James Clear, author of Atomic Habits, shares his story. The conversation dives into the difference between systems and goals.

James' Story

Before even thinking about writing a book, James had a near-death experience that sent him spinning back to square one. He was hit in the head with a baseball bat and the fall out was significant. The ordeal involved seizures, double vision, a medically induced coma, and months of physical therapy to relearn the basics.

At this point in his life, he had to build small habits because it was the only option he had. There was not a magic switch that could flip him back into the life of a young healthy person that he had been prior to the accident.

Instead, he relied on habits to rebuild his life. It was small things like preparing an hour before class, going to bed at the same time every night, and going to the gym on a consistent basis.

That was a time in my life when I had to start small, when I had to build small habits because that was the only option that I had. I couldn't just flip a switch and go back to the normal, young, healthy person that I was. And those small habits were, like, pretty insignificant at the time... None of those seemed significant by themselves but they gave me a sense of control over my life and I felt like I was able to rebound and regain some composure.

Over the years, he was able to rebound and regain some composure in his life. He never thought about this in terms of getting 1% better every day, but looking back, that is the verbiage he would use to describe his journey. He learned about the power of habits as a practitioner and later spent years investigating a way to put his systems into words.

Related: The Aggregation Of Marginal Gains

How To See Through The Short-Term For The Long-Term

The idea of getting 1% better may seem fairly insignificant. For example, the choice between a burger versus a salad doesn't make a huge difference that day. Or the choice to save a single contribution for retirement may not seem impactful. However, over the long-term both of these actions can lead to dramatic results.

It’s very easy to dismiss the importance of 1% changes.

James put this into perspective with a story about an ice cube in a cold room. If the room starts at 25 degrees and you increase it one degree at a time, it could take many small changes to hit the melting point of 32 degrees. At the shift between 31 and 32, you see a visible change in the ice cube but that doesn't mean all of the other changes were less important. Without those prior changes, you couldn't make the change from 31 to 32.

You may have a similar feeling when you are building habits. We often complain about making no progress in a short amount of time. However, just because you can't see the results yet doesn't mean you aren't making a change. The work you are putting in is not wasted, it is just being stored. You are building up potential energy to release at a different point.

The last contribution to your retirement account is not the reason you are able to retire, it is about all of the contributions you made before that.

The Compounding Effect

In a similar way to compounding interest, habits have a compounding effect over time.

That idea that "habits are the compound interest of self-improvement", it's basically like the same way that money multiplies through the compound interest. The effects of your habits multiply as you repeat them across time. And we can say this about pretty much any area in life.

The effects of your habits multiply as you repeat them. The results you experience are often a lagging measure of your habits. For example, a bank account is a lagging measure of your financial habits and your fitness level is a lagging measure of your workout and eating habits.

The hallmark of any compounding process is that the greatest returns are delayed. And so you really need patience to let those things start to accrue and compound.

Habits provide an advantage that you can start to compound day after day.

Related: How Action Creates Identity with James Clear

Goals

James was a goal setter throughout his life. At some point, he realized that setting the goal did not have a big impact on whether or not he achieved the goal.

If the goal is the same between the winners and the losers, it cannot be the thing that makes the difference. It might be necessary, but it's not sufficient for success.

Although a goal might be necessary, it is not significant for success. The systems you create through your habits will determine whether or not you reach your goal. Systems move towards an outcome that may or may not align with your goals. If there is a gap between your goal and your system, the system will always win.

Since we tend to live in a result-oriented world, we often see the outcome without looking at the system. The process that creates incredible results is often invisible. Because we only see the results, we tend to overvalue the outcome and undervalue the system.

We think that the results need to change but actually it's the habits behind the results. It's the system behind the goal that needs the real focus.

Systems

Although James doesn't recommend trying to measure the idea of getting 1% better every day, he does recommend trying to improve every single day. The important part is to show up consistently rather than pin your entire identity on the outcome of a single goal.

Throughout his research, he has found that people focus on goals seem to be short-term thinkers. On the other end of the spectrum, people that focus on systems seem to be long-term thinkers. It is not that short-term goals don't matter, they do. However, with a system, you can allow yourself to win again and again.

Whether or not you achieve [your goals] has very little to do with the goal itself...You do not rise to the level of your goals, you fall to the level of your systems. It does not matter whether you have the goal or not, the system will inevitably take you there if you stick to it.

By focusing on long-term systems, you can see better results.

