly? And, why do the initial stages have to be hard?

Recently, a  presentation on behavior change by Stanford University, has been circling around social media. The slides, which are embedded below,  give  the 10 biggest behavior chance mistakes. The presentation is short, but if you can apply the principles (or just read what I wrote below) to your money, you can make drastic changes to your financial behavior.

# 1 – Relying on Willpower for Long-Term Change

Solution: Imagine willpower doesn’t exist. That’s step # 1 to a better future.
Money: If you understand that willpower doesn’t exist, that eliminates the theory that if you just “try harder,” your finances will improve.

For example, I buy a lot of books. I rationalize this because it’s a business expense. However, that doesn’t change the fact that I have dozens of books yet to read.

So willpower, or telling myself to try harder and not buy any books, hasn’t worked. What has worked is blocking Amazon, with a plugin for Google Chrome called StayFocused. I have set the PlugIn to only allow me to visit Amazon on Saturdays. I’m usually not around a computer on Saturday’s, so I typically “forget” to buy that book I really wanted.

# 2 – Attempting Big Leaps Instead of Baby Steps

Solution: Seek tiny successes — one after another.
Money: Sooner or later, you’re going to have to start investing around 10% or more of your income. If you haven’t started investing yet, that 10% target seems awfully large. It’s a pretty intimidating number for someone who has never invested before. Instead of concentrating on saving 10%, your goal should be to save just 1% this month. Next month, try to save 2%.

The goal is to increase your savings percentage by just 1% each month. In just 10 months, you’ll hit that 10% target.

Personally, I’ve used this not on investing, but on giving. Year by year I’ve tried to increase the percentage of income that I give to charity. It’s not difficult to increase your giving by 1% each year. What is difficult is trying to go from 0% to 10% instantly.

# 3 – Ignoring How Environment Shapes Behaviors

Solution: Change your context & you change your life.
Money: If you’re having problems staying out of credit card debt, a simple solution is to cut up your credit cards. It sounds simple but it’s 100% effective.

You can even take this one step farther by freezing your credit. You can always unfreeze your credit but it takes a few days and some effort.

Another perfect example of changing your environment is contributing to your 401(k). Instead of waiting around to see how much is leftover to save at the end of the month, you never even see your 401(k) contributions, they’re automatically deducted.

Edit: I give two more examples of changing your environment in this YouTube Video I just published–How to Change Behavior

# 4 – Trying to Stop Old Behaviors Instead of Creating New Ones

Solution: Focus on action, not on avoidance.
Money: Imagine you look at your expenses and see that you spent $500 going out last month. You had some fun, but the problem is you don’t have $500 to spend.

This week you declare to all of your friends, “I’m not going out this week. I need to start saving.” So instead of going out with your friends, on Friday you decide to watch some movies and go to bed early.

As we all know, this works for about one night because on Saturday night, you’re back out spending money you don’t have.

So what’s the solution?

Do something interesting instead of sitting on the couch and watching movies you’ve already seen. Replacing something you enjoy (going out) with something you don’t really enjoy (watching the same movies over and over again) doesn’t work. Instead, replace the old behavior with something you actually enjoy doing.

Don’t concentrate so much on not going out, rather look at is as a chance to try something new.

# 5 – Blaming Failures on Lack of Motivation

Solution: Make the behavior easier to do.
Money: Say you really want to start your own business but at the end of the day, you’re too tired after you get home from work. You know what you have to do, but you don’t have the energy to do it.

Instead of blaming the lack of action on lack of motivation, attempt to make the action easier.

Commit yourself to working just 5 minutes each day. There will be some days when you actually are too tired and only work for 5 minutes. But most days, once you start, you will work more than just 5 minutes.

# 6 – Underestimating the Power of Triggers

Solution: No behavior happens without a trigger.
Money: There are two types of triggers, good triggers and bad triggers. The goal is to find the triggers that provide good results and replicate them. Then, at all costs avoid the bad ones.

A negative trigger in my life is investment news. If I read too much of the garbage, I start to think I can beat the market. All of a sudden, I’m on my brokerage account about to make a trade. Even after all I know about investing,  it’s still hard to avoid this trap.

