• The Challenge of Rebooting Your Routines

    No matter what change you want to introduce into your life, it involves removing, modifying, and replacing routines. For example, if you’re trying to spend less money, you’re probably trying to replace or eliminate routines that involve spending money each day. You’re trimming out visits to the coffee shop or cutting out your visits to …

  • External and Internal Motivation

    If you’ve read The Simple Dollar for very long, you know that my children play a major role in motivating me to make good financial choices. I want them to have childhood security and to have every educational opportunity that I can provide for them, at least up until their college education. I use them …

  • An Unhealthy Dose of Optimism

    It isn’t very hard to come across stories of people who thought they had everything planned out, only to see everything come apart at the seams. They lost their job. Their car fell apart. Their apartment building burned to the ground. They got sick. Their child or spouse got sick. Someone stole their identity. They …

  • Feeling Defeated? Here’s How to Rebound

    Sometimes, no matter what you do, life will hand you some lemons. It’s really easy to respond to that with a trite “when life hands you lemons, make lemonade,” but sometimes that just doesn’t work. Things you’ve been preparing for and working on for years have blown up in your face. The big dreams you …

  • The Art and Psychology of Self-Control

    One of the most difficult aspects of personal finance – for me, at least – is the art of self-control. I have always found it difficult to just say “no” to my spending temptations. For many years, I’ve found success in putting up barriers. This works, to a large extent. By making it more difficult …

  • “If Only I Had This Thing, I Would Be Happy”

    Something has captured your imagination or your heart. Maybe it’s an expensive physical item, like a tablet computer or a shiny car. Maybe it’s something like a relationship with another person, either real or visualized. You get wrapped up in this thing that you want. You keep visualizing yourself with this thing in your life …

  • Financial Problems and the Three Ps

    Recently, I found myself browsing through a book called Learned Optimism by Martin Seligman. The idea behind the book is that an optimistic approach is the best way to handle the problems that life throws at us. I was particularly struck by Seligman’s comparison of how optimists and pessimists handle problems. In Seligman’s view, pessimists …

  • Five Ways to Keep Good Money Choices in Mind All Day Long

    This article first appeared at U.S. News and World Report Money. Personal finance rests on a bedrock of choices. Each day, we’re faced with thousands of little decisions, many of which have financial implications. Our ability to consistently make good decisions plays a huge role in whether or not we achieve financial success. For example, …

  • The Focusing Illusion

    Let’s say an advertisement or a news article points out some new gadget or new kitchen appliance or new restaurant that you haven’t experienced yet. This advertisement or news article makes this thing that you’ve not experienced sound like it’s positively incredible and that you’re missing out on something potentially life-changing by missing it. Over …

  • Fuzzy-Trace Theory and Your Money?

    Fuzzy-trace theory? Fuzzy-trace theory is just an odd-sounding name for a pretty simple idea. To put it simply, the idea is that people form two different types of memories. One type, called “verbatim,” is just like it sounds – it’s a very detailed and accurate representation of something experienced or learned in the past. For …

  • Thinking Negative

    We’ve all heard many, many things about the power of positive thinking. Some people (myself included) believe that a key part of being successful at anything is visualizing that success. In doing so, you picture the details of that success, which often helps you a great deal in formulating a plan to get there. It …

  • Money and the Shrinking Attention Span

    Since 2000, the average attention span has dropped by 33%. That’s an amazing little statistic. When I see statistics like that, I attempt to immediately translate them into what they mean from a money perspective. I often talk about the “ten second rule,” which is a simple idea for shopping that helps guide you away …

  • Using the Decoy Effect to Your Advantage

    First, let’s talk about what the decoy effect is: The decoy effect is the phenomenon whereby consumers will tend to have a specific change in preference between two options when also presented with a third option that is asymmetrically dominated. An option is asymmetrically dominated when it is inferior in all respects to one option; …

  • Denial and Delusion

    When the topic of personal finance comes up, most of the challenges that are initially seen are external ones. Debt is an external challenge. Investment decisions are an external challenge. Yet, over and over agan, if we look a little deeper, we see that those external challenges tend to rely quite a lot on internal …

  • Blocking What We Can’t Deal With

    For a few days last week, I spent a lot of time reading and playing video games. It was kind of out of the blue for me, so it didn’t take long for me to start asking myself why I was doing these things. What was triggering it was an avoidance of thinking about the …

  • Selective Memory and Your Wallet

    I love my children. I’m proud of them. When I think about their behavior, my thoughts are almost entirely filled with positive things. I think of my oldest child’s studiousness, my daughter’s creative energy, and our youngest child’s humor. What I often don’t recall is when they do things that they shouldn’t. If you ask …

  • Some Thoughts on Passive Personal Finance Barriers

    In my most recent book, The Simple Dollar, I spent some time talking about passive barriers. A passive barrier is a small barrier that you set up that will make a particular bad habit more difficult to continue or, sometimes, make a particular good habit easier to repeat. Putting your cigarettes in a hard-to-reach place …

  • Impulse Control

    As I’ve mentioned on here several times, I have a weekly piano lesson, something I enjoy very much. On my way to my lesson, I drive by a bookstore and a game shop. On my way home from my lesson, I drive by that same bookstore and same game shop. Every week, especially on the …

  • Outcome Visioning and Personal Finance

    It seemed so incredibly simple. But it actually worked. Last week, I visited a local bookstore. As I’ve mentioned many times, bookstores are one of my biggest weak spots. I can easily go into a bookstore and find myself picking up two or three interesting books before I’ve even really thought about it. My usual …