Identity Drives Your Habits

The story you tell yourself about yourself affects your habits. Generally, people decide that if they follow the process and hit the outcome then you will be the person you want to be.

James suggests inverting the process. Instead, consider your identity the first priority of change. Ask yourself who is the type of person that could achieve the results you want to? Then focus your efforts on who you want to be and allow the outcome to follow naturally.

Build your identity with positive habits and then let the results come naturally. Since all behavior is tied to the internal story you tell yourself, it is important to keep an eye on the narrative.

The real reason that habits matter is that they reinforce your desired identity. Anytime you perform a habit, habits are, your behavior is how you embody a particular identity. Every time you save a little money for retirement, you embody the identity of someone who is a saver, who is Financially Independent. Every time you make your bed, you embody the identity of someone who is clean and organized...Each time you do these things, doing it once does not, like, radically transform how you think about yourself, but if you show up and do it again and again, then it's like you're casting votes for being that kind of person.

Anytime you perform a habit, your behavior helps to embody that identity. Although doing an action once doesn't change your thinking about yourself, doing it again and again can. Each time you perform the new action, it is like a vote for the type of person you want to become.

Struggles With Identity

The danger with identity is that you can easily let a single aspect of your identity overpower everything else. If you cling to one identity, then it becomes hard to grow beyond it.

You view yourself as a collection of identities. For example, a dad, brother, son, volunteer, and more. Anytime one of those things takes over too much, it can feel like you lose a part of yourself.

For James, being an athlete was a huge part of his life until the accident that changed everything. It was a struggle to let go of that part of himself. But he has been able to take parts of that identity forward with him. The key is to be adaptable and translate the positive qualities into your new situations.

Clarity

Working on the book, James was able to come up with a language to talk about habits.

In one chapter of the book, he dives into the secrets of self-control. For most, it is likely not an issue of motivation or will power but an issue of clarity. It is mostly about cues. If you are in a tempting environment, then you are less likely to follow through with your habits. When you are in a disciplined environment, then you follow through just fine.

The problem is when the intention to change is vague, like "this time I'll just do better", the moment of action passes us by. We don't know exactly when to act or how to act.

Often people have a desire to change but keep the habits too vague. You need to know when the moment to act is happening.

Clarity makes it obvious when to act. It's less likely you'll let the moment of action pass you by.

It is less likely you will let the moment pass if you clarify when you will be working on your goals.

How To Build A New Habit

A habit can be broken down into four stages:

• Cue
• Craving
• Response
• Reward

Not everything in life is rewarding. If a behavior is not rewarding then it is unlikely to become a habit. You can use this to your advantage.

From those four steps, you can use the Four Laws of Behavior Change to allow you to follow through on your systems.

To Build A Good Habit:

• You want your good habit to be obvious and easy to see.
• You want the habit to be attractive and appealing.
• You want it to be a simple option.
• Finally, you want the habit to be satisfying.

To Break A Bad Habit:

• Make it invisible.
• Make it unattractive.
• Make it difficult.
• Make it unsatisfying by adding a consequence.

Atomic Habits

Atomic Habits is the idea that you can make big changes with small habits. The habits should be easy and small but they build into immense energy or power. If you make small and easy changes, you can layer them together to transform your life in the long-term.

Social Norms And Tribes

If you find yourself trying to build good habits, surrounding yourself with the right tribe is important. Belong to the tribe with the behavior you want, where that is the norm.

Most people would rather be wrong with the tribe than right and by themselves. It takes a lot of courage to step outside of the social norm. And so the more that we can create groups where something different is the norm, where something outside of what you can get in other tribes is available, the more you have a space to go. A place to join.

Join a group where your goals are the norm.

Two-Minute Rule

When you are setting goals and habits, break it down to the easiest possible do-able thing.

If you want to read a book, break it down to reading one page a day. If you want to become the kind of person that works out at the gym, go to the gym every day--even if only for five minutes. This two-minute rule breaks down the paralysis by analysis, perfectionism, and builds a path around the path of least resistance. It builds a foundation. A habit can only be improved upon once it is established.

Listen to the Friday Roundup of this episode here.

How To Connect

You can learn more about the book on the Atomic Habits website. To check out more of James' writing, head to his personal website.

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• 50 Ways To Improve Your Finances By 1%
• Podcast Episode: Goals vs Systems

New to FI? Be sure to check out Episode 100: Welcome To The FI Community!