An example of a good trigger I have is at the beginning of every month, I have in my calendar to do a monthly review of my finances.  I even have my Google Calendar email me a reminder. This small trigger is enough to remind me to update my finances.

# 7 – Believing that Information Leads to Action

Solution: We humans aren’t so rational
Money: Reading 15 personal finance blogs, instead of 10 isn’t going to improve your finances. Likewise, reading business books isn’t what’s going to improve your business.

What will improve your finances, business, or even life, is changing the underlying behaviors and beliefs holding you back.

You know exactly what you need to do, now get to it. (Hint: Start by changing your environment)

# 8 – Focusing on Abstract Goals more than Concrete Behaviors

Solution: Abstract = Get in shape. Concrete = walk 15 minutes today.
Money: Who’s more likely to succeed? The person whose goal this month is to not spend a lot of money. Or, the person whose goal is to decrease their overall spending by 10% this month, by reducing their eating out expenses by 25%.

When setting financial goals, make sure to set goals that are well defined. In order to get what you want, you must define what you want.

# 9 – Seeking to Change a Behavior Forever, Not for a Short Time

Solution: A fixed period works better than “forever”
Money: Cutting up your credit cards today, doesn’t necessarily mean you can no longer use them in the future. All you’re trying to do is change a behavior. If you’ve successfully changed your spending habits in two months, you can go back to using your credit cards responsibly.

Often we think that all changes are permanent and therefore avoid getting started.

A personal example, I’ve committed to getting up at 5 AM and writing 1,000 words every morning in March. There’s no way I want to do this for the rest of my life. I’ve gone in with the mindset that it’s just a short-term thing. If after 30 days, I want to continue the experiment, I can. If I want to stop after 30-days, I can. Either way, I was able to learn something new about myself.

# 10 – Assuming Behavior Change is Hard

Solution: Behavior change is not so hard when you have the right process.
Money: If you want it to be, personal finance is pretty simple. It’s not about finding the right tools or looking for ways to beat the market, it’s about changing certain behaviors. It really can be as simple as deciding to contribute in your 401(k) or cutting up your credit cards. You just have to allow it to be.


If you’ve ever made one of the top behavior mistakes, share them in the comments. Include how you would have used the provided solution for a successful change. We can all learn from each other’s mistakes.



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{ 5 comments… read them below or add one }

Dana @ Budget DietitianNo Gravatar March 9, 2011 at 10:06 am

Love this article! I use a ton of these tips to help my patients make changes to their diet or physical activity. I use the 5min trick on myself when it comes to working out!

We have a friend living with us as she tries to play off debt. She used #3 by giving me her credit card. Well, it paid off as she jus tpaid off that card last Friday! :)


Pat S.No Gravatar March 9, 2011 at 7:03 pm

I like the new look. The site looks great!


RJNo Gravatar March 10, 2011 at 10:07 am

@Pat – Thanks. It needed a little cleaning up.

@Dana – Thanks. These steps really do work. Sometimes they’re a little unconventional but they get the job done. Being a a Dietitian, have you ever read the book Mindless Eating. It’s on my to read list. Supposed to be all about behavior change.


Levon MkrtychevNo Gravatar March 11, 2011 at 2:41 am

Great article. I just discovered this website with my friend. Also, this article introduced me to Stanford’s Persuasive Lab Tech. What usually happens with me when I want to make changes is that I expect that I will wake up in the morning and will the change to happen. I expect that tomorrow everything will change as long as I stay focused and disciplined enough. Usually halfway through the day you get discouraged and give up. More and more I realie that the secret it to take small steps while at the same time accepting that life isn’t supposed to be perfect in every way and not going to hard on yourself. Small steps will lead to a victory, but attempting a large leap will make you end up flat on your face.


RJNo Gravatar March 11, 2011 at 9:53 am

@Levon – We’ve all been there before. If you’re interested in behavior change, try reading the book Switch by Chip and Dan Heath. One of my favorites on the subject. Thanks for visiting.


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