Focus on Habits Instead of Goals to Reach Your, Um, Goals

Recently, I started a meditation practice. Each day I listen to the British-accented voice of a former Tibetan monk, now a mindfulness magnate, encouraging me to follow my breath. I'm still early into this new habit, but something has definitely shifted. The short intervals of mental calm are rewarding and I always look forward to the next day's session.

The experience got me thinking about how, as investors, we're often instructed to focus on our financial goals, but not so much on the habits to help get us there.

Making any decisions, even ones like determining which day we should transfer funds into a certain investment account, can act as a kind of friction that grinds down our mental energy. Reducing the number of decisions by automating our contributions, for example, can mean reaching our goals sooner and with less mental wear-and-tear. Positive cues in our environment can also help strengthen our willpower. For example, keeping fruit on hand instead of chocolate bars to help with weight-loss goals, or finding an investment community to help support us in reaching our financial goals.

According to James Clear, the author of Transform Your Habits: The Science of How to Stick to Good Habits and Break Bad Ones, habits are a system for achieving goals. He cites the example of Jerry Seinfeld, who has said that the "secret" to being a better comic is to write better jokes, which means writing new jokes every day and tracking progress by marking each day with a big "X." He argues that it's that chain of "Xs" that can be motivating, helping build a habit.

Clear says to choose the goal, but then put your energy into creating the habits that will help you get there. It's not a lack of clarity that blocks us, he says, it's a lack of a support system. One example he offers is writing a book. The goal may be to write a bestselling novel, he says, but the system would be the writing process each day that gets you there.

Similar principles can apply if your goal is more along the lines of financial independence in retirement. Habits to help get you there might include things like starting to save early, paying yourself first, tracking expenses or setting and sticking to a plan.

Once you set an investment goal, it's important to keep it in sight, but you might consider also focusing on your process and building your support system to help make it a reality.