You will be able to write if-then rules for the money situations where you make mistakes.
By now Darren knows a lot about his own money behaviour. His log shows that he borrows when he's stressed, his diary shows that he spends when he's tired and scrolling, and his cooling-off test showed him how a midnight browse turns into a S$2,400 laptop. Knowing all that hasn't stopped it happening. Last Thursday, after a long day, he still ordered S$40 of supper from his bed. The knowledge was there. It just wasn't in the room when the decision was made.
Peter Gollwitzer, a psychologist who has spent decades studying the gap between intending to do something and doing it, called the answer an implementation intention: a plan in the form "if this situation happens, then I will do this". Productivity: time, focus and systems, lesson 6.3, If-then plans and how long habits really take, explains the research behind it and how to use it for work habits. The short version is that people who write if-then plans have generally been found to follow through more often than people who only set a goal.
The reason is that the plan links a specific cue to a specific response in advance. When the cue arrives, the decision has already been made, so it doesn't depend on how you feel in the moment. For money, that's exactly what's needed, because almost every pattern in this course is strongest in moments of stress, excitement, tiredness or fear, when careful thinking is least available.
A money rule has two halves. The "if" names a situation you can recognise as it happens. The "then" names an action you can take right away.
Weak rules fail on one half or the other. "I'll be careful with money" names neither. "If I feel like spending, then I'll think twice" has a vague situation and a vaguer action. Compare that with "If I'm about to order food delivery after 10pm, then I put the phone on the other side of the room and drink a glass of water first." That one names a time, an action and a specific thing to do.
Investing rules work the same way. "If the market falls a lot, I'll stay calm" won't hold up. "If my portfolio is down more than 15% from its high, then I keep my monthly investment going, don't log in to the broker for a week, and talk to my sister before any sale" will hold up much better. Build and run an ETF portfolio, lesson 8.2, Rules for when markets fall and when they boom, covers which rules a portfolio needs. This lesson is about writing any rule so it works.
Rules work best when they meet three conditions.
They're written down, somewhere you'll see them. A rule you only hold in your head tends to be renegotiated when the situation arrives. Many people keep theirs in a phone note, pinned at the top, or on a card in their wallet.
They're specific. 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 there's no room to decide that this time doesn't count.
They're few. Three to five rules you actually follow beat fifteen you can't remember. Every new rule competes with the others for your attention. Start with the situations that cost you most and add more only once the first ones are habits.
The rules that work are aimed at your own patterns, the ones you've found in your log, your diary, your mental accounts map and your trade audit. Generic rules borrowed from someone else often target problems you don't have.
Darren went back to his records and picked the three costliest situations. His spending diary pointed to late-night scrolling and tiredness. His log pointed to borrowing under stress. So he wrote:
"If I want to buy anything on my phone after 10pm, then I add it to a list and decide the next morning."
"If I'm thinking about borrowing from any source, then I wait until the next day and call my sister first."
"If I'm offered a group order at work and didn't bring lunch, then I order my own at my usual price, or skip it."
Hui Min's three came from her audit and her reference point review. One covers raising cash from investments, one covers buying anything she heard about in a group, and one covers checking her portfolio only on the first Saturday of the month.
Go back to your log and find the situations where you went wrong most often, so you can write three if-then rules aimed at them.
Write three if-then rules for the situations in your log where you went wrong most often.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).