Less so a personal finance book and much more a self-help book, Atomic Habits by James Clear encourages readers to make their bed in the morning, meditate, journal, and write to do lists. What sets Atomic Habits apart is Clear’s efforts to promote sustainable and long term improvement rather than offer up “good habits” that will inevitably fall by the wayside of life. For those of us looking to achieve FIRE by a several decade long frugal lifestyle, sustainable habits is the foremost of our concerns. So are the techniques offered up in Atomic Habits truly the key to developing sustainable long term habits as claimed? Or should this book be written off as the latest of many self-help cash-grabs that will have you spinning your wheels without true progress?
The long and short of it:
Clear opens the book by explaining what habits are and why they matter. He describes an ancient Greek parable, the Sorites Paradox, which asks the question “can a single coin make a person rich?” Suppose you gave someone ten coins. Are they rich? Evidently not. What if you proceeded to give them another coin. Then another. And then another. What if you continued to give them coins, at some point would they not become rich? If so, then what coin was it that made them rich?
The same can be said of our habits. At what point do we become a violinist? A writer? A dancer? Only our natural inclination to do these activities on a consistent basis over the long term. In other words, our habits make up our identity. For people who have succeeded in something difficult, like running a marathon or writing a book, it was not due to their abnormal discipline or fortitude (at least, not for the majority) but the small daily rituals they perform on autopilot. Overnight successes only appear so from an outside perspective. To the person who actually succeeds, it is only the natural cumulation of years of consistent habitual effort.
The Science of Developing Habits
Scientists have discovered that habits are made up of 4 components. First the cue, something that makes us want to perform a habit (the phone buzzes). Next the craving, our minds become preoccupied with completing the habit (we want to check our phone). Then the response, we perform the habit (we check our phones). Finally the reward, we feel a sense of satisfaction at having performed the habit (our latest post got a Like). The relative ease or difficulty of habit formation is dependent on these four components. To effectively develop a habit:
- The cue must be obvious
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Let’s say you want to get into the habit of eating healthy but you have a bad habit of snacking on chips.
The cue for eating healthy might be:
Feeling unhealthy
Stepping on a scale
Seeing someone order a salad
The cue for snacking on chips might be:
Feeling hungry
Feeling bored
Feeling stressed/upset
Eating healthy food and not liking the way it tastes
Seeing someone else eat chips
Seeing chips in the supermarket
Seeing chips in the cabinet
The cues that trigger the craving for chips are far more frequently occurring than the cues that trigger the craving for healthy food. You have to go out of your way to step on a scale but you can feel bored at any moment of the day. To solve this dilemma, the cues must be designed to promote the behavior you want. For example:
Stop by a salad bar for 1 minute every day after work
Throwing out all the chips in the house
Changing supermarkets so you don’t know where the chips are located in the store
Put all your fruits in a fruit basket on the kitchen table where it’s easy to see
Making friends with other people on a diet
Print out easy healthy recipes and put them on the fridge etc
This step is all about scattering reminders in your environment that will prompt you to follow through on a good habit you’re looking to develop. Simultaneously, you can try and reduce the cues that might lead you to bad habits.
- The craving must be attractive
The true way to make a good habit attractive is to genuinely enjoy it. Going back to the example of healthy eating, this means enjoying the taste of the food and the challenge of preparing a healthy recipe. If it’s a matter of learning a language, this frequently means finding a piece of media in that language which you genuinely enjoy consuming. It can be difficult however, so until this stage has been achieved, the most effective methods are:
Habit stacking/temptation bundling – only allow yourself to indulge in a habit you want to do (check Facebook) after you’ve performed the habit you need to do (do ten burpees). This is also a good way to encourage improvement, where you allow yourself bigger rewards when you achieve certain checkpoints (for example, being able to do 20 pushups). Of course, make sure the habit you want to do will not undo the progress of the habit you’re looking to build (don’t allow yourself an ice cream sundae immediately after going to the gym for example).
Joining a culture where the habit you’re looking to build is the norm – as we know, humans are social animals. We mustn’t underestimate the influence our peers have on our behavior. A friend group of musicians will naturally lead you to practice your instrument more frequently, a friend group in which you are the only musician means you’ll have to put extra effort to maintain the habit.
- The response must be easy
One of the biggest differences between good habits and bad habits is that good habits are difficult while bad habits are easy. It’s easy to check our phone when it buzzes, to open a bag of chips when our stomach growls, to lay back on our sofa and do nothing all day. In contrast, it’s difficult to go to the gym before work, to cook a healthy meal every meal, to get up from the sofa and tidy our homes even when we’re tired after a long day’s work. The solution then, is to make good habits easy, and bad habits difficult.
The Two-Minute Rule – if the new habit will take more than two minutes to complete, then it’s likely too much for you to maintain long term. Instead, try to simplify it to a routine you can complete in two minutes. You want to make your own meals? Just take out all the ingredients for how. You’re not making anything, you’re just taking things out of the fridge. You want to go for a run? Just put on your running shoes for now. Make the task small then slowly work your way up and remember to always stay below the point where it would feel like work.
Use a Commitment Device – motivation doesn’t last forever so we should make the most of it while it’s here. Do something now that will police the behavior of your future self and make bad habits difficult. This might mean writing up a contract that you and someone you trust sign, saying something like “If I don’t lose 10 lbs this month, I will give my spouse $500 to spend as s/he wishes” or perhaps buying an outlet timer that shuts off the wifi from 10pm-5am every day for a healthier sleep schedule.
