Lesson 1.2

5 secrets from behavioural science to help hack your brain AND your bills

Have you been meaning to shop around on your bigger bills like insurance and utilities, but just can’t seem to find the time?

You are not alone. Behavioural science has highlighted the problem of the ‘intention-action’ gap. 

The intention-action gap describes the difference between one’s intended and actual behaviours. It highlights instances where we fail to execute our planned actions, often influenced by external factors, lack of motivation, or unforeseen obstacles. 

For example, we know that shopping around on your household bills could help you to save big cash. But how do we motivate ourselves to actually do it?

Your money and your mind

Interview with CommBank behavioural scientist, Will Mailer

1. Reset your finances: Harness the ‘fresh start effect’

Have you ever noticed how diets always start on a Monday? Or the tendency of people to make ‘New Year’s Resolutions’ year after year – even when they failed the last time?

Studies of people who have sought to make changes in their life have found picking a point in time to commit to a change is a powerful behavioural change device.

Let’s face it, we need all the help we can get, so picking a moment to start, such as conducting a New Year’s audit of our household bills can help us stick to our intentions. 

The arrival of annual policy renewals is also a great time to review bills and shop around – although any time you can convince yourself to do it will help.

2. Say it out loud: Add ‘social proofing’

‘Social proofing’ is the idea that we tend to copy the actions of those around us to try and conform to what is appropriate behaviour.

In his book ‘Atomic Habits’, James Clear advises joining groups of people where your desired habit is the social norm, such as a bike riding or walking club.

Speaking to our friends and family about our money intentions can also be powerful.

Get a friend and tell them you plan to switch your energy provider. They will ask you about it. Introducing an element of competition or ‘gamification’ can also help – who will switch first? Who can save the most?

Public pledges about your savings goal can also increase the ‘psychological cost’ of failing at it, otherwise known as a ‘soft commitment device’. There is no actual penalty, only what people think of you. But, as it turns out, that’s something most of us care quite a lot about.

3. Piggyback existing habits: ‘Habit stacking’

If you want to take up a new habit, it can help to attach that new habit to an existing one. Also known as ‘habit stacking’ or ‘cue-based planning’ the idea is to create a mental cue, embedded in an existing habit, that it’s time to do your new chosen habit.

Over time, this association will become so strong, you’ll perform your new habit as frequently as your old.

So, whether it’s listening to a podcast while you catch the bus to work or checking your bank account when you get your morning coffee, look for ways to integrate learning about money into your existing habits.

4. Make it fun: Add ‘temptation bundling’

A related idea is to pair doing something you love doing, but isn’t necessarily great for you, with something you enjoy doing less, but know is good for you.

So, it could be folding the laundry while binge-watching your favourite show. Or having a piece of chocolate while you check your bank or superannuation account balance.

You will either do less of the thing you’re not supposed to, or you’ll do more of the thing you’re supposed to do because you get to also do the tempting thing.

Either way, you’ve improved your behaviour!

5. One step at a time: Take advantage of ‘chunking’

Amid all the mental load, we can often get overwhelmed by tasks.

When this happens, use ‘chunking’ or breaking larger tasks down into smaller, more achievable steps.

How do you eat an elephant? One bite at a time.

For every financial goal you have, be it sorting out your super or learning to invest, try to figure out what is the smallest step you can take first. Perhaps it could be finding your password for your account or downloading one investing podcast.

Break bigger tasks down into smaller actions, create a list that you can tick off as you go and then start by taking the smallest step possible towards your goal.