(Part 1: Hacking the Habit Loop)
When we first moved to France, everything felt exhausting. Remembering to drive on the right side of the road, figuring out the unwritten rules of the local boulangerie, and constantly translating conversations in my head required a massive amount of conscious energy.
Today? I do most of it on absolute autopilot.
That is the beauty of human psychology. Our brains are incredibly efficient machines. When we repeat a behaviour enough times, the brain turns it into a habit, so it can stop burning energy thinking about it.
I’ve been reading some fascinating research recently on the psychology behind how habits are formed, and it completely mirrors what I see after 17 years in financial planning: the people who build lasting wealth don’t have superhuman willpower.
They just have better habits.
This exact topic was front and centre at a brilliant conference I recently attended called Humans Under Management. As the name suggests, the entire event is dedicated to behavioural finance, the reality that good financial planning isn't actually about managing money; it is about managing the humans attached to it.
Conversations in these spaces frequently come back to the point that you can build the most mathematically perfect portfolio in the world, but if your strategy requires you to actively make difficult, disciplined choices every single month, it will eventually fail.
If you are relying on discipline and willpower to manage your cross-border finances, you are playing a losing game. Willpower is a battery that drains throughout the day. By the time you sit down in the evening to sort out your investments, you have nothing left in the tank.
Here’s where the psychology of the "Habit Loop" can help us.
Behavioural psychologists tell us that every habit relies on a three-step loop:
- The Cue: A trigger that tells your brain to start the behaviour.
- The Routine: The action itself.
- The Reward: The positive feeling that tells your brain, "Yes, let's remember to do this again."
When it comes to money, most of us accidentally build negative loops.
For example, an expat might feel a sudden spike of anxiety about the pound dropping against the Euro (The Cue). They immediately open their banking app to check the exchange rate (The Routine). Seeing the number, even if it's bad, gives them a fleeting sense of control (The Reward).
Over time, they develop a habit of constantly checking their portfolio, stressing over daily headlines, and making emotional, short-term decisions based on noise.
You can’t out-discipline this loop, but you can hack it. In Part 2 later this month, I will show you exactly how to rewire your financial habits so that building wealth happens completely on autopilot.