Updated: Oct 6, 2018
“You will never change your life until you change something you do daily.” – Mike Murdock
Last week we looked at the difference between process and outcome. To recap, the defining characteristic was the focus on inputs rather than outputs. This is because you have a greater degree of control over the inputs. Rather than worrying about the final result, worry about improving your process. In short, focus on what you can control.
Now that we have that mental model, let’s add onto it to make it more applicable to our daily lives.
Let’s say we have a goal in mind. In one year we want to run a marathon in under 4 hours. A successful outcome would be the completion of that goal. But what would the process look like? Doing some sort of aerobic activity every day? Running a certain number of miles? Eating right?
All processes are made up of habits, things you do on a daily basis. Therefore, in order to achieve a goal, we need to focus on our habits.
The word habit might give off a slightly negative connotation. Maybe you think of bad habits like biting your nails? Even the dictionary defines ‘habit’ in a negative light as, “a settled or regular tendency or practice, especially one that is hard to give up.”
But the word habit just means the things you do repeatedly.
Let’s take the marathon example. The goal is daunting. But that just means we have to break it down into smaller, more digestible pieces. Just like they say, you eat an elephant one bite at a time (sorry PETA). These smaller, digestible pieces are called habits, and they make or break us.
For instance, one habit could be running a mile per day for the first month of training. Or it could be more ambitious, like 3 miles per day. The point is that you’re taking action, you’re closing the knowledge-action gap.
But closing this gap is difficult. Instituting new habits is tough. Making changes to our lives is hard. If it wasn’t, we’d all be billionaires with chiseled abs. So here is a simple technique for creating new habits to achieve a goal, to focus on the process rather than the outcome.
The name of the game is starting small. Laughably small.
If we set out to run a marathon, but start out with a habit of running ten miles per day, we’ll burn out or more likely, pull a hamstring. Setting overly ambitious habits for ourselves can lead to a quick defeat because you’re really not breaking down the problem effectively. You’re trying to eat the whole leg of an elephant in one sitting. You just can’t do it. You need to ease into it. Therefore, start small. Laughably small.
What I mean by laughably small is so small that if you told someone your new habit they would laugh because they would think you were joking.
For example, let’s say you want to achieve a goal of doing 100 push-ups per day. Start with 1.
For one week, you can only do 1 push-up per day. Sounds possible right? It’s because it is. It’s meant to be. It gives us the momentum to overcome inertia. Then, once we are on a roll, it becomes harder to not complete our habit.
Want to save more money? Save $5 per week for the first month.
Want to learn a language? Spend 5 minutes a day on a language-learning app.
Want to become a better friend? Schedule 5 minutes per day to think about others.
Start laughably small. If you don’t achieve your laughably small habit, then it means the goal is not that important to you. If you can’t sacrifice 5 minutes of your time, then it’s not important. That’s not a knock of your future self if you don’t complete your laughable habit. It just means you have different priorities, which are important to figure out.
Over time, you increase the difficulty of your laughable habits as your momentum and habit-muscles get stronger. You might bump it up to 5 push-ups per day and increase the daily count every week.
But starting is often the hard part. Instituting a habit is hard because it’s different and we don’t know where to start. But the bottom line is: starting is more important than how you actually start. So start laughably small.
Another benefit to laughable habits is the power of compounding, meaning that small improvements over a long period of time make for bigger results than we could have imagined. Think of it this way: if you improved 1% each day at something, you’d be about 38x better at that thing in one year.
As Bill Gates is fond of saying, “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten. Don't let yourself be lulled into inaction.”
If we want to achieve a goal, we must make progress. But to make progress, we need to focus on our habits, the things we do daily. It can be hard to institute these new habits so we must start with laughable habits and build from there.
It comes back to the same, original principle: focus on the process rather than the outcome. Instead of focusing on your goals, focus on your habits. And most importantly,
What Does This Have to Do With Investing?
Investing is a game of improvement. But it is also a game of saving money. To start investing, you need to save. But saving can be hard so implementing a laughably small habit is the first step towards increasing savings. Some people set up automatic bank account withdrawals to a savings account which they can then invest.
Investing is also a meta-game of constant improvement. If we focus on improving our habits, we can become better investors. So maybe you decide to spend 5 minutes a day reading through the e-book or watching one of our videos per day? Or just reading one term from the de-jargonizer.
For more advanced investors, maybe your habit can be skimming through one 10k per day. It doesn’t matter so much what the habit is but that you start.
Achieving goals is hard and sometimes even discipline, good habits and perseverance won’t do the trick. But that’s when you have to go back to this matrix.
As long as have a good process, over the long run, you’ll more than likely have good outcomes. And that’s what we’re after. We’d love to know what laughable habits you are going to start soon! And by soon, we mean right now. Not later today-now. Now-now…