Welcome to Week 2 of the periodic event "Let's Clean Out the Bookmarks Folder." It's sort of like spring cleaning - you'll never know what you'll find. This week I've tried to cull out articles and tips that I've saved that have something to do with how our subconscious motivations can influence how we earn, spend, and save money. We may like to think that we are logical beings with good reasons for our actions, but all too often, we have internal influences we don't even realize exist.
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Love and Money: One major cause of divorce and breakups is arguments over money. Money is a very taboo subject in our society and so it can be hard to initiate a discussion, even with your loved one. It's vitally necessary however, for the health of your relationship. Here are 6 Money Talks to Have Before You Marry.
Persuasion: If you have ever walked away from a transaction wondering how you got talked into buying something or spending more than you wanted, you may be interested in reading 50 Scientifically Proven Ways to Be Persuasive. Knowing these techniques may help you spot when they are being used to persuade you against your better interests.
Healthy Home Cooking: While it is true that you can save money and eat healthier foods by cooking at home, it is not necessarily true that home cooking is always healthy cooking. It turns out that the personality of the cook has a lot of influence on how healthy the dish will be. For more info, check out the article Who’s Cooking? (For Health, It Matters). You can also take a quiz to find out what kind of chef you are.
Money Perception: If I offered to sell you something for 500 cents, and you declined, do you think you would change your response if the price was $5 instead. Surprisingly, if you are like most people, your response would actually be different. Behavior: $1? No Thanks. 100 Cents? You Bet has further information on the research that uncovered this inconsistent behavior. One key takeaway from this article is that by knowing this, you can use this to trick yourself into not purchasing something you really don't need by thinking of the price in pennies rather than dollars. Is that cup of coffee really worth three hundred cents? Maybe not.
Stranger Test: Another way to curb your impulse spending is to imagine that a stranger is standing there offering to give you the item or its cost in cash. Which would you pick? If you'd rather have the cash than a new PC, then maybe you should skip making that purchase now.
Credit Cards: I have always been a big advocate for using credit cards for daily purchases. As long as you can pay the entire balance off at the end of the month, it seemed so much smarter to me than using cash. You get an interest free loan for a few weeks, you get a record of your purchases automatically and plus you can earn cash back rewards. Where's the downside? Well, it turns out that many people will actually spend less money if they are handing over cash than if they are using a credit card routinely. While this may not be true for everyone, it is a tendency you should be aware of and try to curb. Here's a good post that tries to examine the available research in depth: Do We Spend More When We Swipe Plastic?
Wall Street: If you are interested in seeing how a mathematical formula helped bring about the economic collapse, you should check out Recipe for Disaster: The Formula That Killed Wall Street. It's a cautionary tale about what can happen when you apply a financial model to situations beyond the original intent.