Q&A with Charles Duhigg: diagnosing, restructing bad money habits

'The Power of Habit' author shares keys to reconfiguring your life

By Sally Herigstad

Charles Duhigg once had a habit -- seemingly innocent- - of getting up from his desk at about 3:30 every afternoon, wandering down to the cafeteria and buying a cookie. He usually chatted with co-workers and then returned to work refreshed and ready to tackle the rest of the day.

He enjoyed his cookie habit. However, when his wife pointed out that all those cookies were adding to his waistline, he started trying to resist the temptation. That was surprisingly difficult -- so difficult, in fact, that Duhigg found parallels between his cookie habit and all kinds of other habits, like smoking, gambling or overspending.

As Duhigg studied habits and how they work, he discovered surprising keys to permanently changing his life by diagnosing and reconstructing his habits. The result: his bestselling book, "The Power of Habit."

Charles Duhigg, author, 'The Power of Habit'

As Duhigg studied habits and how they work, he discovered surprising keys to permanently changing his life by diagnosing and reconstructing his habits.

We chatted with Duhigg about how the lessons he learned could help us in the area of personal finance.

CreditCards.com: We often think of habits in a negative light, but you talk about them as something actually useful. Can you explain?

Charles Duhigg: What we know is that 40 percent to 45 percent of the actions we take every day are habit. Habits are what lets us back out of the driveway. Most habits are things that make our life easy. If we couldn't form habits, we'd be overcome by minutiae. Our brains can't tell the difference between a good habit and a bad habit.

CreditCards.com: Your old habit of buying a cookie every day is a perfect case of a habit that seems harmless at first, but over months and years it adds up in both dollars and calories. Can you describe why your initial efforts to stop buying the cookie failed, and how you were eventually successful in changing your cookie habit?

Duhigg: I hadn't diagnosed the cue and the reward. A lot of people have this issue, and they think they can just willpower through it. What we know is that willpower is like a muscle. It gets tired. You have to diagnose the cue and the reward and then you can change the habit.

You never truly extinguish bad habits. Rather, you have to diagnose the cue and the reward and then you can change the habit. You must keep the old cue, and deliver the old reward, but insert a new routine.

Once you've figured out your habit loop -- you've identified the reward driving your behavior, the cue triggering it, and the routine itself -- you can begin to shift the behavior. You can change to a better routine by planning for the cue and choosing a behavior that delivers the reward you are craving.

CreditCards.com: Say someone has a bad habit of browsing the Nordstrom website when she's bored. This is detrimental to her clothing budget. Other than saying, "I will not look at Nordstrom's new dresses" over and over, how can she change her Web surfing habits?

Duhigg: She needs to find a new website to browse. That's clearly delivering some kind of reward that you crave. You need to satisfy that need. Find a routine that delivers that same reward.

CreditCards.com: You don't seem to recommend a lot of self-reprobation, or taking oneself to task for falling into the wrong habits. Why is that?

Duhigg: What we know about neurology: Your neurology latches onto things that deliver a reward. If there's not a reward, something cannot become a habit. You need to give yourself something that you genuinely enjoy. It has to have a cue and a reward.

CreditCards.com: How many times do I have to do something differently to change a habit?

Duhigg: There's no rule. It doesn't take two times or 21 days. It's different from person to person and behavior to behavior.

CreditCards.com: Some habits are harder to break than others. In your opinion, what makes some habits so resistant to change?

Duhigg: Basically, it's related to the reward. If something has a real reward, you can change the behavior. If people say it's hard to change, it's because the old reward was so rewarding and they haven't found a new behavior that begins to rival that.

Often the reward that alcohol provides is a relief from tension. There's a lot of ways to relieve  tension. Alcoholics Anonymous gives you a group setting that gives you a catharsis and a relief from tension.

It's not particularly hard to replicate that reward; it's just that people have to be deliberate about it.

CreditCards.com: What are "keystone" habits, and how can they help us reach our financial goals?

Duhigg: What researchers have discovered is that some habits seem to matter more than others. They set off a chain reaction. Those are keystone habits.

Usually it's something that when you think about changing that habit, it seems like a cultural change. Exercise is often a keystone habit because people are really proud of changing it. It's something that has an emotional resonance.

CreditCards.com: Is changing a habit easy if we just learn some tricks to reprogram ourselves?

Duhigg: No. What you have to do is diagnose the cue and the reward. And then you know where to start. It does make it easier because you know the first step.

CreditCards.com: Compared to talent, luck and other factors, how important are habits to achieving success in our financial lives?

Charles Duhigg: They're very important. What you spend money on every day has a huge amount of influence on whether you're going to save money or if you're going to be in debt. The biggest influence is the spending equation.

CreditCards.com: Do you ever have a cookie in the afternoon anymore?

Duhigg: No, I don't. Never. Sometimes, if I feel like I really deserve a reward, I'll have one at lunch. But no more cookies in the afternoon.

CreditCards.com: Is that because you're afraid of a relapse, or because everyone's read your book and they're watching you?

Duhigg: (Laughs) There's a nice disincentive!

See related: Q&A: T. Harv Eker talks money, debt and breaking bad habits

Published: May 4, 2012

	Three most recent Spotlight: People and their plastic stories: Q&A: ESPN's Mike Greenberg takes a write turn with novel – The death of a friend inspired the popular sports talk show host to try his hand as a novelist ... Q&A with author Frank Ahearn on the art of disappearing – This skip-tracer turned skip-maker charges $42,000 minimum to help people disappear. He doesn't take credit cards. In fact, his first move will be to destroy yours ... Scared of Big Brother? Too late, says 'Big Data' co-author – As more companies tap into the huge amounts of data to measure consumer behavior, "Big Data" co-author Viktor Mayer-Schonberger says it's not really a bad thing ...

	CreditCards.com's newsletter Did you like this story? Then sign up for CreditCards.com’s weekly e-newsletter for the latest news, advice, articles and tips. It's FREE. Once a week you will receive the top credit card industry news in your inbox. Sign up now!