Psychology

Training Your Mind: Ten Personal Finance Mental Exercises You Can Do Anytime

One major part of being financially responsible is to have the proper mindset, and to build the proper mindset can often be quite challenging. Just like anything else, being financially fit requires work, and most of that work goes on between your ears. Here are ten mental exercises you can do any time to strengthen …

Categories: Planning, Psychology

There Is No “Secret”: Why “Feel Good” Thinking Isn’t Enough To Get Ahead Financially

Over and over again, I keep bumping into pop culture references to The Secret, a new age book/film that’s making the rounds at the moment. The central premise of The Secret is that you only have to visualize what you want in order to get it. For example, if you visualize yourself with money and …

Dave Ramsey vs. Suze Orman: Which Plan For Dealing With Debts Is Best?

Recently, AllFinancialMatters posed the following question: which method of getting out of debt works better, Suze Orman‘s or Dave Ramsey‘s? Here are the compared plans: Here’s Dave Ramsey’s Snowball Method for paying off credit cards: Step 1 – Make a list of all your credit cards, ranked in order from the highest balance to the …

The Value of Etiquette

Recently, I wrote an article about little things that immigrants to America might be surprised to know about money, consumerism, and human relations in the United States. It kicked up some interesting controversy in the comments, in which some immigrants basically stated that I shouldn’t be offering advice to them because I don’t understand their …

Categories: Advice, Careers, Psychology

Deconstructing A Television Advertisement: The Lesson Of Robert Goulet

Given the slickness of modern advertising, many people often view ads strictly as entertainment, when in fact they are intelligently packaged items designed to use various methods into tricking you into buying your product. I find myself often guilty of this, as I was during the Super Bowl this past weekend when I fell in …

Buying Things Lets Me Forget Who I Am For A While

As I was driving around last night, I was listening to a story on National Public Radio in which an immigrant female who was ashamed of her past was recounting some details of her experience. Right in the middle of her monologue, she uttered that line: “Buying things lets me forget who I am for …

How Common Cognitive Biases Affect Personal Finance

A couple months ago, I wrote an interesting essay about how the “peak-end rule” affects personal finance decisions. For those unaware, the peak-end rule is a psychological phenomenon that indicates which parts of a past experience we recall and use to define that experience. I found the whole thing fascinating and immediately began to look …

Categories: Psychology

Setting Daily Metrics For Personal Finance Success (And Success In Other Areas, Too!)

We’ve all heard the maxim of “taking it one day at a time.” I’ve even discussed making a one day commitment to personal finance change. But for most of us (I can certainly say it’s true for me and my friends and coworkers), the biggest problem to achieving bigger goals, like paying off credit card …

Categories: Planning, Psychology

Why Income Inequality Matters: Motivation

Over the Christmas break, I had a long conversation with my wife’s family about the income gap between the working class and the rich in the United States. Compared to them, I grew up extremely poor, and I rather surprised them by saying that I think such a gap is a good thing. Please note …

Categories: Psychology

Reader Question: Calculating The Percent Change In Your Net Worth

Recently, an individual contacted me asking how to calculate his net worth: I am trying to calculate my net worth, and was wondering if you would share the formula for finding the % change between two values. Calculating the change in your net worth over time is quite easy. Say you have an old net …

How To Feel Happier About Not Spending Money

There is a connection between our emotions and our money, a link that is preyed upon countless times each day by advertisers promising to trade us happiness for our hard-earned cash. Most of us have money, and all of us seek happiness; pushing the link between the two is a sure-fire way for a marketer …

Money and Depression

I have a confession to make. The last few months have been the happiest for me in several years. I am convinced that the biggest reason for the turnaround is that I finally have some grasp on my money which I never really had before. For years, I wondered seriously whether or not I was …

Spending and Guilt

Today, my wife and I made a total tabulation of what we spent on Christmas gifts this year, including our charitable donations, and the final number made us both raise our eyebrows. Immediately upon seeing the final total, I felt a deep pang of guilt inside me. Did I really need to spend four figures …

Categories: Psychology

Lying About Money – And Telling The Truth

In some ways, most of us lie about money. We create an appearance to others of having more than we do in order to build up a level of respect. We drive more expensive cars than we can afford, buy more expensive clothes than we can afford, and more expensive accessories than we can afford …

Defining My Financial New Year’s Resolutions – And Their Action Plans

A few days ago, I discussed why so many New Year’s resolutions fail: it comes down to excess resolutions and a lack of a realistic plan filled with milestones. With that in mind, I have defined three resolutions for the coming year, along with plans for being successful in following these resolution. I resolve to …

Categories: Planning, Psychology

Feeling Good and Overcoming The Desire To Spend

When I look back over the biggest spending splurges in my lifetime (excepting those that were carefully planned), all of them have one major factor in common: they were bought during times where I was sad and had a low self-image, even if I wasn’t consciously feeling it at the time. In almost every case, …

Categories: Psychology

Time, Money, and Values

I used to feel really guilty about the ways in which I spent my money. My solution to this guilt was to spend even more money, buying things which would provide a short term balm for my heart, but would in the end leave me feeling even more guilty than before. I felt like everything …

Lauren’s Problem: Overdrafts Mixed With Solid Planning

Yesterday, I received an email from a reader named Lauren. Here’s what she had to say: My husband and I have excellent credit scores (his 820, mine 814) but he does something that I am uncomfortable with. We are both very good savers, (age 56 and 55) he has his own business, I work and …

Figuring Out What Money Really Is

My wife and I used to sit around and wonder what we would do if ten million dollars fell on our lap. I used to imagine buying fancy cars and an amazing house and more electronic gadgets than I can even imagine. They were great dreams, the fantasies of a twentysomething yuppie couple wanting to …

Categories: Psychology, Retirement