We’ve talked about how brushing your teeth can make you rich and what Starbucks can teach you about spending less, but thus far, I haven’t talked about things like budgeting, stocks, bonds, ETFs, interest rates or anything vaguely involving financial terms. The reason for that is simple, it doesn’t matter. Not at this point anyways.

I’m going to sound like a broken record here, but matters is creating the right habits that set you up for success.

A habit is simply something that you can do without thinking about it. It’s broken down into three main parts, the cue, the action and the reward. A cue could be anything. Anything that can trigger the five senses could be a cue. That cue triggers you to carry out an action upon which your brain is hit with dopamine to make you feel good.

Back when I weighed 250lbs, my cue was the fridge and my habit was eating. Every time I walked by it, I’d open it up and look for something to eat. Upon eating the food, BAM, my brain would get happy and the vicious cycle would continue.

One day, I decided that enough was enough.

Every time I got tempted to open up the fridge, I’d pinch my belly and remind myself of how I got there. I didn’t realize it at the time, but I was creating a new habit. The cue was still the fridge, but instead of eating, I was pinching my belly. The reward in this case was the satisfaction of keeping my streak going.

The weight slowly came off which encouraged me to begin exercising and adopting other healthy habits. In a span of a few years, I lost over 70lbs. Even now, six years later, I still get tempted by the fridge. All it takes though is one pinch to remind me.

It’s time for me to come clean now. I’ve been tricking you. Without you knowing, I’ve been putting the framework in place for you to develop your own habits.

In first article about brushing your teeth, I had you begin identifying triggers that caused spending. The following article about Starbucks had you use a framework to actually begin writing down cue, action and reward loops. Just to review, it was RICH.

  • Realize the cue
  • Imagine your response
  • Carry it out
  • High-five yourself

Imagining the response was an extra step that isn’t needed, but feedback from people I’ve tested it on thus far has been positive so I’m keeping it in there for now.

The one last thing you should know about habits for now is that their effects compound. Studies have shown that people who create a fitness habit develop positive habits that spill over to other parts of their lives. From quitting smoking to eating better to being more motivated, it’s all there. It’s not just limited to fitness either. In another study, people set savings goals and kept detailed logs of their progress. Not only did they save more, but they were more productive and healthier.

You might be surprised at how much of a difference small changes can make.

Action Jackson

Whenever possible, I’m going to include some action steps at the end of each article for actions that you can take to build good habits, increase your wealth and/or become happier. I’d love it if you reported what you did in the comments, but if you’re shy (it’s ok) and still want to share, e-mail me. I want to hear about it!

If you have ten minutes: Think of one habit that you want to address. It doesn’t have to be financially related but it could be! Use the cue, habit, reward framework to first write out what it is you want to address. Next figure out how you’re going to replace that habit and associated reward.

Example #1:
In this example, we are trying to break the habit of spending too much time surfing. Instead of surfing being the action, we’re creating a productive action while making the surfing the reward. Increased productivity, less slacking off! Some of you will notice that this is the implementation of the Pomodoro Technique.

Cue: Being in front of a computer
Action: Spending way too much time on social media
Reward: Get to keep up with what’s happening (sidenote: your brain is responding to new and novel information which it craves).

Cue: Being in front of a computer
Action: Twenty-five  minutes of focused work on something (work, study, etc)
Reward: Five minutes to surf on social media.

If you have another ten minutes: Think of a new habit that you want to create and write out what you’re going to use as the cues and rewards for an action.

In this example, we want to create a habit of going for a jog every morning.

Cue:  Running shoes right by doorway.
Action: Go jogging.
Reward: Endorphin rush.

Bonus Challenge: Estimate how much money you spend in an average week. You can choose to split it up by categories (i.e. food, phone, etc) or write down a lump number.  Post it on your fridge.

Next, track every single purchase of yours for a week. See how close you get to that number.


Oaten M,  and Cheng, K. Longitudinal Gains in Self-Regulation from Regular Physical Exercise.  Journal of Health Psychology, 2006. http://www.ncbi.nlm.nih.gov/pubmed/17032494

Oaten M,  and Cheng, K. Improvements in Self-Control from Financial Monitoring. Journal of Economic Psychology, 2007. http://www.sciencedirect.com/science/article/pii/S0167487006001012

Photo credit: Lululemon