WEATHER AUTHORITY : Flood Advisory View Alerts
STREAMING NOW: Watch Now

Behavior hacks to avoid your worst money impulses

No offense, but you are bad at this money thing.It's not your fault, entirely. Your...

Posted: Dec 11, 2017 12:45 PM
Updated: Dec 11, 2017 12:45 PM

No offense, but you are bad at this money thing.

It's not your fault, entirely. Your brain isn't wired for it. Just think how hard you work to push back against your own self-defeating impulses.

In addition, you also have to push back against consumer systems that take advantage of your weaknesses and work against you says Dan Ariely, a behavioral economist at Duke University and the author of the new book, written with Jeff Kreisler, "Dollars and Sense: How We Misthink Money and How to Spend Smarter."

There is no question we are in the midst of a savings crisis, he told CNNMoney. But we are a mess with our spending, too.

With a paltry savings rate of 3.1% and American household debt that reached a new peak of $12.96 trillion in the third quarter of 2017, we are up against some massive forces. It takes a lot of self-initiated action on our part to spend and save better, says Ariely. "We can wait for someone to solve it for us, or you can try to do your own financial hacking yourself."

It's not that people don't know what to do financially, he said. "They know what to do. But in the history of mankind we have not found a situation where just telling people what to do is good enough."

Here are the biggest money challenges facing us right now, according to Ariely, and how to get yourself to do the things you already know you should do.

Problem 1: Invisible savings

Our savings are invisible: no one sees it, no one talks about it, no one knows what we're up to and there's no risk of public shaming for not having anything stashed away. While our spending is excessively visible: what we wear, drive, where we live and what we post on social media is on display.

Although some apps are beginning to offer ways for people to share and compare their financial hard work, Ariely is concerned that just looking at what your friends and neighbors are doing may not be the best advice.

"The reason why I worry about that is because most people don't save enough," says Ariely. "If we show people what others are doing, we are not necessarily showing them the right behavior."

Behavior hacks:

Talk about what you're saving, early and often. Yes, we're also terrible at talking about money, but young people are more likely to do it than older people. The more we make visible what we are saving the better we'll be at understanding it and comparing it, according to Ariely.

Try this for a first strike: Do you know how much your significant other, close friend or parent puts in a 401(k) or other retirement account each month? When you next adjust your contributions, talk it through with your inner circle.

Problem 2: Painless payments

These days, there's an entire ecosystem of technology companies devoted to separating you from your money with greater efficiency and convenience. Rather than counting coins or writing the amount on a check, you swipe, click or tap.

"Pain of paying is another area where we are going in the wrong direction," says Ariely. He points out that when you make more automatic payments, you don't experience the necessary pain of paying. "Automation in payment is the second biggest risk right now. Especially for young people who are taking advantage of all of this."

Automation can be good -- automatically moving funds to your savings account is great, for example. But automated payments are only a good design if you want people to spend more now (as companies and retailers do) he says. They are a bad design if you want to spend less (as we should).

Behavior hacks:

In a world where payments are increasingly going digital, pushing back against the tide and tying yourself to the mast of old-school payment methods like debit cards, checks and cash may seem like a heavy lift.

But, as a way to remain intentional with your spending, refraining from automatic payments can keep you in touch with the bigger costs (ie. less in your future savings) of your spending.

Ariely suggests putting your discretionary money (discussed in more detail below) on a pre-paid debit card. Be sure to avoid loading it up on Friday, when it will feel like you're flush heading into the weekend, he says. Loading on Monday is better.

Problem 3: Destructive discretionary spending

"There is spending, which is happiness now, and saving, happiness later," says Ariely. "If we're not making the trade offs the right way, we may get a bit more happiness now, but at the cost of our happiness later."

You're likely aware that spending more means you are saving less. But knowing that is not keeping our discretionary spending in check, says Ariely.

He argues one of the reasons we don't have self-control regarding saving for later is that we are very emotionally disconnected to our future selves. It's as though we are paying a stranger, when we save.

