psychology http://www.wisebread.com/taxonomy/term/134/all en-US How to Find the Savings Strategy That Works For You http://www.wisebread.com/how-to-find-the-savings-strategy-that-works-for-you <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-to-find-the-savings-strategy-that-works-for-you" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/young_woman_with_a_piggy_bank.jpg" alt="Young woman with a piggy bank" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Creating a savings strategy may sound like an odd concept. Saving money seems like a simple task &mdash; one that doesn't require much strategy on your part.</p> <p>But saving money, like any other financial skill, can be set up to either fit in with your psychology, lifestyle, and preferences, or go against them. And just how successful can your savings plan be if your savings strategy doesn't work for you?</p> <p>If you've ever struggled to save money, you might have been using the wrong strategy. Instead of following the same old failed savings path, try a strategy that works for you:</p> <h2>If you like getting something for nothing: Use a change jar or roundup app</h2> <p>When I was in high school, I was the person holding up every transaction by counting out exact change to the cashier, while my friend thought nothing of breaking a $20 bill. For a long time, I thought my friend was bad with money &mdash; until I learned what he did with all the loose change he gathered by breaking bills. Every few weeks, he'd take his change to the bank and deposit the money into a savings account.</p> <p>My friend's habit was an excellent way for him to set money aside. He got to avoid counting out change at every transaction (which he hated doing), and he felt like he was getting a nice financial bonus every few weeks.</p> <p>In 2017, change jars may not be as practical as they were in the 1990s, but you can consider using an app that offers a similar strategy. Apps like Acorns and Qoins recreate the feeling of throwing change in a jar. These apps round your purchases up to the nearest dollar, and use the difference to build your savings account or pay down debt. (See also: <a href="http://www.wisebread.com/everyones-using-spare-change-apps-are-they-really-worth-it?ref=seealso" target="_blank">Spare Change Apps &mdash; Are They Worth It?</a>)</p> <h2>If you like seeing progress toward a goal: Manually transfer your savings</h2> <p>Sometimes, the best motivation to do something is the same one your elementary school teacher offered: gold stars on progress charts. If this describes you, consider manually transferring money to your savings account every payday.</p> <p>This may sound counterintuitive, since so much personal finance advice suggests automating your savings so you don't have to think about it. But if you're someone who feels great about seeing the progress made on a goal, manually transferring your savings will make you excited about doing it in the first place. It will motivate you to stick with it, and maybe even put more money aside.</p> <p>In addition, actually creating a savings chart or other visual representation of your goal will help you stay on track and inspired to find more ways to save. That's because tracking your progress helps build a chain of good habits, and you want to keep that chain going until the good habits become second nature.</p> <h2>If you don't want to think about saving money: Deposit your whole paycheck into savings</h2> <p>Some people have trouble saving money, no matter how hard they try. If this describes you, why not set up your finances so that your money goes into savings <em>before </em>it hits your checking account?</p> <p>Under this system, your entire paycheck is deposited into your savings account on payday. Once a month, you'll transfer the amount you need for your regular expenses and bills into your checking account.</p> <p>When you follow this strategy, you'll automatically spend less than you earn and save money every month without having to think about it. The money has already been saved for you.</p> <p>If you correctly calculated the amount you need to cover your monthly expenses, the money in your checking account should last until the following month. If you are running short before the end of those 30 days, you can decide to move more money from your savings account, or go on a spending ban (make no unnecessary purchases until the next month begins).</p> <p>If you find that you're regularly adding a second transfer near the end of the month to make ends meet, take time to re-evaluate your expenses.</p> <h2>If you want to productively ignore your savings: Automate and use savings apps</h2> <p>Part of the problem with saving money is the fact that it becomes just another financial decision you have make. How much should you set aside? When should you make your transfer? Where will you find the money to put into savings?</p> <p>If you'd rather skip the whole task of saving money instead of answering these questions, then automation is the right savings strategy for you. Setting up an automatic transfer from your paycheck into your savings account means that you don't have to think about putting the money aside. It's a seamless transfer of your money to savings.</p> <p>Digit is one way to do this. Digit is an app that analyzes your cash flow. After syncing your accounts, about twice a week, the app will determine an amount of money ($5&ndash;$50) that is safe to transfer out of your checking account and into an FDIC-insured Digit deposit account. This is a simple way to save money without having to think about it. Digit is free for one month, and $2.99 per month thereafter. (See also: <a href="http://www.wisebread.com/5-microsaving-tools-to-help-you-start-saving-now?ref=seealso" target="_blank">5 MicroSaving Tools to Help You Start Saving Now</a>)</p> <h2>If you have trouble prioritizing yourself: Treat your savings like a bill</h2> <p>Many of us have trouble putting ourselves first, including <a href="http://www.wisebread.com/7-reasons-you-really-need-to-pay-yourself-first-seriously?ref=internal" target="_blank">paying ourselves first</a>. If you're someone who prides yourself on always paying bills on time, but who struggles to prioritize savings, then start treating your savings like a bill to pay.</p> <p>Set up a reminder to transfer money to savings on the same day you pay your other regular bills. Making &quot;savings&quot; a bill when you are paying all your other bills makes it feel like a nonnegotiable, which will help you make it a priority.</p> <h2>If saving money bores you: Create targeted savings accounts</h2> <p>If you have trouble getting excited about saving money when there is so much fun stuff you could spend your money on, you're not alone. Having money funneled into a savings account can feel pretty boring if you don't have any specific plans for the cash.</p> <p>You are much more likely to get excited about saving money if you have a set goal for your savings. This is partially due to something known as <a href="http://www.wisebread.com/mental-accounting-why-you-blow-your-tax-refund-but-not-your-raise?ref=internal" target="_blank">mental accounting</a>, which is our tendency to value money differently depending on how it is physically and mentally labeled. You might not hesitate to &quot;borrow&quot; $400 from your general savings account for a couple of tickets to Jay-Z's 4:44 tour &mdash; but taking that money from your new car fund, on the other hand, would hurt.</p> <p>Many online and traditional banks will allow you to create several targeted accounts, each with its own nickname. Taking the time to put a name to each one of your savings goals can help you save more and spend less.</p> <h2>Know thy savings self</h2> <p>Finding the best savings strategy for you starts with understanding your psychology and preferences when it comes to money. Working within those preferences makes saving money a much easier and far more satisfying prospect.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/emily-guy-birken">Emily Guy Birken</a> of <a href="http://www.wisebread.com/how-to-find-the-savings-strategy-that-works-for-you">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-2"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-online-forums-thatll-help-you-reach-your-financial-goals">9 Online Forums That&#039;ll Help You Reach Your Financial Goals</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-your-daily-latte-wont-sink-your-retirement-savings">Why Your Daily Latte Won&#039;t Sink Your Retirement Savings</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/everyones-using-spare-change-apps-are-they-really-worth-it">Everyone&#039;s Using Spare Change Apps — Are They Really Worth It?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-manage-your-money-no-budgeting-required">How to Manage Your Money — No Budgeting Required</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-financial-basics-every-new-grad-should-know">The Financial Basics Every New Grad Should Know</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance apps automated savings budgeting expenses mental biases psychology saving money spare change strategy Mon, 18 Sep 2017 08:30:05 +0000 Emily Guy Birken 2020047 at http://www.wisebread.com Why Your Daily Latte Won't Sink Your Retirement Savings http://www.wisebread.com/why-your-daily-latte-wont-sink-your-retirement-savings <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/why-your-daily-latte-wont-sink-your-retirement-savings" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/women_friends_enjoyment_coffee_times_concept.jpg" alt="Women Friends Enjoyment Coffee Times Concept" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If you pay attention to personal finance literature, you have undoubtedly come across some iteration of the &quot;latte factor&quot; &mdash; the idea that forgoing a daily small luxury will add up to big savings over time. Financial author David Bach coined the term over a decade ago to help consumers better understand the high costs of little luxuries. (See also: <a href="http://www.wisebread.com/9-ways-to-save-money-on-your-cup-of-coffee?ref=seealso" target="_blank">9 Ways to Save Money on Your Daily Cup of Coffee</a>)</p> <p>The personal finance sphere has taken Bach's idea and run with it. In fact, you can't swing a bag of artisan coffee on the internet without hitting an editorial, think piece, or other article explaining how the latte factor is costing you your future.</p> <p>But giving up your daily coffee will not mean the difference between enjoying a comfortable retirement and working until you're 80. There is a lot more going on than just the fact that $5 per day adds up to a great deal of money per year.</p> <p>Here's what most latte factor articles fail to take into account.</p> <h2>Financial shaming can make savers give up before they've started</h2> <p>While David Bach's original intent with the latte factor was to empower consumers to make more mindful choices with their money, his idea has often been used to <em>shame </em>people for their financial choices.</p> <p>Shaming is an unproductive way to motivate a person because it generally backfires. The constant drumbeat of the latte factor can make it sound like the only way to save for retirement (or any other big investment) is to give up daily luxuries. Individuals who feel guilty about their latte habit might decide that it's not worth trying to save for retirement if it means giving up their favorite luxury.</p> <p>The fact of the matter is that people can save money for their futures while also enjoying a daily latte. But the use of shaming language about having little luxuries can make it sound like these financial priorities are mutually exclusive.</p> <h2>Your money psychology can make it tough to see these savings</h2> <p>The latte factor math is unassailable. If you purchase a $5 latte every work day for 50 weeks out of each year, that adds up to $1,250 &mdash; which could certainly be a nice addition to your retirement account.</p> <p>The problem is that the latte factor math assumes that you can keep track of the daily $5 that you are spending. Most people's brains don't work like that. A cognitive bias known as the <em>denomination effect</em> makes people less likely to spend big bills compared to small ones. Five dollar bills can be quite difficult to hold onto, because they seem to be worth so little &mdash; even though the end result of $1,250 is quite big.</p> <p>Adding up those unspent five-spots to put them into a retirement account requires a certain type of money psychology that is exceedingly rare. For most people, refraining from buying a $5 coffee would just mean you spend the money on something else, rather than putting it aside for retirement savings.</p> <h2>It's easier to save money on big costs</h2> <p>People who actually spend $5 every single day on coffee are probably not paying close attention to where any of their money goes. If you are spending money every day on a small luxury, you are probably also spending money regularly on big luxuries &mdash; and those are a great deal easier to cut out than the small ones.</p> <p>Rather than focus on the difficult-to-track $5 holes in your budget, start with ways to reduce the bigger line items in your budget. Are you overspending on housing, food, transportation, entertainment, or utilities? Making a cut in one of those areas will not require you to keep track of small amounts of money to see a big difference, which make them a much smarter place to find extra funds to send to your retirement account.</p> <p>Even if you are a generally frugal person, you don't need to ax your beloved small luxuries to find extra money in your budget. Instead, spend some time thinking about which purchases and experiences are the most enjoyable or meaningful for you. Deciding what you want to spend your money on makes it easier to let go of the spending that doesn't matter as much to you. You'll enjoy your spending more that way, while still having savings to send to your retirement accounts.