This isn’t really an article about investing, but I did become a better investor after reading the book I’m going to describe. So to me, it's worth writing about it.
Let’s say you’re trying to be more frugal and live below your means, but after a few days, you find yourself overspending on something unnecessary. Guess what? It’s not entirely your fault; it’s because of your system. In his book "Atomic Habits," James Clear explains that our habits result from our systems, not willpower.
Clear outlines four stages of habit formation: cue, craving, response, and reward.
Here’s a brief look:
Cue: The trigger that initiates the behavior, like seeing an advertisement or receiving a discount email.
Craving: The desire or motivation to act, such as the anticipation of owning something new and the pleasure it will bring.
Response: The actual behavior or action you take, like making a purchase.
Reward: The positive feeling you get from the behavior, which reinforces the habit and makes it more likely to happen again.
To build frugal habits, address each stage:
Cue: Unsubscribe from marketing emails, avoid window shopping, and limit exposure to advertisements.
Craving: Focus on your financial goals and the long-term benefits of saving money.
Response: Create barriers to spending, such as leaving your credit cards at home or setting up a waiting period before making non-essential purchases.
Reward: Find satisfaction in saving money and reaching your financial milestones. Reflect on unnecessary purchases and how they don’t contribute to your overall happiness.
I highly recommend reading this book, which delves much deeper into these concepts!
Hope you enjoy a book recommendation once in a while. Be sure to like if you do!