Book Review: The Power of Habit by Charles Duhigg
By: Kristina K. Bolhouse, CPA/PFS, CFP®
This book piqued my curiosity from two avenues: First, as a financial advisor, I’ve been fascinated at the differences between spenders and savers and even more curious when I see a person actually able to change from one mindset to another.
Second, I was personally curious as to why it does seem so hard to change even the simplest habits—like flossing teeth. You may wonder what the flossing teeth has to do with the world of finances. As this book explains, it’s all part of the same mindset. Flossing teeth is referred to as a “small win” that may actually help you reign in spending later in the day or help you make other good decisions.
While the first two chapters of the book were not really exciting, by the 3rd chapter and throughout the rest of the book, I became fascinated at some of the key concepts that affect not only individuals, but institutions and societies. This is one book that gets better as you read on.
The most important concept is to understand the Habit Loop. The habit loop is simply a cue, a routine, and a reward. New habits are created when the old routine is interrupted and a new routine is put in its place. It sounds simple except that like Pavlov’s famous experiment; our brains have been wired based on the cue. Fighting the routine that follows the cue is the key to it all.
Other key concepts that support changing a habit:
- The power of “small wins” — little victories in our day help us change our routine
- The importance of the people we surround ourselves with to support our changes
- By focusing on one pattern, known as a “keystone habit”, many other habits will easily fall into place.
- A written plan—especially one that has instructions on how to handle a moment of weakness (when temptation is strongest) increases the odds of success
So, if you have any habits that you would like to change—financial or otherwise—I recommend this book as a great starting point. Here’s a link to Amazon if you want to read further; http://www.amazon.com/The-Power-Habit-What-Business/dp/1400069289/ref=tmm_hrd_title_popover?ie=UTF8&qid=1366213513&sr=1-1
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