</p> <h2>Automating your savings allows you to have your latte and drink it, too</h2> <p>One aspect of David Bach's advice that often gets lost in discussions of the latte factor is the importance of automating. Bach suggests cutting out your daily indulgence and setting up an automatic transfer of the savings to your retirement or savings account &mdash; which would solve the whole problem of trying to keep track of those saved $5 bills.</p> <p>However, you don't need to give up your daily luxuries to be able to harness the power of automation. Once you have identified any spending items you're willing to cut, funnel the savings into your retirement account. If a daily latte is your favorite part of your morning ritual, then feel free to keep it and cut something else to automate that savings.</p> <h2>Daily luxuries can help keep you motivated to save</h2> <p>Living on a shoestring is exceedingly difficult. You have to say no to yourself constantly, which can lead to something called the &quot;what the hell&quot; effect. This effect describes how we tend to believe that refraining from spending money is an all or nothing proposition, so the moment we give in to temptation a little bit, we might as well throw our own guidelines out the window: &quot;What the hell, I've already bought myself a latte, I might as well go buy some new shoes!&quot;</p> <p>It's easier to go the distance while saving for retirement if you let yourself have some indulgences. You will no longer feel like the slog to retirement is going to be a daily misery that you might as well rebel against. Instead, your daily latte can make any other sacrifices easier to bear, and help you adjust to a new savings normal. Cutting out the latte on top of anything else can trigger the &quot;what the hell&quot; effect and make it even harder for you to save.</p> <h2>Enjoy your simple pleasures</h2> <p>The latte factor is an important thought exercise, but it should never become a hard-and-fast rule for how to live your life. Building daily luxuries into your life is an important part of enjoying your time, both during your career and after you retire. As long as you are willing to be mindful about your spending in general, you don't need to sacrifice small pleasures to afford retirement.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fwhy-your-daily-latte-wont-sink-your-retirement-savings&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FWhy%2520Your%2520Daily%2520Latte%2520Wont%2520Sink%2520Your%2520Retirement%2520Savings.jpg&amp;description=Why%20Your%20Daily%20Latte%20Wont%20Sink%20Your%20Retirement%20Savings"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;">&nbsp;<img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/Why%20Your%20Daily%20Latte%20Wont%20Sink%20Your%20Retirement%20Savings.jpg" alt="Why Your Daily Latte Wont Sink Your Retirement Savings" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/emily-guy-birken">Emily Guy Birken</a> of <a href="http://www.wisebread.com/why-your-daily-latte-wont-sink-your-retirement-savings">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-find-the-savings-strategy-that-works-for-you">How to Find the Savings Strategy That Works For You</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-you-can-cut-costs-right-before-you-retire-0">6 Ways You Can Cut Costs Right Before You Retire</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-save-for-retirement-while-caring-for-kids-and-parents">How to Save for Retirement While Caring for Kids and Parents</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-signs-its-time-to-retire">8 Signs It&#039;s Time to Retire</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-red-flags-that-your-retirement-plan-may-be-off-track">4 Red Flags That Your Retirement Plan May Be Off Track</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Retirement automated savings cognitive bias cutting costs daily latte expenses Latte Factor psychology saving money shame small luxuries Fri, 15 Sep 2017 08:00:05 +0000 Emily Guy Birken 2019385 at http://www.wisebread.com 4 Ways Science Says Money Affects Your Mind http://www.wisebread.com/4-ways-science-says-money-affects-your-mind <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/4-ways-science-says-money-affects-your-mind" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/young_woman_with_money.jpg" alt="Young woman with money" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>How we think about money can make it easier &mdash; or more difficult &mdash; for us to handle our finances well. These studies reveal some interesting information on our money mentality, and how these thoughts can affect our day-to-day money decisions.</p> <h2>1. When you don't have enough money, you don't think as clearly</h2> <p>Without the money you need to pay your bills and meet your regular expenses, something strange happens to your brain. Because of the stress induced by financial scarcity, you can actually <em>lose </em>some cognitive functioning ability. That means you're less able to process information, analyze and prioritize conflicting needs, and make long-term decisions. (See also: <a href="http://www.wisebread.com/poverty-makes-you-stupid?ref=seealso" target="_blank">Poverty Makes You Stupid</a>)</p> <p>In 2013 researchers conducted two different studies. One involved shoppers at a mall in New Jersey who were asked to consider a hypothetical problem, such as <a href="http://science.sciencemag.org/content/341/6149/976" target="_blank">how to pay for a car repair</a>. They were then given unrelated spatial and reasoning tasks to complete.</p> <p>In the study, lower-income individuals performed poorly on those unrelated tasks if the cost of the car repair was high. They did better on the tasks when told the cost of the repair was lower. Higher income participants performed well, no matter what the cost of the hypothetical repairs were. The greater stress the lower income participants felt when faced with high repair costs seems to have affected their ability to perform other kinds of tasks.</p> <p>In another experiment on the other side of the world, sugar cane farmers from India were asked to perform a series of tasks both before their harvest, when they were poor, and after the harvest, when they were rich. The farmers performed better at cognitive tasks after the harvest than they did before. Researchers concluded that poverty-related concerns leave less mental resources for other types of tasks.</p> <p>You, most likely, are neither a New Jersey shopper nor a Tamil Nadu sugar cane farmer. However, your brain responds in the same way to financial stress. When you lack the resources to pay bills and buy groceries, or to handle a financial crisis of some sort, a huge amount of your cognitive ability is taken up in figuring out how to handle the problem. That means, of course, that you have less cognitive ability left to make decisions in other areas of your life.</p> <h3>Take-away</h3> <p>As much as possible, avoid making big decisions in any area of your life when you're under financial stress, whether it's temporary or extended. Try to give yourself more time, and get help when possible until your financial situation is resolved. Realize that the financial stress will have a direct effect on your cognitive ability, and normal tasks may seem harder. Reduce any obligations you can.</p> <h2>2. When you have a lot of money, you think you deserve all your advantages</h2> <p>You work hard for your money; so, in a sense, you deserve the advantages you gain from it. However, other advantages and the results of chance or &quot;good luck&quot; aren't something you earn or deserve. When you're doing well financially, however, you'll tend to give yourself credit for all the good stuff that comes your way, no matter how unrelated it is to your hard work or financial smarts.</p> <p>In 2012, psychologist Paul Piff conducted an experiment on <a href="https://www.ted.com/talks/paul_piff_does_money_make_you_mean" target="_blank">wealth's impact on ethical behavior</a>. Stationed at the University of California, Berkeley, Piff had over 100 participants play a game of Monopoly. Anyone who's ever played Monopoly with competitive family members knows how dangerous that can be. In this situation, however, one player had almost no chance of winning; the two players were given different rules.</p> <p>Player One got <a href="http://nymag.com/news/features/money-brain-2012-7/" target="_blank">$2,000 at the beginning of the game</a>, received $200 every time he passed Go, and got to roll two dice. Player Two, on the other hand, received only $1,000 at the beginning of the game, got only $100 on every trip past Go, and got to roll only one die. The mood of the game was interesting; as the players progressed, Player One, who was advantaged, became increasingly dominant and rude toward the other player, smacking pieces around the board and loudly celebrating their victory.</p> <p>What does this mean for you?</p> <p>It means that, if you're human (and we assume that you are), you, too, are subject to this type of mental attitude toward having plenty of money. The more financially secure you feel, the more you might assume you have the right to be financially secure. This cognitive bias could easily affect your financial future by leading you to treat your money casually and assume that everything will work out for the best.</p> <p>Perhaps more chilling is the effect that this mental response can have on how you treat other people. A 2012 study by The Chronicle of Philanthropy showed that, surprisingly, lower-income households give a bigger portion of their discretionary income to charities than the wealthy do. In other words, not only can plenty of money make you think you inherently deserve all the advantages you have, it can make you think others don't deserve them &hellip; at least, not quite as much as you do.</p> <h3>Take-away</h3> <p>It's easy, and almost automatic, to feel invincible when you're in a good financial position. But this feeling of invincibility can prevent you from doing important financial planning, making prudent decisions, making wise investments, etc. You may also become less generous and less empathetic to the needs of others if you're feeling quite wealthy.</p> <p>Generosity, however, is a key way to strengthen your social network and build a support structure that will be with you even through difficult times. You should never assume you'll always have the advantages of wealth, or that they're inherent to you somehow.</p> <h2>3. Thoughts about money ease pain and social distress</h2> <p>Money does matter, and we wouldn't pretend otherwise. But you know that money isn't the only thing that matters in life. You can have plenty of money, but without fulfilling work and deep relationships, you'll be missing out on what is essential for a happy life. Unfortunately, your brain is often convinced otherwise, and thinks of money as a substitute for connection and as a valid way to relieve pain.</p> <p>In a 2009 study on <a href="http://assets.csom.umn.edu/assets/127771.pdf" target="_blank">money's impact on pain and social distress</a>, participants were invited to a lab where they were told they would be tested for finger dexterity. One group was tasked with counting a stack of currency; the other group got to count blank pieces of paper. After they counted, some of the participants were asked to put their fingers in a bowl of hot water &mdash; 122 degrees F &mdash; and rate their level of discomfort.</p> <p>The results?</p> <p>The participants who had counted currency expressed much lower levels of discomfort than the participants who had counted paper. The study, combined with earlier research, points to a strange tendency we have to equate money with strength, acceptance, and social connection.</p> <h3>Take-away</h3> <p>When you have plenty of money, be aware of the tendency to focus on your wealth and ignore the other needs in your life. It's great to have things that make you feel better, and there's nothing wrong with being appreciative of your financial security. However, put effort, thought, and attention into the relationships and community that surround you &mdash; those last longer and ultimately do more for you than money ever could.</p> <h2>4. You think money improves the odds of getting what you want</h2> <p>It can be intimidating to ask other people for help. You don't want to be a burden. You don't want to inconvenience people. And you don't want others to help you out of some sense of obligation, when secretly they're fuming over the delay and effort. It's easier to ask people for help when you can offer them something in return; that way, you think, it's not so much &quot;help&quot; as it is a trade. And what better to trade with than cold, hard cash?</p> <p>Past research has shown that people tend to <a href="https://repositori.upf.edu/handle/10230/22000" target="_blank">underestimate their ability to get others to help</a> them, or, in other words, to say yes to whatever is being requested. In five different studies, researchers showed that the requesters don't underestimate their ability to get others to comply <em>as much</em> when they're able to <a href="http://digitalcommons.ilr.cornell.edu/cgi/viewcontent.cgi?article=2093&amp;context=articles" target="_blank">offer money in exchange</a>.</p> <p>In the various studies, participants were asked to make a small request of others; before they did so, they were asked to estimate the likelihood of their success. When the participants knew they could offer a monetary incentive in exchange for the request, they were much more accurate in their prediction. In other words, participants equated the ability to offer money with their own chances of success. Also interesting is that being able to offer money made participants feel more comfortable with making a request.