Earlier this year the personal finance community got into a heated debate about charitable giving. The conversation kicked off with a thread of tweets from Tanja of Our Next Life.
Tanja’s thread was filled with research and nuance, but the big takeaway was basically that we fail to recognize when we are wealthy, and this leads to a scarcity mindset that, among other things, causes us to donate much less money than we are actually able.
This all seemed pretty uncontroversial to me. And yet, it led to a lot of pushback. Especially the idea that those of us with money should be donating more of it.
I wanted to understand why, so I asked. Continue reading “The Case Against Charity”
2018 has been a pretty big year.
New baby. New job. And lots of introspection and self improvement.
Around the blog we’ve been focusing on a different subject each month and learning everything that we can in order to try to live a happier, wealthier, more productive life.
Because we’ve covered so much ground, I wanted to take some time to review rather than plowing through to a new topic. Learning new things is great. But it’s tempting to learn them, move on, and forget them.
Because these are all things I want to incorporate into my life on a permanent basis, it is worth doubling back to revisit, both as a reminder and to measure how I’ve done.
Today we’re going to start by reviewing our January topic: life planning. Continue reading “How to Plan Your Life”
You always have a choice.
This is not an empty maxim. Not an inspirational quote.
It is a fact of life. And recognizing this fact will make you happier and allow you to live a better life.
There are times when things happen to us that are outside of our control. But it is always our choice how we respond (or react) to them. Continue reading “You Always Have a Choice”
A lot of advice for succeeding involves being different. Avoiding blending in. Not following the crowd.
Just be yourself! Be weird! People will appreciate it!
And that may all be true. But it doesn’t make it easy.
Even if being different makes sense and is logical, our brains are not built for it.
We have an evolutionary need to fit in.
Continue reading “Find Your Own Tribe”
Have you ever wondered why a project that you have two weeks to complete ends up taking the whole two weeks, when you can finish a similar project with a shorter deadline in 48 hours?
Remember when you had a whole semester to complete a paper for class? We would always plan to get it done early so that we weren’t writing our paper while also taking final exams. And yet, how many of us ended up still writing the night before the paper was due?
Continue reading “Do More in Less Time”
Imagine for a moment that you are in the market for a new suit. You find one that you like for $200. A fellow customer then tells you that the same exact suit is on sale across town for only $100. Do you go?
Imagine that you are buying a new car. You’ve done your test drives and made a final decision on which make and model you want. You go to the dealer near your home to find that the car costs $30,000. A salesman sees you eyeing the car and says, “My manager would kill me for saying this, but the dealer on the other side of town has this model for $29,900.” Do you go? Continue reading “Your Instinctive Thinking Is Losing You Money”
When faced with a tough decision, most people choose to do nothing.
This is the basis of the Status Quo Bias, first proven in a series of experiments in 1988 out of Harvard. The general idea is that people are emotionally attached to the current state of affairs and are skeptical of any change from that baseline.
This means that we tend to need overwhelming proof to make a change, even when that change would be the better option. Continue reading “Why We Have Trouble Making a Change”
In Lake Wobegon, Minnesota, all the women are strong, all the men are good-looking, and all the children are above average.
So says Garrison Keillor, host of A Prairie Home Companion, and creator of the fictional town.
While all of the women in a given location could be strong and all the men could be good looking, the idea of all of the children being above average is an interesting paradox. Continue reading “What to Do When Everyone is Above Average”
I like to spend a lot of time exploring cognitive biases. I firmly believe that if we spend the time to get familiar with the natural flaws in our thinking we can avoid those flaws, make better decisions, and live a richer and happier life.
Previously we have explored confirmation bias and the sunk cost fallacy. Today I want to talk about the cognitive bias with my favorite name. Continue reading “The IKEA Effect”
Let me pose to you a scenario posed to subjects of a 1985 University of Ohio study:
Imagine that you spent $100 to book a ski trip to Michigan that seemed like it would be a lot of fun. You later spent $50 on a ski trip to Wisconsin that seemed like it would be even more fun. After spending your money on both (and finding out that they cannot be refunded or resold) you realize that the trips are for the same weekend. Which one do you go on? Continue reading “Saving Time and Money – Avoiding the Sunk Cost Fallacy”