Behavior hacks:

Budgets should be weekly, not monthly, according to Ariely. "This is based on the finding that even people who are paid bi-weekly end up spending too much on the first week and not having enough on the second week."

Ariely says to connect with your Later Self, get an aging app and post a photo of yourself with a clear "Later" look in a place you'll see it regularly -- especially when making financial decisions.

Lastly, he advises we take the time to do a happiness audit: "All our purchases are forward looking, but from time to time it is good to look backward and say, 'Let me see where I'm wrong.' Where are the places that I predicted things would make me happy, but they did not."

Mississippi Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 28770

Reported Deaths: 1092
CountyConfirmedDeaths
Hinds224739
DeSoto144216
Madison124234
Jones109149
Neshoba97070
Lauderdale89479
Rankin86012
Forrest82942
Harrison79410
Scott75715
Copiah58016
Leake56519
Jackson55716
Holmes53641
Wayne52212
Lee51816
Oktibbeha51625
Washington5129
Yazoo4786
Leflore47449
Warren46317
Lowndes45912
Lincoln43734
Lamar4317
Grenada3965
Pike39312
Monroe37529
Lafayette3684
Attala35523
Newton3329
Sunflower3216
Covington3175
Bolivar29813
Panola2956
Adams28018
Simpson2713
Chickasaw26418
Tate2648
Marion26311
Pontotoc2616
Jasper2516
Noxubee2478
Pearl River24532
Clay24410
Winston2446
Claiborne23910
Marshall2123
Smith21111
Clarke20424
Coahoma1906
Union1819
Walthall1794
Kemper17614
Yalobusha1667
Lawrence1621
Carroll16111
Humphreys1309
Itawamba1308
Tippah12711
Webster12610
Calhoun1244
Montgomery1242
Hancock12313
Tallahatchie1153
Jefferson Davis1074
Prentiss1003
Greene968
Jefferson963
Wilkinson929
Tunica903
Amite842
George753
Tishomingo731
Choctaw724
Quitman690
Perry634
Alcorn601
Stone541
Franklin392
Benton270
Sharkey270
Issaquena81
Unassigned00

Alabama Coronavirus Cases

Confirmed Cases: 41362

Reported Deaths: 983
CountyConfirmedDeaths
Jefferson4532143
Montgomery3875102
Mobile3797134
Tuscaloosa210739
Marshall162210
Lee124537
Shelby110923
Madison11047
Morgan10203
Walker87123
Franklin86314
Dallas8419
Elmore83614
Baldwin7359
Etowah64413
DeKalb6415
Butler60727
Chambers60027
Tallapoosa57269
Autauga55312
Unassigned50724
Russell5030
Lowndes45820
Lauderdale4576
Houston4464
Limestone4290
Cullman4114
Pike4075
Colbert3775
Bullock3649
Coffee3592
Barbour3331
Covington3327
St. Clair3192
Marengo29911
Hale29621
Escambia2936
Wilcox2848
Talladega2827
Calhoun2805
Sumter27912
Clarke2686
Dale2620
Jackson2522
Winston2373
Blount2181
Pickens2176
Chilton2152
Marion20613
Monroe2052
Choctaw19212
Randolph1889
Conecuh1866
Greene1788
Macon1778
Bibb1761
Perry1541
Henry1303
Crenshaw1243
Washington1027
Lawrence1000
Cherokee797
Lamar711
Geneva700
Fayette671
Clay612
Coosa571
Cleburne301
Out of AL00
Tupelo
91° wxIcon
Hi: 92° Lo: 73°
Feels Like: 99°
Columbus
Few Clouds
94° wxIcon
Hi: 93° Lo: 72°
Feels Like: 108°
Oxford
Broken Clouds
86° wxIcon
Hi: 91° Lo: 71°
Feels Like: 95°
Starkville
Clear
90° wxIcon
Hi: 88° Lo: 70°
Feels Like: 96°
WTVA Radar
WTVA Temperatures
WTVA Severe Weather