</p> <h3>Take-away</h3> <p>You may think you have to offer value, in particular cash value, in order to get cooperation and help. However, while money is motivational, it's not the most powerful motivation by any stretch. The studies showed that monetary incentive helped the requesters more accurately assess their own ability to get help. That ability was always there; they just weren't able to accurately see it until they had cash-in-hand to offer.</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2F4-ways-science-says-money-affects-your-mind&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2F4%2520Ways%2520Science%2520Says%2520Money%2520Affects%2520Your%2520Mind.jpg&amp;description=4%20Ways%20Science%20Says%20Money%20Affects%20Your%20Mind"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/4%20Ways%20Science%20Says%20Money%20Affects%20Your%20Mind.jpg" alt="4 Ways Science Says Money Affects Your Mind" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/annie-mueller">Annie Mueller</a> of <a href="http://www.wisebread.com/4-ways-science-says-money-affects-your-mind">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/your-brain-is-keeping-you-in-debt-and-how-to-fix-it">Your Brain Is Keeping You in Debt (And How to Fix It)</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-get-through-a-tough-financial-emergency">How to Get Through a Tough Financial Emergency</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-your-bad-credit-can-impact-your-kids">How Your Bad Credit Can Impact Your Kids</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-find-the-savings-strategy-that-works-for-you">How to Find the Savings Strategy That Works For You</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-celebrities-with-shockingly-low-net-worths">6 Celebrities With Shockingly Low Net Worths</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance cognitive bias money psychology research science stress studies Tue, 05 Sep 2017 08:30:10 +0000 Annie Mueller 2013259 at http://www.wisebread.com How Reliving Past Money Mistakes Hurts Your Financial Future http://www.wisebread.com/how-reliving-past-money-mistakes-hurts-your-financial-future <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-reliving-past-money-mistakes-hurts-your-financial-future" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man_looking_at_wallet_money_dollar_banknotes_flying_away.jpg" alt="Man looking at wallet money dollar bank notes flying away" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Past money mistakes are a little like zombies: Just when you think you've finally destroyed them, they rise again.</p> <p>It's time for you let those old mistakes go. Not only does focusing on your past money mistakes make you feel bad without actually improving the situation, but spending time thinking about your past misjudgements makes you more likely to repeat them.</p> <p>Here's how focusing on past money mistakes keeps you shambling from one bad financial decision to the next, and how you can avoid that fate.</p> <h2>Shame can be a downward spiral</h2> <p>In many cases, when you are focused on a money mistake you made in the past, you are using the word &quot;should&quot; to describe what happened. For instance, you might be thinking something like:</p> <ul> <li> <p>I shouldn't have co-signed a loan with my shiftless brother-in-law.</p> </li> <li> <p>I should have started saving for retirement much earlier.</p> </li> <li> <p>I shouldn't have used student loans to go on spring break.</p> </li> </ul> <p>These &quot;should&quot; statements aren't necessarily wrong &mdash; they're just useless. You are probably correct that you should have acted differently in the past, but since it's impossible to go back in time, all you are doing is making yourself feel bad for something you can't change.</p> <p>This thought process can cause further financial damage, too. For instance, if you feel like you <em>should</em> have started saving for retirement earlier, that fact is only going to make you feel terrible about not having done so. From there, it's an easy jump to think that there is no point in starting now since you are already so far behind. (See also: <a href="http://www.wisebread.com/7-retirement-planning-steps-late-starters-must-make?ref=seealso" target="_blank">7 Retirement Planning Steps Late Starters Must Make</a>)</p> <h3>Ask yourself &quot;Now what?&quot;</h3> <p>Feeling ashamed of the things you've done in the past is a form of sunk cost fallacy. Sunk costs are the time, money, or resources that have already been spent and can't be recouped. The sunk cost fallacy is when we value sunk costs over future choices.</p> <p>When you're feeling ashamed of a past decision, you're overvaluing that past decision and allowing it to affect your current emotional state and decisions. Instead of simply thinking &quot;I shouldn't have co-signed that loan,&quot; it makes more sense to complete the thought. &quot;I shouldn't have done it, but I did &mdash; so now what?&quot;</p> <p>Instead of getting caught in your shaming thought process, asking yourself &quot;Now what?&quot; allows you to start making decisions based on what the situation actually is.</p> <h2>Trying to learn from mistakes can backfire</h2> <p>What if you are focusing on your past mistakes in an attempt to learn from them? You understand that you can't change the past, but you can certainly learn from it, right?</p> <p>Well, not necessarily, according to a 2016 New York University study. When you focus on trying to figure out why you made a mistake in the past while trying to make a similar decision in the present, you don't have as much mental bandwidth to devote to the decision at hand. Thinking about your past mistake &quot;triggers a cascade of computations&quot; which distract from the decision at hand, Roozbeh Kiani, assistant professor at New York University's Center for Neural Science, told The Atlantic in 2016.</p> <h3>Let your brain reset</h3> <p>The best way to keep yourself from being distracted by your past mistakes when making a similar decision in the present is to take a little time away from the problem. In Kiani's study, participants didn't get overwhelmed by negative feedback after a mistake if they took a break before trying the task again.</p> <p>So, think about something else for a while and come back to your financial issue after you've let your brain reset. That will help you make a more rational decision.</p> <h2>You can fall for feel-good mistakes again</h2> <p>Another major problem with letting ourselves focus on past mistakes is that our brains are wired to repeat actions that were rewarding once, even if they are no longer rewarding &mdash; anyone who has tried to kick a sugar, cigarette, or debt habit can attest to that. (See also: <a href="http://www.wisebread.com/its-never-too-late-to-fix-these-5-money-mistakes-from-your-past?ref=seealso" target="_blank">It's Never Too Late to Fix These 5 Money Mistakes From Your Past</a>)</p> <p>According to Susan Courtney, a cognitive neuroscientist at Johns Hopkins University and a co-author of a 2016 study into this phenomenon, this can be a hard thing to overcome. &quot;When my gaze drifts toward the doughnuts in the mailroom,&quot; she told The Atlantic, &quot;that triggers a thought process of what it would be like to taste that doughnut. That makes it harder to resist.&quot;</p> <p>If you are regretting past mistakes that felt great at the time, focusing on those past mistakes will do nothing but further entrench your interest in them and awareness of them. The more you think about how much you regret buying all of those shoes (which you enjoyed at the time), the more likely it is that your attention will be caught by shoe sales in the future &mdash; making it that much harder to change your spending habits.</p> <h3>Focus on the future</h3> <p>Rather than thinking about these felt-good-at-the-time mistakes, it makes more sense to think through what you want your future to look like. That kind of thought process will not only distract you from the enticing potential mistakes that surround you, it can potentially also start charting a different neural wiring that will reward you for intelligent financial behavior.</p> <h2>Letting go of your mistakes</h2> <p>Past financial mistakes don't need to keep coming back to haunt you. Let go of your shame, take a break from thinking about your finances, and don't assume that obsessing over old mistakes will help you learn from them. Instead, focus on your future and let your past stay in the past. (See also: <a href="http://www.wisebread.com/20-money-mistakes-everyone-makes-but-no-one-talks-about?ref=seealso" target="_blank">20 Money Mistakes Everyone Makes But No One Talks About</a>)</p> <h2 style="text-align: center;">Like this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fhow-reliving-past-money-mistakes-hurts-your-financial-future&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FHow%2520Reliving%2520Past%2520Money%2520Mistakes%2520Hurts%2520Your%2520Financial%2520Future.jpg&amp;description=How%20Reliving%20Past%20Money%20Mistakes%20Hurts%20Your%20Financial%20Future"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/How%20Reliving%20Past%20Money%20Mistakes%20Hurts%20Your%20Financial%20Future.jpg" alt="How Reliving Past Money Mistakes Hurts Your Financial Future" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/emily-guy-birken">Emily Guy Birken</a> of <a href="http://www.wisebread.com/how-reliving-past-money-mistakes-hurts-your-financial-future">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/what-to-expect-after-these-5-personal-financial-disasters">What to Expect After These 5 Personal Financial Disasters</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/its-never-too-late-to-fix-these-5-money-mistakes-from-your-past">It&#039;s Never Too Late to Fix These 5 Money Mistakes From Your Past</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-money-mistakes-to-stop-making-by-50">5 Money Mistakes to Stop Making by 50</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-financial-mistakes-to-stop-making-by-age-40">6 Financial Mistakes to Stop Making by Age 40</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-ways-expats-can-maintain-their-credit-scores">9 Ways Expats Can Maintain Their Credit Scores</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance bad habits debt fixing money mistakes moving on problems psychology shame Thu, 31 Aug 2017 09:00:06 +0000 Emily Guy Birken 2012629 at http://www.wisebread.com Want Your Investments to Do Better? Stop Watching the News http://www.wisebread.com/want-your-investments-to-do-better-stop-watching-the-news <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/want-your-investments-to-do-better-stop-watching-the-news" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-510572840.jpg" alt="" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>If you pay close attention to investment news, it'll either make you laugh or it'll drive you bonkers. Within the same hour, and on the same market news website, you will often see completely contradictory articles. One says the market is headed higher; the next says the market is about to tank.</p> <p>What's a smart investor to do? Be very careful about your information diet.</p> <h2>More Information, Less Success</h2> <p>In the late 1980s, former Harvard psychologist Paul Andreassen conducted an experiment to see how the quantity of market information impacted investor behavior.</p> <p>He divided a group of mock investors into two segments &mdash; investors in companies with stable stock prices, and investors in companies with volatile stock prices. Then he further divided those investors. Half of each group received constant news updates about the companies they invested in, and half received no news.</p> <p>Those who received no news generated better portfolio returns than those who received frequent updates. The implication? The more closely you monitor news about your investments, the more likely you are to make changes to your portfolio &mdash; usually to your detriment.</p> <p>In another study, renowned human behavior researchers Daniel Kahneman, Amos Tversky, Richard Thaler, and Alan Schwartz <a href="http://faculty.chicagobooth.edu/richard.thaler/research/pdf/The%20Effect%20of%20Myopia%20and%20Loss%20Aversion%20on%20Risk%20Taking%20An%20Experimental%20Test.pdf" target="_blank">compared the stock/bond allocations</a> of investors who checked on their investments at least once a month against those who did so just once a year. Those who took in the <em>least</em> information about their portfolios made fewer investment trades and generated higher returns.</p> <h2>When Helping Hurts</h2> <p>One factor at work here is &quot;loss aversion.&quot; First quantified by Kahneman and Tversky, it's the idea that people feel the pain of loss more acutely than the pleasure of gain. The frequent monitoring of investment portfolios brings every downward market move to the attention of investors, who tend to react by moving money into less risky assets (bonds instead of stocks), thereby locking in their losses. (See also: <a href="http://www.wisebread.com/how-to-trick-yourself-into-better-credit-card-behavior?ref=seealso" target="_blank">How to Trick Yourself Into Better Credit Card Behavior</a>)</p> <h2>Misinformation Is Not Power</h2> <p>Another factor has to do with the tales told in the investment press. Each day's market performance is reported &mdash; what happened, and <em>why. </em>The first part is factual. The market either went up or down and by a certain amount. The second part is mostly opinion. No one can say with certainty exactly what moved the market. Was it fear over the growth rate of China's economy, a contraction in the oil supply, or that XYZ company missed its quarterly earnings projection by a penny? No one really knows. But that doesn't stop the explanations from flowing across the pages of investment news sites.