The Money Saving Habits I Gave Up Because They Waste My Time

This article by Kristin Wong from is great.  It seems a little counterintuitive, but I think sometimes we all are 'penny wise pound foolish.' - Talia

It’s probably safe to assume no one’s ever gotten rich clipping coupons. That doesn’t mean saving money is a waste of time, though. Some money-saving habits are worthwhile and save you a heap of cash in the long run. Others just aren’t worth it. Here are some specific habits I’ve ditched because they aren’t worth my time and energy (or yours).

Clipping Physical Grocery Coupons

Coupon clipping is an often-ridiculed habit, partly because people assume it takes a lot of time to coupon. For me, it didn’t.

I had a whole system I followed that took me all of fifteen minutes every week, and I usually saved anywhere from $10-15 per week. After a while, though, I realized that just because a task isn’t time consuming doesn’t mean it’s worth your time.

Let’s look at the math. At a $15 savings for 15 minutes, I’m basically earning $1 a minute, which is pretty good: that’s $60 an hour. The math adds up, but it lacks common sense. I don’t actually earn $60 an hour the way I would at a normal job. Sixty minutes of couponing will probably not save me much more money, unless I’m buying a bunch of crap I don’t need. Also, I’m not a robot. I actually value my free time much more than that, and the busier I get, the more I value an extra 15 minutes a week.

There are easier ways to save $10-$15 a week. If that was a make-or-break amount to me, I could always move to a cheaper apartment and save a lot more money. And then there was the clutter. I hate clutter, and thanks to coupons, I had stacks of newspaper circulars piling up in my desk drawers. It was a waste of space and paper.

Another problem with couponing is that, according to research like this 2003 study from NYU (PDF), it leads you to buy stuff you wouldn’t normally buy. Overall, it’s just another advertisement designed to get you to consume. Don’t get me wrong, if the right coupon falls into my hands, I’ll use it. For example, my local grocery store recently sent me free coupons for stuff I actually buy, so why not use those? However, that requires no time or effort on my part.

What I Do Instead: Plan Meals Better

Instead of fretting over coupons, I worked on a bigger problem: my grocery shopping and restaurant spending. I have a bad habit of overspending on restaurants every month, and my overspending adds up to way more than the $60 I was saving with coupons. I would overspend on groceries, too, and buy a bunch of food I didn’t eat because I didn’t know how to shop efficiently.

My lack of meal planning was a bigger problem than anything because I was spending a bunch of money on unhealthy food I didn’t even enjoy.

There are a handful of awesome meal planning apps out there, and I’ve tried quite a few, but MealBoard is my favorite. It costs $3.99, but it’s worth it for the functionality and simplicity. You can add or upload any recipe, drag and drop that recipe on specific days of the week, and the app will automatically generate an organized shopping list so you can quickly get everything you need. You can also save weekly templates. Some apps will do similar stuff for free, but they’re usually limiting and hard to organize, at least in my experience.

Overall, I saved more by ditching the coupons and focusing on my real spending problem.

Searching for the Best Price on Everything

Of course, if I buy a $900 laptop I’ll presumably use for years, I’m going to look for a good price. Deal hunting serves a purpose, but I’ve spent way more time than I care to admit searching for, say, the best price on toilet paper via Amazon Subscribe and Save.

I’ve learned to be pretty savvy at finding the best deal on stuff and sometimes it pays off. I’m still proud of the KitchenAid mixer I scored for $160, for example. However, I cringe to think about the time and energy I’ve wasted researching deals on every tiny purchase, only to save a couple of bucks here and there. The small stuff adds up, but that logic applies to your time and energy, too.

What I Do Instead: Set Guidelines

Instead of searching for the best price on just anything, I set a dollar limit. If I’m buying something that’s over $30-$40, I’ll take the time to search for a better price. However, if I just need something quick on Amazon—toilet paper is a good example—I’m not going to spend more than a couple of minutes of my time looking for the best deal. If I spend two dollars more on toilet paper, so be it. There are bigger regrets in life.

Your own guidelines should vary from mine, and mine aren’t set in stone. I just have a general idea of when deal hunting is worth my time and when it’s not. Tech can help with this, too. Tools like HoneyInvisible Hand, andCamelCamelCamel make it easier to track prices and make sure you’re saving the most money.

On a more behavioral note, part of learning to let go of this time-wasting habit was learning to let go of my scarcity mindset. In the past, when I realized I spent even a few bucks more than I needed to spend on something, it would eat me up inside. Frankly, I was cheap! And that’s primarily because I was stuck in a mindset of scarcity: a fear of being poor that caused me to react defensively, rather than act progressively, toward my finances.

Using Saving Apps That Require Way Too Much Work

There are a lot of fun apps out there to help you save money. I was addicted to them, not really because they saved me a ton of cash, but because they were fun. It was like playing a game in which I saved a few cents here and there.

After a while, though, I realized how much time I wasted on these apps, most of which required some extra effort on my part: I had to take photos of my receipts and upload them, check into a store every time I entered, or answer some survey questions. It was all too much work.

