Understanding your own psychology is a powerful way to set up systems that work for you. A successful system takes a little planning and thought but once running can have a profound impact on your life. In other words, exercising once for 60 minutes is great but exercising three days a week for 30 minutes every week will change your life.
How to set up a system to achieve anything
A process is a system for handling events. Whether or not you’ve thought about it deeply, almost everything you do is a process (also known as a habit).
Some habits are good and we want to keep them.
Some habits are bad and we want to remove them.
Other habits are neither good nor bad, result from neither planning nor purpose, but simply exist because we’re trying to get from point A to point B.
Habits are actions we take unconsciously that produce events.
You commute to work the same way every day, often crossing the streets at the same places or turning on the same streets. Your commute is an ingrained process that requires little conscious thought.
It produces an event: you arrive to work.
An event is something that happens, either as a result of a process (or habit) or because we’re trying to get from point A to point B.
Still with me? Hang on for a bit longer.
The magic of a process vs an event
The easiest part of a process is starting. Anyone can start!
More importantly, you’re always going from point A to point B anyway. For example, you already have a process for eating, budgeting, saving, sleeping, etc.
The hardest part of a process is keeping it going. After you’ve exercised for a few weeks, you no longer want to and so you stop.
And yet we all know that’s where the magic happens.
Building wealth is a process. It’s not enough to want to save money for a few days. You have to always want to save money.
An event is the EXACT OPPOSITE.
The hardest part of an event is starting. When it comes to actually exercising, I’m most resistant a few minutes before I start. I would prefer to stay in bed or just rest.
The easiest part of an event is keeping it going. Once I’ve started exercising, it’s usually no problem to continue. It’s a rare day that I do five minutes of cardio and then decide I want to stop.
What the hell does this have to do with money?
If we understand the difference of a process vs an event, we understand our own psychology.
Depositing money into your 401(k) is an event.
Making a student loan payment is an event.
It’s hard to start an event. You’re likely to be most resistant right before you do it.
So take yourself out of the equation and automate the event.
Making regular deposits into a 401(k) over the course of a year is a process.
Remember, the hardest part of a process is keeping it going, not the part where you decide you want to start.
Again, the solution is to take yourself out of the equation and automate the process.
If you want future-you to respect the decision made by today-you, make it as hard as possible for future-you to mess with your plans.
Protect yourself from yourself!
UH, what does all this mean?
If you got this far, congratulations. You understand the power of systems in our daily lives.
You probably also understand the importance of taking the time to design the systems that work for you.
Is getting frustrated and paying 70% of one month’s income toward your student loans a sustainable strategy to pay off your loans? Probably not.
Is setting up a separate student loan bank account, automatically transferring money each month and then having your student loan company apply an automatic extra payment going to eliminate your debt? Absolutely. Every time.
So, it stands to reasons that in order to be successful, you need to build a process that works for you in the long run.
True power and progress results from nailing a process, setting it on autopilot and letting it become ingrained into your life (just like a habit).
Once you get your financial life on autopilot, you will be building wealth in the most powerful way possible – free from conscious thought.
Does this apply in all parts of life?
Yep, pretty much. Our habits control us.
Can you interrupt a process?
Install a Google Chrome plugin that replaces your Facebook feed with an inspirational quote (Facebook News Eradicator).
Can you start a new process? What if I want to start flossing?
Link the new habit to an existing one like brushing your teeth. Before you know it, every time you brush you brush you’ll also be thinking about flossing.
If these ideas interest you, you might also like The Power of Habit: Why We Do What We Do in Life and Business. It’s a personal favorite of mine. And yes, I’ll make a few cents if you buy the book using my link (and THANK YOU if you do). If you decide not use my link, I won’t mind either.
But most importantly, go out and work on your processes/habits today! As the old proverb says, to know and not act is to not really know at all.
Joshua Holt is a practicing private equity M&A lawyer and the creator of Biglaw Investor. Josh couldn’t find a place where lawyers were talking about money, so he created it himself. He spends 10 minutes a month on Personal Capital keeping track of his money and is always negotiating better student loan refinancing bonuses for readers of the site.
One thought on The Difference Between a Process and an Event
Great post. I love creating systems and processes. I use them for investing, work, and at home. For investing, it takes the emotions out of decision making. At work, automation frees up time to focus more on consulting than task driven duties. At home, having a process keeps the place in order.