</p> <p>Late December and early January are especially dangerous times to read market news. That's when market forecasters spin their yarns, undaunted by their previous year's miss or economist John Kenneth Galbraith's scolding that &quot;The only function of economic forecasting is to make astrology look respectable.&quot;</p> <p>We pay attention to such forecasts &mdash; and even worse, we change our portfolios because of such forecasts &mdash; at our peril.</p> <h2>Selective Listening</h2> <p>You can't control the stock market or what is said about it, but there are certain factors you <em>can</em> and <em>should</em> control, such as:</p> <ul> <li>Estimate how much you need to invest each month in order to accomplish your goals;</li> <li>Determine your <a href="http://www.wisebread.com/the-basics-of-asset-allocation?ref=internal" target="_blank">optimal asset allocation</a>;</li> <li>Choose a trustworthy <a href="http://www.wisebread.com/5-essentials-for-building-a-profitable-portfolio?ref=internal" target="_blank">investment selection process</a>;</li> <li>Add to your portfolio regularly;</li> <li>Expect market turbulence;</li> <li>Be very, very careful about what investment news you take in and how much;</li> <li>Keep moving forward.</li> </ul> <p>Of the many factors involved in successful investing, selective listening may be the most important.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/matt-bell">Matt Bell</a> of <a href="http://www.wisebread.com/want-your-investments-to-do-better-stop-watching-the-news">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-3-rules-every-mediocre-investor-must-know">The 3 Rules Every Mediocre Investor Must Know</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-types-of-investors-which-one-are-you">8 Types of Investors — Which One Are You?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/is-dollar-cost-averaging-the-right-strategy-for-you">Is Dollar Cost Averaging the Right Strategy for You?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/your-loss-aversion-is-costing-you-more-than-your-fomo">Your Loss Aversion Is Costing You More Than Your FOMO</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-too-much-investment-diversity-can-cost-you">How Too Much Investment Diversity Can Cost You</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Investment bonds loss aversion misinformation news psychology reactions returns risk stock market Mon, 13 Mar 2017 11:00:09 +0000 Matt Bell 1904508 at http://www.wisebread.com The One Thing That Will Help You Actually Save Money http://www.wisebread.com/the-one-thing-that-will-help-you-actually-save-money <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/the-one-thing-that-will-help-you-actually-save-money" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/iStock-525488514.jpg" alt="" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>At least 66 million American adults <a href="http://www.cnbc.com/2016/06/21/66-million-americans-have-no-emergency-savings.html" target="_blank">don't have anything saved</a> in an emergency fund. Whether you have one or not, that is a whopper of a number!</p> <p>Saving is hard. There are so many legitimate places to spend our money, and so many things we want on top of that. It can be difficult to figure out how to set anything aside, let alone to leave it there when a new need or want pops up on our horizon.</p> <p>Lucky for us, there is one very simple way to help ourselves save more money.</p> <h2>Positive Encouragement</h2> <p>The Rand Corporation recently published a study examining the role of <a href="https://www.rand.org/content/dam/rand/pubs/working_papers/WR1000/WR1055/RAND_WR1055.pdf" target="_blank">positive encouragement in savings</a>. Study participants were randomly given $50, $100, or $500 just for participating, but they had to put at least a portion of that into savings. They were able to choose the portion, as long as some of the money got saved for the six-month duration of the study.</p> <p>Each saver was assigned one of three different types of savings account: A traditional savings account, earning 30% interest and allowing the participant to withdraw the money at any time; a hard commitment account, also earning 30% interest but disallowing withdrawals; and a soft commitment account, which was the same as the traditional account except that it also included encouraging nudges designed to potentially help participants save.</p> <p>These nudges weren't anything huge. The folks running the study just reminded people why they were saving, helped them see themselves as good savers, and helped them think about how good it would feel to reach their savings goals.</p> <p>In addition to all of this, every participant got an update on their money every month, and they were also asked if they wanted to save more. The results? The folks with the soft commitment accounts were the most successful savers early on, while those with the hard commitment accounts enjoyed the greatest return at the end of the study.</p> <p>That's not the only good news! The people who seemed to benefit most from the encouragement they received were &quot;impatient&quot; people, a group less likely to successfully reach a savings goal.</p> <h2>Encourage Yourself</h2> <p>Since we can't all be part of a study like this, what does it mean for us? Is there a way to apply these ideas so that we can motivate ourselves to start &mdash; and continue &mdash; saving?</p> <h3>1. Find a Goal</h3> <p>Before you can know how it feels to reach a goal, you have to set one. Even if you are saving for something less glamorous, like an emergency fund or a new water heater, set that goal firmly in your mind. It is what you need, and it is the reason you are putting money away.</p> <h3>2. Think About Your Goal</h3> <p>When it comes to financial goals, don't just set it and forget it. Instead, remind yourself of your goal regularly. This can mean writing &quot;Hawaii&quot; on a sticky note and putting it on your bedroom mirror or your computer monitor, or it can mean setting daily reminders on your phone. Do whatever works for you, but make sure your goal comes to mind at least every few days.</p> <h3>3. Feel Good About Your Goal</h3> <p>Positive feelings are important when it comes to feeling encouraged, so don't just analyze your goal, but think about how you will feel when you achieve it, too. If you're saving for a new car, picture yourself driving it to work feeling happy and proud. If you need an emergency fund, imagine yourself feeling safe and secure, even in the face of a medical bill or a massive auto repair.</p> <p>It can help to write these scenarios and feelings down, too. Writing has a way of making things feel more real, of making them tangible. If you struggle to meet your goals, giving yourself a tangible reminder of why you're pursuing your goal can help make it more concrete in your mind.</p> <h3>4. Affirm Yourself</h3> <p>In addition to focusing on your goal, spend some time focusing on yourself, too. Say and write down statements like &quot;I am a good saver,&quot; and &quot;I will reach my financial goals.&quot; You might feel silly, but doing these things will help you come to believe these things about yourself. Saying it once won't make it true, but saying it over and over can help you change what you believe about yourself.</p> <p>Be sure that your statements are all positive. Keep away from statements that include words like &quot;I won't&hellip;&quot; or &quot;I will stop...&quot; These can be harder for our brains to process, and can sometimes backfire. You can turn any statement into a positive one with a couple moments' work, thus avoiding any accidental confusion in your own head.</p> <p>Saving may feel like a gargantuan task for you, but you can get started today. Set aside a little bit of money &mdash; open a new account if you need to! &mdash; and jump in with these positive reminders. You may be able to save more than you think!</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/sarah-winfrey">Sarah Winfrey</a> of <a href="http://www.wisebread.com/the-one-thing-that-will-help-you-actually-save-money">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/23-frugal-living-resolutions-anyone-can-master">23 Frugal Living Resolutions Anyone Can Master</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-mental-habits-that-make-the-rich-richer">5 Mental Habits That Make the Rich Richer</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-online-forums-thatll-help-you-reach-your-financial-goals">9 Online Forums That&#039;ll Help You Reach Your Financial Goals</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-find-the-savings-strategy-that-works-for-you">How to Find the Savings Strategy That Works For You</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-your-daily-latte-wont-sink-your-retirement-savings">Why Your Daily Latte Won&#039;t Sink Your Retirement Savings</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Frugal Living affirmations encouragement goals positive reinforcement psychology saving money Wed, 08 Feb 2017 10:00:09 +0000 Sarah Winfrey 1878070 at http://www.wisebread.com 4 Reasons to Cut Yourself Some Slack Following a Financial Setback http://www.wisebread.com/4-reasons-to-cut-yourself-some-slack-following-a-financial-setback <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/4-reasons-to-cut-yourself-some-slack-following-a-financial-setback" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_stressed_posture_532326842.jpg" alt="Woman learning to cut herself slack for a financial setback" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>So, you fell off your financial wagon. It's particularly easy to do this time of year, though financial mistakes aren't necessarily seasonal.</p> <p>It's easy to beat yourself up over these things, even if you understand why your mistake happened. But what purpose does that serve? Does making yourself feel bad about a mistake actually make it less likely to happen again, or help you fix it?</p> <p>Whether you messed up because you are stressed, going through a difficult time personally, or wanted to give your kids an extra-special Christmas, stop berating yourself. Still prone to indulging your shame and guilt? Here are some good reasons to let it go.</p> <h2>Failure Almost Always Precedes Success</h2> <p>While true overnight success does occasionally happen, it's often more fluke than anything else. True success &mdash; even when it looks like it comes quickly &mdash; usually happens after many rounds of failure. In fact, ultimate success may be more about perseverance than it is about talent.</p> <p>Even well-known people, like Steve Jobs and Bob Dylan, faced setbacks and failures before they became successful. So, rather than being frustrated with yourself, see yourself as normal. Then, when you're ready, get up and try again and again and again until you find a way to meet your goals.</p> <h2>Failure Helps You Become Resilient</h2> <p>Being resilient means that life can knock you down, but you always get back up stronger than before. It means surviving and thriving in a world that often doesn't give you what you need or want. Some people seem to have this characteristic in spades, but the rest of us have to develop it.</p> <p>Failure is one way to become more resilient. As you weather failures, you learn how to deal with them and with yourself. You will learn how to let life's disappointments wash over you, and then how to step out again once they're done.</p> <p>If you've failed financially, whether your fall was spectacular or quiet, remember that each failure makes you a little more resilient, and then determine to get yourself back on your feet, no matter what.</p> <h2>Failure Invites Creativity</h2> <p>When we fail, it means that the solution we used to try to solve whatever problem stands before us didn't work, and so we have to figure something else out and try again. When we do this, we are exercising our creative muscles, because we are coming up with multiple ways to solve the same problem.</p> <p>Look at your financial failure as the problem to be solved. Whether you want to save more, spend less, pay off a debt faster, or something else, failure means that the plan you're currently using is not one that is working for you. So take a deep breath and start brainstorming. Think of other ways to achieve your goals, even if they seem a little crazy right now.</p> <p>Once you have a list of ideas, pick one to try next. For instance, if you struggle to save an emergency fund, consider using an app that saves for you automatically. If you want to spend less on drinks after work, come up with alternate activities to try with your coworkers. Most problems have a solution; you just have to find the one that works best for you.</p> <h2>Failure Teaches Us</h2> <p>If nothing else, failure often teaches us. Not only does it show us what does not work to solve a problem, but it also teaches us about ourselves. Failure can show us our limitations, it can reveal our resiliency, and it can tell us a lot regarding how we feel about ourselves.</p> <p>There is a lot of focus on learning from failure as part of the pathway to success and, while that can definitely be true, learning from failure can also redefine success. Let's say you want to save up enough money for a luxury car. You're diligent about putting away what you can, until Christmas comes around. Then, you see all sorts of awesome gifts you want to give to the people in your life. To buy them, you will have to dip into your savings&hellip; and you do it without a second thought.