- The reward must be satisfying
Cue, craving, and response are the forces that carry us through a habit, but the final component, reward, is what keeps us coming back. Bad habits are bad because they bring immediate short term rewards but carry long term consequences. Meanwhile, good habits (especially those that people struggle to maintain) are frequently the opposite, with no short term reward and only long term benefit. Intellectually we are aware of the importance of long term benefit, but our animal minds have difficulty grasping this. Therefore, rather than fighting against this, we should do our best to soothe our less logical impulses with these techniques:
Reward habits of avoidance – many good habits require us to turn down instant gratification. Instead of buying coffee, we should save money for our future retirement, we tell ourselves. This behavior is logical, but unsustainable. Instead of sacrificing for a nebulous future goal, we should set up a way to make visible our current progress. For instance, labeling a savings account “5k to take a day off work and watch a movie” and transferring $5 over every time you decide not to buy a coffee.
The Paper Clip Strategy – another method of keeping track of progress is to have two containers, one filled with paper clips (or hair pins, or marbles), the other empty. Then every time you finish writing a page of your book, or move $50 into your savings account, or make a sales call at work, you move a paper clip over. The number of paper clips and time it takes to move them can be whatever you set it as. Having a visual metric for your progress can be incredibly motivating for maintaining a difficult habit.
Maintaining Habits in the Long Run
After a certain number of repetitions, habits generally become automatic. Beware however, that the length of the road that must be traversed before reaching this stage is not to be underestimated. Clear offers some additional nuggets of wisdom to help us stay on track for financial independence.
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- Adopt an Identity
The more we repeat an action, the more we subconsciously adopt it as a part of our identity. It would not feel right to call yourself a writer if you never wrote anything aside from emails and to-do lists. However, just as actions influence identity, identity drives action. People who believe themselves to be writers are more likely to write. People who identify as frugal are more likely to save. In order to consistently perform an action, you should strive to identify as the kind of person who would perform that action.
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- Develop Systems, Not Goals
Goals are important to have, but they are not sustainable in the long term. The issue with goals is they frequently result in an all-or-nothing endpoint. If your goal is to lose 50 lbs, then you’ll have either achieved your goal or failed with no in between. Additionally, unless a new goal is set after the previous has been achieved, you are liable to return to your old habits now that the motivation is gone. Finally, by constantly setting goals, we deny ourselves the right to feel happy with our achievements. There is complacency, and then there is placing undue stress on ourselves by constantly shifting the goalpost.
Clear offers systems as a better alternative than goals. Systems is a series of guidelines we have implemented ahead of time that naturally guides us to better habits. In the case of FIRE, this may look like setting up automatic transfers between your bank account and brokerage account to automatically purchase shares of SPY, choosing to live somewhere closer to public transport over the suburbs, and learning how to meal prep so cooking is easy and you’re less tempted to eat out. Of course goals still have their use, our FIRE number offers us a finish line to cross and a dream to strive for, but as a long term strategy, systems are far more effective and make for a far less stressful way to live.
What makes Atomic Habits unique?
As far as providing an articulated series of practical advice for general self improvement went, Atomic Habits is excellent. James Clear offers a number of highly generalizable and helpful ways for a person to better themselves and reach their goals, whatever those goals may be. I especially enjoyed the way Clear structured the book overall. He began by offering an anecdote and by extension his own credentials as a speaker on the topic of habits, then proceeded to explain the value of good habits, before finally going through each individual cog in the wheel of habit building so that we may begin to tailor our own habits in accordance with what we want out of life. The ideas found in this book aren’t groundbreaking, nor is Clear the foremost expert in this field, but what he’s provided us with is a wonderfully in-depth and generalizable inside look at why successful people are able to do what the rest of us cannot. This book goes beyond platitudes like “you have to work hard and you have to really want it.”
Final thoughts:
It should come as no surprise at this point that I hold Atomic Habits in high regard and definitely recommend for you to read it should you get the opportunity. Before you head off to do so, however, there are some warnings I would like to impart because for as much as I enjoyed this book, it is still flawed in a few notable ways.
Firstly, although the book isn’t very long (just under 200 pages if we discount the appendix), it manages to go on some unnecessary tangents. As interesting as it was to learn about how the shape of continents influence the development of farming and rate of population expansion, it’s only vaguely related to the topic at hand, that being “energy is precious so less effortful habits are easier to develop.” I came away from this book with the perhaps not incorrect impression that James Clear is much more accustomed to writing shorter pieces, perhaps to the tune of 2k-5k works rather than full length novels.
The last critique I have is Clear’s underlying assumption that everyone should strive to maximize their time always. The idea that every single one of my unthinking life rituals should be plotted according to what’s best and healthiest makes my head spin. The additional insistence that I should review my past habits annually and always look to improve myself if even by 1% is headache-inducing. I do not feel that it’s wrong for me to be satisfied with my present state without a perpetual insistence for improvement. It’s not wrong to strive for self-improvement or self-betterment, in truth I find it commendable that Clear does so. What’s wrong is the demand for everyone to behave this way all the time, with the implication that to do otherwise is to waste your time.
Overall, I very much appreciate the various techniques and ideas found in Atomic Habits. I like it well enough to immediately implement the recommended techniques in my own life, which is more than I can say for every other self-help book I’ve read. Paired with Thinking Fast And Slow and The Psychology of Money, Atomic Habits is an excellent addition to the collection of books that provide excellent habit-building tips to improve your personal finance. Despite my criticisms, Atomic Habits is a good read and I highly recommend that you give it an afternoon of your time.
Jenny Xu