You’re doing it wrong: how to reduce friction in your financial journey


In an earlier post this month, we discussed the value of Tiny Habits, a system for change and growth developed by Stanford University researcher Dr. BJ Fogg.

We dove deep into Tiny Habits and how to build them, but we’re wrapping it up with an important final lesson: how to reduce friction in those habits.

Reducing friction in habit creation drives much of Dr. Fogg’s methodology—the path of least friction, to be precise. But before we get into that, a quick reminder of his methodology and how it applies to our financial lives:

  1. Financial goals (like investing for your future) are long games we can get better at by exercising simple, small actions over time.
  2. Small actions over time reinforce human behaviors centered on patience, commitment and delayed gratification.
  3. Dr. Fogg’s behavioral model can be applied to dozens of other things in our lives, aside from investing.

With that taken care of…



Back to that friction thing

Like we said, reducing friction drives a significant part of Dr. Fogg’s methodology.

In practical terms, that means: When a behavior is easy, we need less motivation to do it.

In other words, we are not the problem.

“Our approach to change is,” Dr. Fogg told the Sydney Morning Herald.  “It’s a design flaw, not a personal flaw.”

But we also need to remain aware of the mental friction we bring to the table. The human mind operates with a tendency towards what psychologists call negativity bias. That is, negative events have a greater impact on our brains than positive ones—and so we’re predisposed to dwell on our past failures where we set goals but fell short.

Yes, we’re talking about all those moments when we thought more about our portfolios in the red or the market experiencing volatility.

The bright side is that the Tiny Habits model makes repeated “micro-success” as easy as walking to the fridge and back. This means that even if you’re more likely to focus on the red days, you can build habits that won’t necessarily cave to the negative.



Five tiny questions to ask yourself

We talked about how smart investors build their Tiny Habits, but it’s important that you build them in the right mindset. Think about it this way: you can build the smallest habits, but there may still be just enough friction to keep them from being truly valuable.

Here are a few questions you can ask yourself to reduce friction, get into the right mindset, and take those first steps towards your goals:

  1. Which challenge do you want to address first? Just one. That’s it. And if you need any guidance in terms of picking, the easiest, tiniest step is to take a look at where you are in your financial journey. In this blog, we discuss the how age impacts financial goals; it’s worth a “Tiny Step” quick read to assess where you are on your investment continuum.  
  • What is your intention? It could be as simple as “I want to save for retirement” or, if you’re more comfortable with something a tad more involved, “I want to diversify my portfolio by adding bonds and learning which ones to buy in the right amounts.”

Again, it helps to think of age and stage as you refine your intention. If you’re in your mid-30s and haven’t touched your retirement account since you started it, you could check your investments for rebalancing. If you have young children, maybe it’s time to learn about tax-deferred investment options for college.

  • Which actions would take little or no effort to support that intention? You could, for example, follow some trusted sources on Twitter. That way each time you scroll, you’re getting bite-sized pieces of information.
  • What are your personal beliefs in relation to finances? Some of what you’ll uncover will root out points of negativity or friction—but could just as easily spotlight positivity you didn’t know you had. Be prepared to shed some light on what we believe to be common mistakes in long-term investing. For example, “I need to invest in the hot tech stocks” or “I can time the market to make money.”

Remember: You aren’t trying to do anything but get those beliefs in front of you—to be a witness, not the Captain Marvel of Motivation or Judge Judy of Financial Wisdom.

  • What does personal success look like? Numbered lists can keep things tidy. That way, you won’t feel compelled to write a novel. A single sentence will work just fine to form the basis of your “vision statement,” though as investors we prefer to add numbers to everything. Consider these examples:
  • “I want to diversify my portfolio in the next six months.”
  • “I want to invest 10% of my disposable income in the stock market.”
  • “Finance over Facebook, education over email—even if for just 15 minutes a day.” (Nice Tiny Step.)
  • “I’d love to retire by age 65 with $500,000.” Many retirement calculators online can show you how that breaks down. 


Putting it all together

For all the areas of life change where Dr. BJ Fogg’s methodology applies (and it’s hard to imagine one where it doesn’t) finance and investing are especially powerful. We’ve outlined what that looks like and even provided tools to help you execute your plan.

One more thought as you begin your journey: where tiny investing steps lead to tiny victories—as in, “Hey, I actually got that done!”—don’t forget the Tiny Rewards.

We’re supposed to feel good when we make progress; we need to reward ourselves when we move the needle forward. We deserve Tiny Celebrations for the times we choose to act, especially when we could’ve dwelled on our lack of motivation. Truth is, we don’t need it.

Small increments of structure, time and clarity are enough to get us started and keep us going. Our hope is that with this month’s series, we’ve given you enough substance to count for an excellent Tiny First Step.  


M1 Finance is not affiliated with Dr. BJ Fogg, his books, or other work. We’re just fans.



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