</p> <p>Sure, you may feel like you failed. After all, you didn't reach your goal. And you may have learned that you need to make your savings less accessible, so you can't dip into them so easily. But you also may have learned that you care more about people than you do about cars, and so you may choose to redefine success from &quot;saving enough for a luxury car&quot; to &quot;having plenty saved to buy luxurious Christmas gifts.&quot;</p> <p>Whatever failure has to teach you, stop beating yourself up and learn it!</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/sarah-winfrey">Sarah Winfrey</a> of <a href="http://www.wisebread.com/4-reasons-to-cut-yourself-some-slack-following-a-financial-setback">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-find-the-savings-strategy-that-works-for-you">How to Find the Savings Strategy That Works For You</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/10-golden-rules-of-personal-finance-everyone-should-know">10 Golden Rules of Personal Finance Everyone Should Know</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-mental-habits-that-make-the-rich-richer">5 Mental Habits That Make the Rich Richer</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-think-like-a-billionaire-when-you-re-broke">How to Think Like a Billionaire When You’re Broke</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/is-an-all-cash-diet-right-for-you">Is an All-Cash Diet Right for You?</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Lifestyle emotional failures financial mistakes overspending psychology resilient saving money setbacks Mon, 23 Jan 2017 10:00:17 +0000 Sarah Winfrey 1876849 at http://www.wisebread.com 5 Mental Habits That Make the Rich Richer http://www.wisebread.com/5-mental-habits-that-make-the-rich-richer <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/5-mental-habits-that-make-the-rich-richer" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/kid_money_maker_532666075.jpg" alt="Kid learning mental habits that make the rich richer" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>The mind is a powerful thing that should not be underestimated.</p> <p>Many successful people believe that if you can change your thought patterns, you can also change your bank account size. Here are five mental tricks that rich people use to make even more money. Try adopting these thought patterns to see if they work at boosting your income.</p> <h2>1. They Think of Money as a Game</h2> <p>Rich people tend to think of money as a game, calculating where to spend and where to invest. Successful people love to win, which is why they are continually trying to do better, do more, learn more, and grow. The average earner gets in trouble when they become stagnant in their career and finances. If you drag yourself to work each day for just a paycheck to survive, then don't expect much more than that. (See also: <a href="http://www.wisebread.com/how-to-retire-rich?ref=seealso" target="_blank">How to Retire Rich</a>)</p> <h2>2. They Set Big Goals</h2> <p>Rich people are not afraid of setting big, somewhat unrealistic goals because they know they can conquer them. Why are we afraid of setting big goals for ourselves? Is it because we don't believe they can happen? Is it because we know we will hit our financial expectation if we set it low enough?</p> <p>Set big, scary goals for all areas of your life and look at them as a challenge. What if you don't meet those goals? There is always going to be a possibility of setting a huge goal that you never meet, but what if you try and get halfway there? When you set the bar high, you force yourself to grow as a person.</p> <p>For example, you can set two different financial goals this next year. One goal is to save $1,000, and the other to save $20,000. There's a big difference in the two goals, and for some, the latter seems impossible. However, if you set the $20,000 savings goal and then tried your best to achieve it, you are going to surprise yourself. You might not hit the $20,000 mark, but you might hit the $10,000 or even $15,000 mark, which are all so much greater than the low-expectations goal of saving $1,000. Don't be afraid to set big goals for yourself. Shoot for the stars, not the dirt.</p> <h2>3. Fear Is Not an Option</h2> <p>One of the biggest emotions that keeps people from achieving great things is fear. Rich people block out fear and take smart risks. Do they fail? Yes! Every rich and successful person has a list of failures to their name, along with even more accomplishments and achievements. When you are trying to battle your fear, ask yourself, &quot;What is the worst that can happen?&quot; Many times, the worst isn't that bad at all.</p> <h2>4. They Deserve to Be Rich</h2> <p>The rich think that they deserve to be rich. They view themselves as worthy of having money. On the flip side, those stuck in middle class don't feel worthy to be rich. They don't view themselves as anyone important or of value.(See also: <a href="http://www.wisebread.com/5-when-youre-rich-dream-buys-that-arent-that-great?ref=seealso" target="_blank">5 &quot;When You're Rich&quot; Dream Buys That Aren't That Great</a>)</p> <p>This isn't just some lofty thought to have. Think of your current job position. Can you be replaced easily in your company? If you answered yes, then figure out how you can become a valuable asset to your boss. If your company doesn't want to lose you, they will pay more to keep you. This can apply to almost any position, so don't think you need to go back to school to get a better degree to make this true for you.</p> <h2>5. Money Is Their Friend</h2> <p>Wealthy individuals realize the power that money has, knowing that it can solve problems and make their lives better. Those who earn less view money as the enemy. They work so that they can pay bills, they pay bills so that they can live, and so on. The cycle never ends, and they are miserable.</p> <p>Obviously, money is not the answer to happiness, but those who are smart with their money can leverage their paychecks to make their lives better.</p> <p>These mental tricks aren't magic. Instead, they help rewire your brain to value yourself and your work &mdash; which in turn means you will earn more and spend your money better.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/ashley-eneriz">Ashley Eneriz</a> of <a href="http://www.wisebread.com/5-mental-habits-that-make-the-rich-richer">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-find-the-savings-strategy-that-works-for-you">How to Find the Savings Strategy That Works For You</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/9-online-forums-thatll-help-you-reach-your-financial-goals">9 Online Forums That&#039;ll Help You Reach Your Financial Goals</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/dont-start-a-family-before-reaching-these-5-money-goals">Don&#039;t Start a Family Before Reaching These 5 Money Goals</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/create-a-reverse-bucket-list-to-improve-your-money-management">Create a Reverse Bucket List to Improve Your Money Management</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-financial-decisions-youll-never-regret">8 Financial Decisions You&#039;ll Never Regret</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance goals mental tricks outlook paycheck to paycheck psychology rich saving money wealth building wealthy Thu, 29 Dec 2016 10:30:37 +0000 Ashley Eneriz 1864425 at http://www.wisebread.com Your Brain Is Keeping You in Debt (And How to Fix It) http://www.wisebread.com/your-brain-is-keeping-you-in-debt-and-how-to-fix-it <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/your-brain-is-keeping-you-in-debt-and-how-to-fix-it" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_stressed_thinking_84125877.jpg" alt="Woman learning how her brain is keeping her in debt" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Your debt never seems to shrink. Each month you resolve to ditch your credit cards, spend less, and devote more money to paying down your outstanding debts. When next month rolls around? You're staring at even more debt.</p> <p>What's the problem? Blame your brain.</p> <p>Recent research from Scientific American suggests that our brains are wired so that when we do decide to pay off our debt, we tend to focus on our smallest ones first. But it'd make much more sense to pay off highest-interest debt first.</p> <h2>Your Brain on Debt</h2> <p>Scientific American, which published the results of its <a href="https://blogs.scientificamerican.com/mind-guest-blog/why-don-t-people-manage-debt-better/">debt study</a> in February of this year, started its research by concluding that the most effective way to battle debt is to pay off those debts that come with the highest interest rates first. Usually, that'd be the debt piling up on one of your credit cards.</p> <p>The reason that this makes the most sense is that higher-interest-rate debt grows more quickly. If you pay that debt down first, your overall debt load will not rise as fast.</p> <p>But instead of attacking higher-interest-rate debt first, consumers usually focus on paying down what they consider the most manageable of their debts, generally the smallest ones they face. They do this even if the interest rates attached to these smaller debts are lower.</p> <p>How did Scientific American determine this? They performed an experiment in which participants were asked to pay multiple debts, all of which came with varying interest rates. Researchers gave these participants a paycheck at the beginning of each round of this game, asking them to use it to pay off their imaginary debts in whatever way they deemed best.</p> <p>According to the study, only 3% of the participants &mdash; just five out of 162 &mdash; focused on paying down the debt with higher interest rates. Scientific American reported that the majority of participants paid off their smaller debts, instead.</p> <p>This isn't just bad money management. It's psychological. Your brain does you no favors when you're battling multiple debts.</p> <p>The Scientific American story says that people are naturally averse to debt accounts. This means that consumers with many different debts naturally want to reduce the total number of these accounts. This pull is so strong, it overwhelms the more rational approach of first paying down those debts that cost the most.</p> <h2>Teach Your Brain to Battle Debt</h2> <p>Can you fight your brain? Can you resist the natural temptation to close out those smaller debt accounts first? Sure, if you focus.</p> <p>Consider the avalanche approach to debt repayment: Consumers pay off those debts with the highest interest rates first, making only the minimum monthly payments on the rest. Once they pay off the debt with the highest interest rate, they then move on to the debt with the second-highest rate. (See also: <a href="http://www.wisebread.com/snowballs-or-avalanches-which-debt-reduction-strategy-is-best-for-you?ref=seealso">Snowballs or Avalanches: Which Debt Reduction Strategy Is Best for You?</a>)</p> <p>The benefit here is obvious: Debt with higher interest rates cost consumers more. Eliminating it first saves lots of money in the long run.</p> <p>And if you want to outwit your brain's natural tendency to steer you in the wrong direction? You'll go with the avalanche method, too.</p> <h2 style="text-align: center;">Lik this article? Pin it!</h2> <div align="center"><a data-pin-do="buttonPin" data-pin-count="above" data-pin-tall="true" data-pin-save="true" href="https://www.pinterest.com/pin/create/button/?url=http%3A%2F%2Fwww.wisebread.com%2Fyour-brain-is-keeping-you-in-debt-and-how-to-fix-it&amp;media=http%3A%2F%2Fwww.wisebread.com%2Ffiles%2Ffruganomics%2Fu5180%2FYour%2520Brain%2520Is%2520Keeping%2520You%2520in%2520Debt%2520%2528And%2520How%2520to%2520Fix%2520It%2529.jpg&amp;description=Your%20Brain%20Is%20Keeping%20You%20in%20Debt%20(And%20How%20to%20Fix%20It)"></a></p> <script async defer src="//assets.pinterest.com/js/pinit.js"></script></div> <p style="text-align: center;"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/u5180/Your%20Brain%20Is%20Keeping%20You%20in%20Debt%20%28And%20How%20to%20Fix%20It%29.jpg" alt="Your Brain Is Keeping You in Debt (And How to Fix It)" width="250" height="374" /></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/your-brain-is-keeping-you-in-debt-and-how-to-fix-it">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-easy-first-steps-to-paying-off-debt">7 Easy First Steps to Paying Off Debt</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-ways-science-says-money-affects-your-mind">4 Ways Science Says Money Affects Your Mind</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/whats-better-less-debt-or-more-savings">What&#039;s Better: Less Debt or More Savings?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/should-you-use-peer-to-peer-lending-to-pay-down-credit-card-debt">Should You Use Peer-to-Peer Lending to Pay Down Credit Card Debt?</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-foolish-ways-to-pay-down-debt">6 Foolish Ways to Pay Down Debt</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Debt Management avalanche method brain psychology repayment research science thought process Mon, 21 Nov 2016 11:00:06 +0000 Dan Rafter 1835352 at http://www.wisebread.com Here's Why Multitasking and Money Don't Mix http://www.wisebread.com/heres-why-multitasking-and-money-dont-mix <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/heres-why-multitasking-and-money-dont-mix" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_stressed_work_86169855.jpg" alt="Woman learning why multitasking and money don&#039;t mix" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Think you're good at multitasking? You're not.