One of the themes that I wanted to explore with this blog is the link between personal finance and sustainability.
But what do they have to do with each other anyway?
Aside from issues like the impacts of consumption on our wallets and planet, there’s also the question of what we can do, especially when it comes to personal action.
Here are the only two things we need to know to change behavior: We need to set up barriers for bad behavior and reduce the friction for good behaviors.
What does that mean? Let’s look at some examples:
Setting up barriers for bad behavior
Let’s say you want to reduce credit card spending. One of the most common pieces of advice is to freeze your credit card.
Why does that work? Well, you’ve clearly made it harder to get to your credit card. So obviously you’re going to spend less if you need to wait for your card to thaw out (unless you’re a freak like me and seem to spend cash more easily than credit, but that’s a whole different story).
If you’re spending too much on Amazon or trying to avoid messaging your ex on Facebook, you could make sure that you don’t save your password or use the “unfriend” buttons so you have to take a second to decide if it’s really worth typing that sucker in or refriending that special someone.
Why do charges on plastic bags work? Well, adding even a tiny charge creates a barrier that makes people rethink taking a bag:
“In Los Angeles, the average grocery store went from using 2.2 million bags a year to using 125,000 a year, after the 10 cents-per-bag ordinance went into effect in 2011.”
All of these help make undesirable behaviors harder, and therefore less likely.
Reducing friction for good behaviors
Destroying barriers to a good behavior makes it that much more likely that you’ll actually do it. For example, author Ramit Sethi managed to start working out when he laid his gym clothes out the night before, taking away one more thing to think about in the morning.
One of the easiest ways to do this is to just change the default. For instance, according to “How Opt Out Keeps People In,” “Fidelity, a Vanguard competitor, says 76 percent of 20- to 24-year-old workers stay in its opt-out plans, compared with 20 percent who sign up for opt-in plans.” Some states have programs where residents can get 100% renewable energy using a similar opt-out structure.
Automating removes all friction to a negative behavior. One common piece of advice for increasing savings is to automate savings or student loan payments, so that you don’t have to do it yourself every month. Some homes have automated heating systems that can help conserve energy.
Of course, this can also be a force for unnecessary spending, like subscriptions that have been long forgotten about. But being deliberate about using automation can create a win-win situation where you don’t need to do any extra work but also get the benefits of a good behavior.
So, there you have it, the only two things you need to know to change an environmental or financial (or any) behavior, really!