When I was a young lad, I would always tell myself little lies. Lies that in turn, would hinder my performance in school, athletics, savings, and many other goals a youngster would like to accomplish. As a result, in my early high school years, I developed a procrastination habit by creating these ‘loopholes’ for every situation. So my homework would get done just before it was due, and my studying for an exam would be crammed right before the test.
I was the king of finding loopholes.
I later realized I was just making excuses for myself. If I taught myself to realize these loopholes existed, I could defeat them before the excuses set in. As a result my productivity skyrocketed. My goals became clear, because nothing was in my way.
It’s not that we do not know what would make us happier, creative, and more productive. The issue comes in the execution. If we can remember that in the end, the execution would make us feel happier, we are more likely to avoid making excuses. Here are 3 examples of Loopholes I see regularly.
(1.) The Ten Dollar Loophole
If you give a person $10 is he rich?
No, but if you give a person $10, then another $10, and another $10, eventually that person will be rich. Many people will only consider their actions as a single instance, rather than looking at the bigger picture.
“Eh, this bottle of wine is just $10 I can swing it.”
“This shirt I don’t need is only $10 what a steal! “
“Buying lunch at work is only $10, what is the big deal?”
Whether you focus on the single $10, or the growing pile, that will determine what your behavior is.
A lot of first time money trackers, will find that all their small purchases quickly add up to hundreds of dollars per month. Thousands of dollars per year. This is because we have loophole Jedi mind tricked ourselves into thinking each individual purchase is no big deal. For most of us, we would rather have saved that money then reap the collection of those purchases. Would you rather have 10 “quick trips” to Target where you can’t remember what you bought, or have that money still sitting in your bank account?
We do this in other areas of our lives as well “If I skip the gym today, what difference does it make?”
Well, it makes no difference. Yet the only way to get the benefit of going to the gym is one gym day + one gym day + one gym day (Unless you are watching a 6-minute abs infomercial, then it’s 6 minutes per year).
Focus on the growing pile.
Mr. Money Mustache wrote a great post on the value of $10, check it out here.
(2.) The Reward Loophole
Another big loophole I see is people going out of their way to reward themselves for doing something good. In turn what we do is something counterproductive to our goal:
“I stuck to my budget this month, so I will buy myself a new watch.”
“I saved for retirement this month, so I will use that money to buy a new T.V. next month.”
“I lost 10 pounds, I deserve to eat 6 cupcakes”.
The reward of these positive outcomes should be the outcome itself, not the counterproductive fairy tale reward. The dangerous part about these “fake rewards” is they can cause us to stop a behavior. It gives us a way out by creating a finish line – it is a means to an end. Finish lines are never a good idea when you want to make something a habit.
Rewards create the mindset that the positive act is a deprivation, not a habit.
A better solution would be to reward yourself with something that makes sense. Instead of rewarding your 10lb weight loss with cupcakes, buy yourself a new yoga mat. Or if you hit your savings goals for the month, open a new investment account.
(3.) The Fake Reality Loophole
We live in a Y.O.L.O (You only live once) generation. People constantly are doing things that are counter intuitive to their values.
“I want to retire early, but all my friends are going on vacation so YOLO”!
If the action fits your values and will make you happier than do it. If it is something you will regret afterwards, then you need to re-evaluate this thinking. Making decisions based in quick gratification is usually the wrong decision. Trade the few pleasures right now, for happiness in the long run and you will thank yourself for it.
That being said, You do want to live in the moment and enjoy life. You’re an adult, do so by planning, not impulse.
To wrap it up, these are just a few examples of loopholes I see myself and others tricking ourselves into believing. Gretchen Rubin wrote a great book that goes into many other loopholes in detail. Check it out here.
Do you have any others?
Cheers,
Andrew
Andrew is the host of The Personal Finance Podcast, a show that is changing the way you think about your money. His primary goal with the podcast is to bring as much value as possible to his listeners.
Andrew's favorite free financial tool he's been using since 2014 to manage his net worth is Personal Capital. Each month he uses their free Investment Checkup tool and Retirement Planner to track his investments and ensure that he's on the fast track to financial freedom.
His favorite investment platform is M1 Finance, a site that allows him to build a custom portfolio of stocks for free. It has no trading fees and is his preferred way to invest without having to lift a finger.
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The reward loophole is really a big problem for me. I always used to think that, since I did “good” I should reward myself. But this just undo all the effort I put in and really slows the progress down. Now I am telling myself that it’s more important to create good habits. With good habits, everything will get easier.
The reward loophole is one of my biggest down falls as well. I think many of us fall into the trap. At least we can correct the problem before it gets any worse! Thanks for reading!
A loop hole I fell into was buying books, I thought it was acceptable to spend £8 on a book because I was enlightening myself with knowledge. Well at £8 a book the money added up and I would just give the hard copy away to the charity shop in the end as I was running out of room. I don’t like ebooks. So I had a good talking to myself and now….drum roll…it’s not rocket science…. I go to the library. Loop hole sorted.
Books can be a way that you can really save money. If you really value books it’s fine to spend on them. The problem arises when people buy books, never read them, and they collect dust. If you learn anything of value from that book it’s usually worth it.
My personal rule for buying books:
1.) All books I own must be completed
2.) The local library does not carry the title.
I do reference my books frequently, which in turn brings long term education.
Thanks for reading!