</p> <p>Plenty of research has shown that multitasking simply doesn't work. Our brains can't focus on more than one thing at a time. We might tell ourselves that this isn't true, that we can concentrate on several tasks at once. The truth, though, is that we're fooling ourselves.</p> <p>Multitasking is especially dangerous when it comes to managing our money. You might think that you can juggle several financial tasks at once, everything from building an emergency fund to paying off your credit card debt to saving for the down payment on your first home.</p> <p>But just as your brain can't juggle multiple tasks at once, neither can most people's finances.</p> <p>Here are three reasons why you should never multitask when it comes to managing your money.</p> <h2>It Doesn't Work</h2> <p>In 2014, Psychology Today ran a fascinating feature story about multitasking. The story pointed out that the human brain can't take on simultaneous tasks. We might think we can hold a conversation on our smartphones, surf the Web on our laptop, and text another friend on our tablet at the same time. But we can't, at least not effectively.</p> <p>According to the Psychology Today story, when we multitask, our brain just switches from task to task more quickly, employing a sort of stop/start process. This makes us sloppy, meaning that we make more mistakes. It can also sap our mental energy over time.</p> <p>So what happens when we try to multitask with our finances? We try to pay off debt at the same time we try to build an emergency fund? We get sloppy and we make mistakes. We forget to pay our credit card bill and incur a late fee, or we go months without making a payment into our emergency fund.</p> <p>The better approach? Ditch the multitasking and take on one financial job at a time.</p> <h2>We Don't Get Anything Done</h2> <p>You might think multitasking means you are being more efficient. Actually, it's the opposite. When we take on several tasks at once &mdash; say writing a report at work, answering email messages from colleagues, and trying to schedule dentist appointments for our kids &mdash; we tend to get none of these jobs done in a timely manner.</p> <p>The better approach is to again move away from multitasking and attack these jobs one at a time until we finish each of them.</p> <p>When it comes to managing finances, completing one task at a time again pays dividends. Most financial experts recommend that you <a href="http://www.wisebread.com/fastest-way-to-pay-off-10000-in-credit-card-debt?ref=internal">pay off high interest rate credit card debt</a> first by sending extra money at these bills until you eliminate them. It's hard to do this if you're diverting some funds to building an emergency fund at the same time.&nbsp;</p> <p>Money experts recommend creating a plan that starts with eliminating credit card debt, then moves on to building an emergency fund with at least six months' worth of living expenses in it. Once you complete these two tasks, you can then start saving for retirement or for a down payment on a new home.</p> <h2>We Get Depressed</h2> <p>Multitasking is exhausting. If you're constantly juggling three or four tasks at once, it's difficult to focus on any one thing. It's also difficult to take a breather to enjoy life. The constant stress that goes along with multitasking can make you depressed.</p> <p>The same holds true when we multitask money matters. If you are constantly alternating between paying down your credit card debt, saving for retirement, and investing in the stock market, you'll feel like you're not doing a good job at any of these tasks. As your credit card debt continues to grow and your retirement savings don't, it'll be easy to fall into a funk.</p> <p>But if you take on one of these financial tasks at a time? You'll feel a sense of accomplishment when you are able to check off your goals one by one.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/heres-why-multitasking-and-money-dont-mix">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/these-5-apps-will-help-you-finally-organize-your-money">These 5 Apps Will Help You Finally Organize Your Money</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-simple-way-to-make-multitasking-actually-work">The Simple Way to Make Multitasking Actually Work</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-make-your-sluggish-workday-go-a-lot-faster">How to Make Your Sluggish Workday Go (a Lot) Faster</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-online-tools-to-manage-your-money-in-under-10-minutes-a-week">5 Online Tools to Manage Your Money in Under 10 Minutes a Week</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-simple-financial-upgrades-you-can-make-during-breakfast">6 Simple Financial Upgrades You Can Make During Breakfast</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Organization attention span depressed distractions Mistakes money management multitasking psychology Mon, 17 Oct 2016 09:30:21 +0000 Dan Rafter 1813253 at http://www.wisebread.com How "Radical Implosion" Can Help You Get Ahead at Work — and Everywhere Else http://www.wisebread.com/how-radical-implosion-can-help-you-get-ahead-at-work-and-everywhere-else <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/how-radical-implosion-can-help-you-get-ahead-at-work-and-everywhere-else" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/confident_woman_work_71845173.jpg" alt="Woman using radical implosions to get ahead" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Do you ever feel like there's <a href="http://www.wisebread.com/7-ways-youre-sabotaging-your-job-hunt">something holding you back</a> at work? Maybe it's social anxiety that keeps you from speaking up in meetings, or a fear of rocking the boat that keeps you from asking for that raise you really deserve.</p> <p>If you're like most people, you probably feel like you've tried everything. You've taken your deep breaths, said your mantras, posed in power positions. And it still didn't work. You just couldn't overcome the fears and insecurities deep inside.</p> <p>Are you serious about making some changes? And committed? Then there's one more thing you might try. It's a technique called <em>radical implosion</em>, and it can help you change for the better &mdash; even in areas where you feel really and truly stuck.</p> <h2>Radical Implosion Explained</h2> <p>Radical implosion is the idea that overcoming a challenge much more difficult than the one you're actually afraid of makes your fear dissipate. Psychologist Albert Ellis <a href="https://www.psychologytoday.com/articles/200703/confidence-stepping-out?page=3">pioneered this approach in 1933</a> when, desperate to learn how to talk to women, he decided he would talk to every woman he found sitting alone on a bench in the New York Botanical Gardens. And over 230 women later, he had overcome his fear.</p> <p><a href="http://lifehacker.com/overcome-shyness-with-radical-implosion-1785985698">Will Farrell did something similar</a> when, frustrated with his shyness and the ways he felt it was holding him back, he started doing embarrassing things in public on purpose, until it didn't bother him anymore when people laughed at him. Sure, it sounds crazy, but we all know where it got him!!</p> <h2>Radical Implosion at Work</h2> <p>To apply radical implosion at work, you first have to determine what it is you're afraid of, and then you have to find a way to address that fear from an implosion perspective.</p> <h3>During Meetings</h3> <p>Speaking up in meetings can be terrifying. All of a sudden, there are several people looking at you, focused on you. What if you say the wrong thing, or you can't explain your ideas, or everyone thinks your idea is stupid?</p> <p>To address this from an implosion perspective, think about other times and places where you could stand up, speak, and have the attention of a crowd. Maybe you decide to give an impromptu speech in your local park every Saturday at noon, or try your hand at karaoke, or approach random strangers on a street corner to explain your point of view on something.</p> <p>No matter which of these options you choose, once you've done it, talking to your co-workers in the confined space of a meeting should be a piece of cake.</p> <h3>Asking For a Raise</h3> <p>It's easy to be terrified when asking for more money. After all, if they thought you deserved more, wouldn't you be making it already? And what if they refuse you, or ask you a question you hadn't anticipated, or laugh in your face?</p> <p>One implosion technique to apply here would be to approach random people and ask for something. You could start with the time, and move on to requesting money or food or larger items. When you've done this quite a few times, asking your boss to consider a raise won't be nearly as intimidating.</p> <p>You could also implode this fear by asking a few other people for relatively big things. This requires you having some things that you need or want and people who could give them to you, but it would also make that raise request seem much easier.</p> <h3>Networking</h3> <p>It's hard enough to make friends as an adult, and sometimes networking seems even harder. What if you seem fake, or you can't explain what you do and where you want to go, or you forget your words entirely and speak gobbledygook?</p> <p>Start imploding these fears by approaching random strangers. Pick a number, like 50, and don't go home until you've explained what you do to that many people. Take your business cards with you, because you might end up networking by accident! And when you're done, attending that seminar or meeting with that group with the hopes of making some new connections won't seem so frightening anymore!</p> <h2>Radical Implosion Elsewhere</h2> <p>Work isn't the only place where you can use radical implosion techniques to achieve your goals.</p> <h3>Money</h3> <p>People have many, many fears surrounding money. Some are afraid to spend on themselves, while others are afraid of the chances they will miss if they save. While these aren't necessarily social fears, they can still be attacked with implosion.</p> <p>If you are afraid of budgeting, try budgeting every single dollar for the next six months and see if it kills you. If you are afraid of spending money on yourself, buy the most luxurious vacation you can afford. And if you are afraid of what you will miss out on if you save some of your money, try saving as much as you possibly can for several months.</p> <p>The point here is to go over the top. Don't ease yourself into attacking your fears, but tackle them head on. That way, you will know for sure that whatever you're afraid of isn't actually so bad.</p> <h3>Romance</h3> <p>Does talking to a potential romantic partner make your hands sweaty? Do you get so tongue tied on a date that you end up saying nothing?</p> <p>Radical implosion can help you. Be like Ellis and begin approaching people you might want to date, not to necessarily get a date, but to learn how to strike up a conversation. Or go to a party and make yourself carry on a five-minute conversation with at least 10 potential dates. Over time, you will learn that you can do whatever you felt like you couldn't.</p> <p>These aren't the only situations where radical implosion can help you grow and achieve your goals. This technique, once learned, can help you overcome many fears by showing you that they are not, in fact, deserving of your fear after all.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/sarah-winfrey">Sarah Winfrey</a> of <a href="http://www.wisebread.com/how-radical-implosion-can-help-you-get-ahead-at-work-and-everywhere-else">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-3"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-ways-to-ease-into-a-day-job-after-freelancing">5 Ways to Ease Into a Day Job After Freelancing</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/8-ways-to-deal-when-you-work-with-someone-you-hate">8 Ways to Deal When You Work With Someone You Hate</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-surprising-benefits-of-failure">7 Surprising Benefits of Failure</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-write-a-resume-12-steps-to-your-next-job">How To Write A Resume: 12 Steps To Your Next Job</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/11-smart-ways-to-maximize-desk-space">11 Smart Ways to Maximize Desk Space</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Career and Income Life Hacks career career tips face your fears get ahead life hacks psychology success Mon, 03 Oct 2016 09:30:20 +0000 Sarah Winfrey 1803458 at http://www.wisebread.com 7 Signs You Have a Serious Spending Addiction http://www.wisebread.com/7-signs-you-have-a-serious-spending-addiction <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/7-signs-you-have-a-serious-spending-addiction" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/man_money_wallet_86784517.jpg" alt="Man learning signs he has a spending addiction" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>We all splurge once in awhile, buying that extra pair of shoes or that top-of-the-line laptop computer that we didn't really need.</p> <p>But what if your splurging was something more? What if your splurges were a sign of a deeper shopping addiction?</p> <p>Shopping addiction might sound like a fake condition, but it's real. The World Psychiatric Association refers to it as compulsive buying disorder, or CBD. According to the association, CBD is characterized by excessive shopping and buying decisions that lead to either remorse or, even worse, prevent you from paying your bills, socializing, or interacting with your family members.</p> <p>The association says that 5.8% of the U.S. population battles this condition throughout their lives.