You will be able to write if-then rules for the money situations where you tend to make mistakes.
Knowing your money patterns does not stop them happening on its own. You can know which situations cost you money and still end up in them again, because that knowledge is often not there at the moment you make the decision.
Peter Gollwitzer is a psychologist who has spent decades studying the gap between intending to do something and actually doing it. He called the answer an implementation intention: a plan of the form "if this situation happens, then I will do this". Research has generally found that people who write if-then plans follow through more often than people who only set a goal.
The plan links a specific cue to a specific response ahead of time. When the cue shows up, the decision is already made, so what you do does not depend on how you feel in that moment. This matters for money because almost every pattern in this course is strongest in moments of stress, excitement, tiredness or fear, when careful thinking is least available. Productivity: time, focus and systems, lesson 6.3, If-then plans and how long habits really take, explains the research behind these plans and how to use them for work habits.
A money rule is an if-then plan with two halves. The "if" names a situation you can recognise while it is happening. The "then" names an action you can take right away. Weak rules fail on one half or the other, or both.
"I'll be careful with money" names neither half. "If I feel like spending, then I'll think twice" has a vague situation and an even vaguer action. A stronger rule would be: "If I'm about to order food delivery after 10pm, then I'll put my phone on the other side of the room and drink a glass of water first." It names a time, an action and a specific thing to do. The 10pm, like the other numbers in these example rules, is an example figure.
Investing rules follow the same structure. "If the market falls a lot, I'll stay calm" will not hold up. This one holds up much better: "If my portfolio is down more than 15% from its high, then I'll keep my monthly investment going, not log in to my broker for one week, and talk to my sister before selling anything." This is about how to write any rule so it works. Build and run an ETF portfolio, lesson 8.2, Rules for when markets fall and when they boom, covers which rules a portfolio needs.
Rules work best when they are written, specific and few. A rule kept only in your head tends to get renegotiated when the situation arrives, so put yours somewhere you will see them, such as a phone note pinned to the top or a card in your wallet.
Use numbers, times, places and names wherever you can: "More than S$300", "after 10pm", "in the broker app", "my sister". Specific rules are harder to argue with because they leave no room to decide that this time does not count.
Three to five rules you actually follow beat fifteen you cannot remember, because each new rule competes with the others for your attention. Start with the situations that cost you most, and add more rules only once the first ones have become habits. Aim them at your own patterns, the ones in your log, spending diary, mental accounts map and trade audit. Generic rules borrowed from someone else often target problems you do not have.
Darren already knows a lot about his money behaviour from earlier work. His log shows he borrows when stressed. His spending diary shows he spends when he is tired and scrolling. His cooling-off test showed how a midnight browse turns into a S$2,400 laptop. Knowing this has not stopped it. Last Thursday, after a long day, he still ordered S$40 of supper from bed.
He goes back to his records and picks his three costliest situations: late-night scrolling and tiredness from the diary, and borrowing under stress from the log. He writes three rules:
If he wants to buy anything on his phone after 10pm, then he adds it to a list and decides the next morning. If he is thinking about borrowing from any source, then he waits until the next day and calls his sister first. If he is offered a group order at work and did not bring lunch, then he orders his own at his usual price, or skips it.
Hui Min took her three rules from her trade audit and her reference point review. One covers raising cash from her investments, one covers buying anything she heard about in a group, and one limits checking her portfolio to the first Saturday of the month.
Find the situations in your records where you went wrong most often or that cost you most. For each one, write an "if" that names a situation you can recognise as it happens, and a "then" that names an action you can take right away. Add numbers, times, places and names. Write the rules down where you will see them.
Go back to your log, find the situations where you went wrong most often, and write three if-then rules aimed at them.
Look through your log, find the situations where you went wrong most often, and write three if-then rules for them.
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