This is the fourth post in the series I’m writing which reviews and ranks the non-fiction books I read in 2017.
You can find the first three in the series here:
I don’t want to drag this out forever but I also don’t want to have a mammoth post. We’ll see where this one ends up.
In this book, he shows through very interesting case studies, that habits are incredibly resilient. In some cases, people with extensive brain damage who could not even remember where they lived could still adhere to their old habits and pick up new ones. This is because learning and maintaining habits happen in the basal ganglia, a part of your brain that can function normally even if the rest of your brain is damaged.
Habits can be broken down into a three-part loop. First, there’s an external cue, like an alarm clock going off. Your brain then fires up and determines which habit, if any, is appropriate for the situation.
Next comes the routine or the activity you’ve performed over and over when given this particular cue. This might be blindly heading to the bathroom and finding it with your eyes closed.
Finally, you get a reward. This gives you a feeling of success, which, in this case, would be relief. Your brain then registers the successful completion of the activity and reinforces the link between the cue and the routine.
The problem with habits being resilient is that it makes bad habits hard to break.
Kicking a habit is hard because you develop a craving for the reward at the end of the habit loop. Cravings work for good habits as well. Research indicates that people who manage to exercise habitually crave something from the exercise. It might be an endorphin rush or the satisfaction of completing the workout or possibly how they look in the mirror.
The key to kicking a bad habit is not to resist the craving but to redirect it. Keep the same cues and rewards, but change the routine that occurs as a result of that craving. Alcoholics Anonymous has used this to great effectiveness.
Not all habits are equal. Some habits, known as keystone habits, are more important than others because adhering to them creates positive effects that spill over into other areas. Research shows that doctors can get obese people to make a change for the better just by getting them to focus on developing one keystone habit such as keeping a food journal. This caused other habits to start to take root.
It turns out that willpower is like a muscle, it can tire. If you exhaust it by concentrating intently on a problem, you might have none left when you get home. You can strengthen your willpower by engaging in habits that demand resolution, like adhering to a strict diet.
Willpower likes autonomy too. Studies have shown that if people do something because they are ordered to rather than by choice, their willpower muscle will get tire more quickly.
He tells the terrible story of the Kings Cross Landing underground station fire in 1987. Organizations tend to be battlegrounds in which individuals clamor for power and rewards. Habits such as minding one’s own business form as ways to keep the peace.
In 1987, at the King’s Cross underground station, a ticket collector saw signs of a fire but didn’t raise the alarm. It wasn’t his responsibility. The fire escalated, but no one present knew how to use the sprinkler system or had the authority to use the fire extinguishers. Within minutes, a huge fireball erupted and 31 people perished.
Taking Advantage of Habits in Marketing
Retailers have long known about shoppers habits more than the shoppers do.
In the book, he tells the story of Target and how they were gathering data on shoppers habits to the point they could tell when a woman was pregnant by her shopping habits. This worked so well that they would tailor their ad circulars that are sent to people’s homes base on their shopping habits. In this instance, they started sending baby product circulars to a teenage girl. The father became so angry that he paid the local Target manager a visit. Come to find out, the girl was pregnant and the father went back to apologize later.
Habits are a part of our lives. We can use habits to make our lives better or worse. It’s good to know that habits can be rewired and changed. It’s also good to know, if it is a good habit, that once it is learned, it will go on automatically. The key seems to be finding the keystone habit that will make all the other related habits fall into place.
In his earlier book, Money, Master the Game, Tony Robbins interviewed at least 50 of the most successful financial experts to take the mystery out of money and investing. In this book, Unshakeable, he distills the advice given by the financial experts into an actionable plan, no matter what your financial situation.
At the beginning of the book, he lists seven “freedom” facts that show how the markets work.
- On average, corrections have occurred about once a year since 1900.
- Less than 20% of all corrections turn into a bear market.
- Nobody can predict consistently whether the market will rise or fall.
- The stock market rises over time despite many short-term setbacks.
- Historically, bear markets have happened every three to five years.
- Bear markets become bull markets, and pessimism becomes optimism.
- The greatest danger is being out of the market.
He lays out four core principles that expert investors use to help determine a good investment from a bad one.
- Focus on how to not lose money rather than how to make it. Look for investments that are safer and have a limited downside.
- Look for investments that are relatively low risk and offer relative high rewards.
- Be smart and know your taxes! Having a good sense of what taxes and fees you face will help make better investment decisions.
- Diversify. There are four ways you can diversify, a) across different asset classes; b) within asset classes; c) across different markets, countries, and currencies and d) across time.
Don’t get emotional when investing. Following your instincts can lead to bad decisions. He says to stay disciplined and use a checklist for investing. We need rules and principles to help guide our financial decisions because of the way our brains are wired. We respond to losing money like we respond to life-threatening situations. When it comes to finances, this is an unfortunate reaction since often the best response to plummeting stock prices is to invest more. That’s why rules and checklists come in handy.
Watch out for investment fees! If you’re not careful, they can end up eating up two-thirds of your earnings.
By the end of the book, you begin to realize that financial success and security are within your reach. No matter what job you have or how small your paycheck is. With the right knowledge and an action plan in place, anyone can make good, lucrative investments.
Yeah, I only got through two more of the 13 books from last year. I hope you’re enjoying this as much as I am. I love going back through books I’ve read and the notes I’ve taken on them. It’s almost like reading them a second time because you have those moments where you go, oh, right! I remember that now.
Just five books left!