</p> <p>How do you know if you are suffering from CBD? Here are seven clues that your shopping is more than just a fun diversion:</p> <h2>1. You Hide Your Purchases</h2> <p>We're supposed to buy items to use them. But those suffering from shopping addiction often hide their purchases deep inside bedroom closets, under their beds, or in other hiding spots. Why? They are hiding their purchases from a spouse, partner, or family member. Those suffering from shopping addictions often want to hide the evidence of their overspending. This is one of the top warning signs of a spending addiction.</p> <h2>2. You Constantly Break Your Household Budget</h2> <p>Each month, you vow to keep your spending within the budget you've set for your household. But every month, your spending shatters your careful plans. You might feel remorse over this, but you overspend every month anyway. This inability to stick to a spending plan is another of the key signs that your shopping habits are out of control.</p> <h2>3. Your Overspending Happens All Year Long</h2> <p>It's easy to overspend during certain times of the year, such as during the winter holidays. Overspending all year long, though, is a more serious sign of a serious spending addiction. The World Psychiatric Association makes it a point to say that compulsive buying disorder isn't just a seasonal problem; it's a yearlong spending pattern.</p> <h2>4. You Buy Items You Don't Need</h2> <p>Do you come home from a shopping trip with bags full of clothing you'll never wear or electronics that you'll never use? Buying items that you neither want nor need is another sign that your shopping habits are out of control.</p> <h2>5. You Can't Buy Just One</h2> <p>Buying one pair of jeans isn't so bad. Coming home with a dozen? That's troubling. Buying items compulsively is another big sign of a shopping addiction. If you can't just buy one pair of shoes, and instead feel compelled to buy eight &mdash; that's a good sign that your shopping is controlling you instead of the other way around.</p> <h2>6. Remorse</h2> <p>How often do you feel remorse or guilt when returning home after a shopping spree? If it's often, you might be struggling with a spending addiction. The World Psychiatric Association says that remorse is one of the top signs exhibited by consumers who are not in control of their spending habits. You should be able to return from a shopping trip pleased with your purchases. If you're feeling the opposite, it might be time to seek help from a therapist.</p> <h2>7. You're Anxious When You're Not at the Store</h2> <p>Finally, if you often find yourself anxious when not spending, you might be suffering from a significant spending addiction. You should be able to relax and enjoy the time you're not spending at the stores. If this contentment eludes you, and if instead you are constantly planning out or imagining your next visit to a shopping mall, you might be a sufferer of CBD.</p> <h2>Where to Turn for Help</h2> <p>If you do feel you may have a problem with shopping addiction, you have several options. Donald Black MD, a professor of Psychiatry at the University of Iowa College of Medicine, told WebMD that there are no medications or standard <a href="http://www.webmd.com/mental-health/addiction/features/shopping-spree-addiction?page=3">treatments for shopping addiction</a>, and that some doctors seek to treat underlying depression with antidepressants or behavior modification therapy. Ultimately, Black said, behavior change is necessary. Other doctors interviewed told WebMD that suffers should seek help from groups like Debtor's Anonymous or local credit counseling agencies, as well, as most shopping addicts are heavily indebted.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/dan-rafter">Dan Rafter</a> of <a href="http://www.wisebread.com/7-signs-you-have-a-serious-spending-addiction">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-types-of-overspenders-which-one-are-you">5 Types of Overspenders — Which One Are You?</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-ways-to-stop-your-mindless-spending">5 Ways to Stop Your Mindless Spending</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/why-do-we-feel-buyer-s-remorse-anyway">Why Do We Feel Buyer’s Remorse, Anyway?</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-terrible-money-situations-you-need-to-stop-getting-yourself-into">6 Terrible Money Situations You Need to Stop Getting Yourself Into</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/12-everyday-money-tasks-youve-been-doing-wrong">12 Everyday Money Tasks You&#039;ve Been Doing Wrong</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance Shopping cbd compulsive buying disorder Help overspending psychology shopaholic spending addiction therapy wasting money Fri, 16 Sep 2016 09:00:06 +0000 Dan Rafter 1793092 at http://www.wisebread.com Create a Reverse Bucket List to Improve Your Money Management http://www.wisebread.com/create-a-reverse-bucket-list-to-improve-your-money-management <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/create-a-reverse-bucket-list-to-improve-your-money-management" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_notebook_thinking_73069659.jpg" alt="Woman creating reverse bucket list for money management" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>Having financial goals is a wonderful thing. And having lofty ones is even better, because it pushes you to see exactly what you can do &mdash; maybe even more than you'd ever thought possible with your money.</p> <p>But, some days, having goals is just plain frustrating. When you're always looking at where you haven't gotten to yet or what you haven't yet achieved, it's easy to feel like you'll never get there, or like you aren't good enough. You might begin to wonder what the point of these goals is, anyway.</p> <p>That's where the reverse bucket list comes in.</p> <h2>Make a Reverse Bucket List</h2> <p>When it comes to your finances, a reverse bucket list is simply a list of things you've already accomplished financially, or a list of goals you've already met.</p> <p>My husband and I tried this recently. On our list, we put things like buying a house, getting away to Cancun last year, not taking on more debt despite several major expenses this year, and paying off my student loan.</p> <p>Some of these things &mdash; like buying a house &mdash; were things that we had made into goals. They were things we wanted to do, things we saved to do, and things we accomplished over time. Others weren't explicit goals, like not taking on more debt. But we added them because they felt like financial accomplishments to us.</p> <p>Take some time to make your list. Some items &mdash; like, for us, paying off the student loans &mdash; might be things that you accomplished years ago, so they may not be in the forefront of your mind. Give yourself a day or two to think over your list, coming back to add things when you remember them.</p> <h2>The Reverse Bucket List and Positivity</h2> <p>The first thing that we felt, when we looked over our final list, was an overwhelming sense of positivity. We have been discouraged lately. This year seems to have been one surprise attack after another when it comes to our money, and it's frustrating to work harder than ever only to see the balances go down.</p> <p>When we looked at our list, though, we started to feel better about ourselves and the way we're living. We are still people who can make good financial decisions, as evidenced by the number of things we've accomplished in that realm. In fact, it's those decisions that put us where we are now &mdash; without any new debt &mdash; even though life hasn't cooperated recently.</p> <p>Looking at our list has also made us feel more positive about continuing to pursue the financial goals we haven't met yet, even though we feel like our most recent progress has been negative. For each item on the list, we can remember the moment where it happened, where we felt proud and happy, and that motivates us to keep putting one foot ahead of the other.</p> <p>Making this list definitely raised our motivation levels and helped us look at our situation realistically. Setbacks happen. They aren't necessarily a commentary on us or our intelligence or our financial prowess. And now, we feel like moving forward again.</p> <h2>Understanding Your Finances Through the Reverse Bucket List</h2> <p>Looking at our reverse bucket list also helped us find some patterns in our spending and saving that will help us as we move forward.</p> <p>For instance, the closer I get to a goal, the more likely I am to pursue it wholeheartedly. When we were just about able to pay off my student loans, I stopped buying everything that wasn't extra. I could see victory, I could taste it, and I wanted it!</p> <p>On the other hand, when I'm not anywhere near meeting any goals, I tend to spend a lot more haphazardly. If I feel like I will never get there, or I feel like we are just going to encounter another setback anyway, I figure I might as well buy what I want while I have the money in my hands.</p> <p>Moving forward, we are planning to structure our goals differently, making them tiered rather than all-or-nothing. That way, I can always feel like I'm just about to achieve something, so I won't be as tempted to spend in any given moment.</p> <h2>Find What Motivates You</h2> <p>When we thought about our list, we also noticed that we are highly motivated by travel. When we saved for travel, we were able to save quickly, simply because we both really love to get on a plane and see somewhere new.</p> <p>Now, when you have a mortgage and other student loans like we do, you can't just make all of your goals about traveling. But we realized that staggering our goals so that travel goals are included in every two or three things we save for would help us.</p> <p>For instance, when we pay off my husband's student loans, we are planning a trip to New Zealand. We know that we can take that trip as soon as these other goals are met. Even if it takes us several years, we will feel more motivated knowing that the travel goal is coming up, even if the gratification isn't immediate.</p> <p>A financial reverse bucket list won't solve all of your problems, but it certainly might make you feel better about your money situation and help you figure out how to structure your goals so they best suit you.</p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/sarah-winfrey">Sarah Winfrey</a> of <a href="http://www.wisebread.com/create-a-reverse-bucket-list-to-improve-your-money-management">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-think-like-an-olympian-to-master-your-money">How to Think Like an Olympian to Master Your Money</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/ow-do-you-deal-with-family-members-who-are-bad-at-managing-money">How Do You Deal With Family Members Who Are Bad At Managing Money?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-money-lessons-we-could-all-learn-from-dwayne-the-rock-johnson">6 Money Lessons We Could All Learn From Dwayne &quot;The Rock&quot; Johnson</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/reach-your-money-goals-faster-with-a-simple-naming-trick">Reach Your Money Goals Faster With a Simple Naming Trick</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-get-your-finances-back-on-track-after-losing-everything">How to Get Your Finances Back on Track After Losing Everything</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance General Tips accomplishments advice goals inspiration motivation positive thinking psychology reverse bucket list Wed, 14 Sep 2016 09:00:07 +0000 Sarah Winfrey 1792247 at http://www.wisebread.com This Creative Shopping Strategy Could Save You Tons http://www.wisebread.com/this-creative-shopping-strategy-could-save-you-tons <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/this-creative-shopping-strategy-could-save-you-tons" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/woman_shopping_happy_96929491.jpg" alt="Woman using creative shopping strategy to save her tons" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>We see something we really like. We buy it. We use it (or don't). We move on.</p> <p>For most of us, this is how shopping works. But what if there was a step that could change the way we all shop? What if you see something you like, but put it back and keep a running total of your &quot;non-purchases?&quot; Could this technique be the path to saving money, and feeling happy?</p> <p>Let's examine it more closely.</p> <h2>Keep a Running List of Things You Wanted to Buy, But Didn't</h2> <p>It's a technique developed by <a href="http://www.swiss-miss.com/2016/08/things-i-didnt-buy.html">Tina Roth Eisenberg</a> over at <em>Swiss Miss</em>, although it's an idea many people may have had over the years. Instead of just keeping track of your purchases, you also keep track of the things you almost bought, but didn't.</p> <p>It's been described as something of a cathartic technique. We all succumb to impulse purchases, or see deals that we just <em>have</em> to have at that moment. But instead of giving in to those quick decisions, this approach makes you take a step back, think, and reconsider. And most of the time, it ends up being a purchase you decide you don't actually need.</p> <h2>How to Avoid Buying Those Items</h2> <p>First and foremost, you have to approach every purchase with the &quot;want vs. need&quot; mindset. Clearly, as you make a shopping list, you know exactly what you need, from bread and milk, to cleaning products and kitchen utensils. But when you hit the store, you can get sucked in by clearance signs, special offers, and BOGO deals that can really add up.</p> <p>So, before buying anything, look at it and ask &quot;Do I need it, or want it?&quot; Most of the time, you'll know instantly if it's something you really need, or just want because it's on sale, or it's cool, or it's an impulse decision.