Why does a person eat a chocolate bar when they are not really hungry? Why does someone spend £5 on a gadget they will never look at or use again? A chocolate bar or £5 are small things, but on a longer period of time they do add up. How can we improve our micro-behaviour?
A few years ago I read a book that has become a point of reference for me in many fields: Mindless Eating: Why We Eat More Than We Think, by Professor Brian Wansink. While this book focuses on eating behaviour, most learnings and advice could also be applied to finance matters.
The mindless margin
As the picture below illustrates, between eating way too much and eating way too little, there is a narrow margin where people either over-eat or under-eat – by such a small amount that it is hardly noticeable.
The author gives the example of 100 calories a day. That’s about 10 peanut M&Ms extra a day. Not much – but if you eat 100 calories a day more, you will have eaten 36,500 calories more in one year, which will translate into 10 pounds a year.
The same applies to saving. £5 a day does not sound like a lot, but if you save £5 a day you will have £1,820 more in your pocket after one year.
How can we eat less?
The book gives some good examples aimed at making us aware of unconscious habits and triggers.
- People eat more if they don’t notice how much we ate so far. His advice: leave evidence (empty plates and packaging, chicken bones, etc.) in sight to remind you that you actually ate already.
- People often crave food when they see it, irrespective of how hungry they are. His advice: don’t leave food in plain sight.
- People are more likely to eat a snack that is places on their desk or take another serve during dinner from a bowl in front of them on the table. His advice: make a little inconvenient to reach your food.
- The larger the plate and glass, the larger the portions people will ingest. His advice: use smaller plates and glasses whenever possible.
- People who eat in the company of one or more persons will eat more. His advice: try not to eat too often in a large group.
- In most cultures people eat until their plate is empty. On some cultures, like the French and Japanese ones, stop eating when they are not hungry any longer. His advice: become aware when you are are full and stop eating.
A lot of his advice relies on changing small things and habits, so you don’t feel deprived. If you feel deprived you will fall back and binge eat (or go for an unnecessary shopping spree). But when these small changes are introduced meaningfully and mindlessly in your life, change will take place almost effortlessly.
How can we change our financial habits?
Here are a few rules I use myself:
- My 24 hour rule: if I see something I really would like, I wait 24 hours before buying it, and most of the times I will not end up buying it. This includes buying fewer snacks and wine. And gin and tonic. You get what I mean.
- Hide snacks so that I don’t casually see them, but I will still have something for Saturday night.
- Live in a smaller place with a small wardrobe. You will have less space to fill and when your wardrobe is full you will realise that you still have all you need to wear. Note that you will still have moments where you think you have nothing at all to wear – but these moments have nothing to do with your wardrobe size! To show what I mean, this is my wardrobe which is built into an eaves to optimise that space. It is short (I have to fold dresses) but deep (ideal for storing boots or sandals I’m not currently wearing). I also share a six-drawer chest of drawers with my husband (we get 3 drawers each).
- Does this item really make me happier? Think about how many hours you worked to be able to buy this, and compare the happiness you will get out of it with the amount of work you did in order to be able to purchase it. Is it worth that time?
- Make it easy to save and invest:
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- Set up automated transfers every month to your savings and pension accounts, and a direct debit for your credit card so it gets paid automatically and you are not charged interest.
- Use your calendar (Google calendar or paper calendar) to add reminders. For example two weeks before a contract runs out and you want to switch energy, gas or insurance provider(s). Or every six months to check new credit card reward deals. Or anything else you’d otherwise forget easily.
- Be mindful of who you go shopping with: shopping-happy people will make you want to spend more. Or even better, don’t go into shops where you know you will find it hard not to buy anything.
- Meet up for a coffee rather than dinner. Or even better, suggest a walk in the park to get a bit of exercise and fresh air in.
- Research and plan: you can often find discounts and special offers, but you need to think in advance about what you will need. This includes suggesting birthday and Christmas presents to family and friends. You’ll miss out on the surprise factor – both in the good and bad way 🙂
The best way to change any habit? Be mindful and ask yourself – honestly – if that is the only way of doing something.
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