In The Power of Habit, Charles Duhigg describes Paul O’Neill’s belief in keystone habits. Keystone habits “have the power to start a chain reaction, changing other habits…” They “can influence how people work, eat, play, live, spend, and communicate. Keystone habits start a process that, over time, transforms everything.” In essence, that means that if you change one thing, you can start a chain reaction that changes everything.

Finding your keystone habits

According to the book, if you want to change something, you can most easily do so by identifying the keystone habit — the one thing that you do that automatically leads to the next thing in the chain — and then focusing on changing that. Everything else will fall into place more easily after that.

For example, if you have problems with overspending, you could start by making a list of the things that cause you to spend money. Maybe you discover that most of your overspending takes place at the grocery store. You’d then do a little more digging by answering questions like these:

• When do you usually shop? (After work? When you’ve forgotten an ingredient? On pay day? Late at night?)
• How do you feel when you shop? (Harried, hungry, stressed?)
• Who is with you, if anyone?
• Are your trips planned, spur-of-the moment, or a mix of the two?
• Do you bring a list, or go by memory?
• How much time do you spend in the store?

The answers to those questions will probably point out one habit that, if changed, would allow you to stop overspending at the grocery store. For example, getting in the habit of making a list (if that’s your keystone habit) is completely doable.

Focus on changing that one thing, and you’ll see a huge difference in your spending. That’s because instead of saying to yourself “Ok, this month we have really got to stick to the grocery budget!” (and then failing), you can say “This month I’m going to make a list the day before I go to the store, and then only buy things that are on the list once I’m there.”

Keystone habits extend to other areas

The great thing about keystone habits is that they then spill over into other areas. For example, I started out 6 years ago with the idea of doing the “track your spending” portion of the Your Money or Your Life program. I decided to start by just writing down what I’d spent each day on a scrap of paper.

I didn’t even read what I wrote down at the end of the first day. I didn’t total it up, analyze it, or try to reduce my spending in any way. For that first day, I just wrote things down as I bought them and threw the paper in my purse. Then I got in the habit of writing down what I bought and how much it was. Every day.

Eventually, that one habit morphed into:

• Actually looking at what I wrote down and deciding if I wanted to change anything
• Paying off my student loan
• Getting life insurance
• Starting a new business
• Building an emergency fund
• Signing up for a 401k and a Roth IRA
• Regularly increasing the amount I was contributing to retirement
• Learning about (and using) other investments
• Starting other savings accounts
• Creating an iPhone app to help people get out of debt
• Getting raises
• Meeting some great people
• Helping pay for my son’s college

And soon, I’ll be able to add “paying off our house” to that list. I can literally trace ALL of those changes to the decision to make tracking my spending a habit. Is it any wonder I’m a fan?

Change one little thing, and you can change your life.