</p> <p>Get into the habit of taking things out of your basket or cart before reaching the checkout. Look through it, and ask the same question &mdash; &quot;Is this a want, or a need?&quot; Sometimes, the act of putting the item into the cart is enough to satiate your desire for it. Taking it back out again is easier than never putting it in the cart in the first place.</p> <p>When shopping online, go through the same process. Examine your shopping cart, and look at the prices. Is it worth it? Do you need it? Can you easily live without it? Why are you even considering this purchase? Is it retail therapy? If you're buying something just to feel good, think about how that money could be used on something better.</p> <p>Some online retailers, including Amazon, have made it very easy to buy something with just one click. You may find it helpful to remove that Buy It Now option from your account, and instead go through the extra steps to purchasing. This additional time is often all you need to re-evaluate the purchase, and turn it into a &quot;didn't buy.&quot;</p> <h2>How to Track Your Non-Spending</h2> <p>The easiest way to do this is in a spreadsheet, where you can pop in the name of the item, the price, and see a running total that can give you weekly, monthly, and annual totals.</p> <p>Of course, we don't all carry around tablets or laptops that we can whip out in the grocery store, so find simple ways to jot down your non-purchases, including:</p> <ul> <li>A note taking app on your smartphone</li> <li>A small pocketbook/pen that you carry whenever you shop</li> <li>A notepad besides your computer or tablet</li> <li>A voice recorder, or voice recording app</li> </ul> <p>Get into the habit of doing this every time you are about to pull the trigger on an item, but put it back on the shelf, or remove it from your online shopping cart.</p> <p>See also: <a href="http://www.wisebread.com/start-saving-more-with-this-one-simple-tool?ref=seealso">Start Saving More With This One Simple Tool</a></p> <p>If you want to go the extra mile, put a chart on the wall, perhaps near the garage door or entrance, showing how much you didn't spend on stuff over the weeks and months. That running total can give you an incredible feeling of satisfaction, knowing you saved over $200 in one month by not buying stuff you really didn't need.</p> <h2>Why Does This Work?</h2> <p>Well, there is plenty of evidence online that explains the psychology behind impulse purchases, wanting expensive new things, and believing that stuff equals happiness. However, there is very little out there to suggest why this new technique works. But, after explaining it to a focus group including working moms, stay-at-home parents, Millennials, and people with a lot of disposable income, there seem to be some common threads explaining why this works so well.</p> <h3>1. Instant Gratification</h3> <p>There is something very empowering about seeing money go back into your pocket, instantly. Even though you haven't actually spent that money yet, when you remove it from the cart and add that money to your &quot;didn't buy&quot; running total, you have immediately saved money. You're paying yourself, without actually doing anything with the money.</p> <h3>2. A Sense of Accomplishment</h3> <p>By examining your purchases, and then making a determined effort to remove unnecessary items from the cart, you have exercised willpower. That, in itself, can give anyone a feeling of accomplishment. When you add to that the actual monetary amounts saved by avoiding the purchase, it further compounds the feeling.</p> <h3>3. Visual Stimulation and Encouragement</h3> <p>By charting the purchases you didn't make, and the money saved, you can see at a glance how much extra money you have in your pocket at the end of each week. This kind of visual graphing works well for paying down debt, or adding money into a savings account, and is just as powerful here. Although it's money that was not actually put into savings, or earned, it is still a great way to show your progress.</p> <h3>4. It Exorcises the Shopping Demons</h3> <p>This one came up a lot. By putting the item into your cart, and then removing it, you are doing something close to buying the item. You have considered it. You have, in many cases, touched it and tried it out. You have almost owned it, and felt that ownership. That can be enough to satiate the desire for the product, and putting it back actually gives you a sense of relief. You had it, but you didn't pay for it.</p> <p>So, what are you waiting for? Give this technique a try, and let us know how you get on. What did you save over the week, or month? Did you realize why this specific technique works, or doesn't, for you?</p> <p><em>Can you think of any other similar strategies that will save money?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/paul-michael">Paul Michael</a> of <a href="http://www.wisebread.com/this-creative-shopping-strategy-could-save-you-tons">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/6-ways-to-convince-a-store-clerk-to-give-you-a-deal">6 Ways to Convince a Store Clerk to Give You a Deal</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/how-to-find-the-savings-strategy-that-works-for-you">How to Find the Savings Strategy That Works For You</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/frugal-tip-do-not-spend-when-you-are-sad">Frugal Tip: Do Not Spend When You Are Sad</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/heres-how-to-get-a-sale-price-match-at-16-popular-stores">Here&#039;s How to Get a Sale Price-Match at 16 Popular Stores</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/21-times-spending-more-will-save-you-money">21 Times Spending More Will Save You Money</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Shopping buying instant gratification lists psychology saving money spending strategy techniques Fri, 09 Sep 2016 09:00:08 +0000 Paul Michael 1788932 at http://www.wisebread.com Don't Let "Lizard Brain" Derail Your Finances http://www.wisebread.com/dont-let-lizard-brain-derail-your-finances <div class="field field-type-filefield field-field-blog-image"> <div class="field-items"> <div class="field-item odd"> <a href="/dont-let-lizard-brain-derail-your-finances" class="imagecache imagecache-250w imagecache-linked imagecache-250w_linked"><img src="http://wisebread.killeracesmedia.netdna-cdn.com/files/fruganomics/imagecache/250w/blog-images/green_lizard_grass_19865568.jpg" alt="Preventing lizard brain from derailing your finances" title="" class="imagecache imagecache-250w" width="250" height="140" /></a> </div> </div> </div> <p>When it comes to your personal finances, you're in the driver's seat, right?</p> <p>So how come &mdash; sometimes &mdash; that &quot;quick trip&quot; to the mall can end up a daylong spending extravaganza? Why is it that occasionally, the tiny tingle of desire becomes a thunderous nagging, and you're suddenly the proud owner of some shoes (or a car, or a state of the art bit of tech) that you can't really afford? Or why, when the market wobbles, do you cash in your investment chips &mdash; even though you signed up for the long term?</p> <p>Meet your lizard brain.</p> <h2>What Is the Lizard Brain?</h2> <p>The <a href="http://www.crystalinks.com/reptilianbrain.html">lizard brain</a> &mdash; which is also known as our reptilian brain or chimp brain &mdash; is the oldest and least evolved part of our human brain. Sitting near the spinal cord, this tiny clump of cells is similar to what you might find between the ears of a lizard (or a fish, for that matter). While the rest of the human brain moved on, this crucial little powerhouse drives our most basic (and primitive) needs. It is what we have to thank for our desires to survive, reproduce, hoard, and dominate.</p> <p>And if it sounds like we don't have a need for such base motivations these days, then think again. The lizard brain is what drives fight or flight &mdash; a crucial physical mechanism at times even today.</p> <p>The problem, really, is that the lizard brain struggles with identifying some of our more modern struggles. And because it developed to save our lives, it is also able to override the more rational and logical areas of the mind. It is hard wired to take control, especially when we feel under pressure, stressed, or emotional.</p> <h2>Feel Compelled to Eat That Pint of Ice Cream? Blame Your Lizard Brain</h2> <p>You might recognize the interventions of the lizard brain in yourself. Think of the times that you are seized by an overwhelming impulse to do something, and it happens so quickly your logical head has not processed the decision. That &quot;heart over head&quot; type of brain hijack is initiated by the lizard brain. Maybe you feel a compulsion to eat the contents of the snack cupboard, have another sneaky drink, spill your juicy gossip, or splurge on something out of your budget. If you know you shouldn't do it, but go ahead anyway (and perhaps later regret it), then that's the lizard brain.</p> <p>The lizard brain is not fundamentally bad. In fact, for millions of years it has done a great job of keeping us alive and out of trouble. But when it comes to your cash, it can be the personal finance saboteur sat right in your own mind.</p> <h2>Personal Finance and the Lizard Brain</h2> <p>There are some ways that your <a href="http://www.wisebread.com/4-ways-your-mind-can-make-you-rich?ref=internal">mind can make you rich</a>. And then there are some that can make you substantially poorer.</p> <p>Even those most sophisticated of money minds can suffer. The last economic crises have proved rich fodder for psychologists watching the way the human brains of traders and investors react to sudden changes in the market. Overall, the answer seems to be that they <a href="http://www.ft.com/intl/cms/s/2/5c528240-c3a7-11e0-8d51-00144feabdc0.html">do not act rationally</a>, preferring short term horizons and certainty, despite investing being a long term game.</p> <p>One reason for this is the pleasure/pain principle. We tend to worry more about the pain of losing money, than we celebrate the success of winning an equivalent amount of money. Therefore stress kicks in at the prospect of losing out, and we allow the lizard brain to take over. A series of knee jerk reactions kicks in, and before you know it, your rational decision making is out of the window.</p> <p>On a more individual level, the lizard brain can cause us to act on impulses without the calming influence of rational thought. So if you have a compulsive spending problem, or get swept along by the moment and find yourself picking up far more at the mall than you intended, then the lizard brain might be to blame.</p> <h2>Reining In Your Lizard Brain</h2> <p>Your lizard brain might not always be your best friend, but it is one of the things that is keeping us alive. Even if we no longer have to dodge passing saber tooth tigers, or high-tail it away from a rampaging mammoth, that fight or flight mechanism gets us out of trouble today, too.</p> <p>But stopping the lizard brain from accidentally getting us into trouble is an ongoing process. Understanding the situations in which we make impulsive financial decisions is a starting point. Simply by noticing the impulse, you have the time to more rationally assess the decision you're about to make. And stopping just a moment &mdash; however brief &mdash; to understand your basic impulses might be enough to prevent you from making a poor decision.</p> <p>You can't live without your lizard brain, so better to start making friends with it. Acknowledging the tendency to act on impulse might be enough to bring it in line and make sure you're not being hijacked by your own little personal finance saboteur.</p> <p><em>What do you think? Does stress cause you to make financial decisions driven by impulse rather than logical assessment? How do you keep your lizard brain in check?</em></p> <br /><div id="custom_wisebread_footer"><div id="rss_tagline">This article is from <a href="http://www.wisebread.com/claire-millard">Claire Millard</a> of <a href="http://www.wisebread.com/dont-let-lizard-brain-derail-your-finances">Wise Bread</a>, an award-winning personal finance and <a href="http://www.wisebread.com/credit-cards">credit card comparison</a> website. Read more great articles from Wise Bread:</div><div class="view view-similarterms view-id-similarterms view-display-id-block_2 view-dom-id-1"> <div class="view-content"> <div class="item-list"> <ul> <li class="views-row views-row-1 views-row-odd views-row-first"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/the-10-biggest-lies-we-tell-ourselves-about-money">The 10 Biggest Lies We Tell Ourselves About Money</a></span> </div> </li> <li class="views-row views-row-2 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/5-types-of-overspenders-which-one-are-you">5 Types of Overspenders — Which One Are You?</a></span> </div> </li> <li class="views-row views-row-3 views-row-odd"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/7-signs-you-have-a-serious-spending-addiction">7 Signs You Have a Serious Spending Addiction</a></span> </div> </li> <li class="views-row views-row-4 views-row-even"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/4-reasons-to-cut-yourself-some-slack-following-a-financial-setback">4 Reasons to Cut Yourself Some Slack Following a Financial Setback</a></span> </div> </li> <li class="views-row views-row-5 views-row-odd views-row-last"> <div class="views-field-title"> <span class="field-content"><a href="http://www.wisebread.com/boost-your-savings-by-making-your-money-harder-to-spend">Boost Your Savings by Making Your Money Harder to Spend</a></span> </div> </li> </ul> </div> </div> </div> </div><br/></br> Personal Finance fight or flight impulse buys lizard brain overspending psychology self control Splurging Thu, 07 Jul 2016 09:01:03 +0000 Claire Millard 1746054 at http://www.wisebread.com