Question: I’m sick of financial advice that rehashes the same old tips (“Forgo your morning trip to Starbucks and eventually all that pocket change will add up!”) – What’s something new (advice or tool or resource) in the world of personal finance that will help me manage my money better? -Danielle
Answer: Hi Danielle, Your question made me laugh–because I, too, get sick of that same old advice. What’s new in the field are new discoveries in the world of “behavioral finance.” Essentially, this is an exploration in universities across the world of the fact that although we know what we should be doing when it comes to our money (spend less, save more), just like we know what we should be doing when it comes to our health (eat less, exercise more), we don’t. The question is what can you do to get around that impasse. And the answer is: mind games. You have to figure out how to trick yourself into doing the right thing. One way to do that is automating the right behavior. The reason 401(k) plans actually work is that they take the money out of your hands before you have the chance to spend it. You have to figure out other ways to do the same in the rest of your life. You can automatically have your bank swipe money from checking to saving to fund your goals, or into a college savings plan, for example. Another game that works is visualization. Think about this as the picture of the girl of the bikini on the fridge that stops us from reaching for the cake inside. It works because it’s a constant reminder: Don’t eat! If you know what you’re saving for, having visual reminders of those things – your retirement house, your next car, your dream vacation – in places where you’re likely to see them when you’re about to spend. So – use one as your screensaver, on your smartphone as well as your laptop. Cut out a picture and wrap it around your credit card or tuck it on your wallet. Or, yes, tape it on the fridge. -Jean Chatzky
You might also enjoy reading Jean Chatzky's response to Patricia's question about opening an IRA.