Plus, those shopping portals and apps are just that: shopping apps. They might help you save a few bucks here and there, but ultimately, they motivate you to buy stuff the same way a good sale does. We actually feel more relaxed and happy when we get a good deal on something, and this might encourage us toactually spend more. For example, one study from Columbia Business Schoolconcluded:

The study helps explain why luxury products and services, such as high–end boutiques and luxury hotels, are often sold or provided in relaxing environments. Everything else being equal, consumers will be willing to pay higher prices if marketers are able to relax them first, which has important implications for marketers.

In short, when I used these apps, I might have saved a little cash, but they put me in consumer mode and quite literally rewarded me for spending. That might seem harmless, but over time, keeping up with all of those apps and tools encouraged me to consume mindlessly.

What I Do Instead: Mindful Spending

Instead of trying to figure out which apps were worth it and which weren’t, I gave up on the ones that weren’t working for me, deleted them, and kept the ones that required zero effort on my part.

Not all apps or shopping portals require a ton of work. I’m fine with the ones I use because I never have to look at them. Some of them might be worth it, but more than anything, it came down to conscious spending: making deliberate choices about my purchases rather than spending impulsively.

Rather than try to get cash back or rewards for my purchases after the fact, I’ve found that I save more by actually questioning my spending to begin with. You can do this by literally asking yourself a few questions before a purchase, like:

  • Is this a planned purchase?
  • Will it end up in the “crap” pile one day?
  • Where am I going to put it?
  • Have I included this in my budget?
  • Why do I want/need it?

There’s nothing wrong with spending your money, but it comes down to priorities. Make a list of a few things you actually enjoy spending money on, then, as Tiffany “The Budgetnista” Aliche puts it, “put your needs and loves before your likes and wants.”

Sure, you could argue that you might as well get rewards or rebates from spending on your needs and loves. If it’s worth your time and doesn’t encourage bad financial habits, go for it. In my experience, I saved more in the big picture by limiting my time with those tools and my exposure to other marketing that encouraged me to consume. Don’t get me wrong, I still spend. For the most part, I try not to spend as an activity, however, and only do it as a means to an end: buying something I love and that I’ve budgeted for.

Looking Exhaustively for Travel Deals

Travel can be expensive, so I understand the need to look for the best deal on everything travel-related, but sometimes, it can backfire.

For example, when I talked about my experience using a last-minute hotel hunting app, the hotels hated it. Sometimes that resulted in less-than-stellar service. One hotel clerk even told me to just call next time and they’ll honor the price if I book directly with them. It’s easy to overthink the effort that has to go into finding the best travel deal. Sometimes it’s as simple as picking up the phone and booking.

Flights are expensive, so you want to do whatever you can to save. For me, this typically means shoving everything in a single carry-on to avoid bag fees, and agreeing to an unreasonable amount of stops to save $50 or so on your flight. The savings can be worth it, but they can also be really inconvenient.

When calculating the value of your time to see if a savings habit is worth it, you also have to consider the cost of the headache. The headache of stopping in two cities and rushing to your next flight might not be worth the $50 savings to you. You want to fit your time and comfort into the equation, too. Especially if you’re on vacation, you want to enjoy your time traveling.

What I Do Instead: Focus on the “Big Wins”

Rather than meticulously monitor flight prices, stick to a strict budget during my trip, and exercise every other inconvenient frugal travel hack, I’ve found a much easier option: fly when it’s cheap. Over at Business Insider, writer Libby Kane said this was her “favorite trick to save money on travel” because it’s “a single decision that saves hundreds of dollars.” She’s right!

Rather than make your travel more stressful or time-consuming than it needs to be, you can simply travel in the shoulder season, when the weather is still good, but the tourists are gone and the prices are reasonable. It automatically saves you hundreds on flights, hotels, and more.

Of course, this isn’t always possible, and it’s a little obvious to just say, “fly when it’s cheaper.” Most of us don’t choose when we can fly, we fly when wehave to, and obviously, it helps to search for the best prices and do your homework. Instead of trying to scrimp on every little travel expense, though—like luggage costs and dining out—I focus on what money writer Ramit Sethi calls the “Big Wins.” These are the costs that are so expensive, the savings are actually worthwhile: flights and lodging. I’ll take the time to search for a decent deal on airfare and hotels, and beyond that, I just try to enjoy my trip.

Frugality is great way to help reach your financial goals, but it isn’t just about saving money. It’s about utilizing your resources efficiently, and that includes your time and mental bandwidth. Everyone values their time differently, of course (and this calculator can help you figure it out), and some money-saving habits are worthwhile. Others, however, cost you more in the long run, or they cost more time and headache than they’re worth. For me, these habits have proven to be more trouble than they’re worth, and thankfully, there are better options.


Contributing writer,

Paying With Cash Hurts. That’s Also Why It Feels So Good.

This article by Phyllis Korkki was published in the New York Times on July 16th and tells us all something we instinctively know, but don't really use to our advantage.  Read on - and try to pay for things in cash whenever feasible - you'll save yourself a lot of money! - Talia

Paying with cash is painful — and that’s a good thing, according to new research.

When people pay for items using cold, hard cash rather than by card or online, they feel more of a sting and therefore assign more value to the purchase, according to Avni M. Shah, an assistant marketing professor at the University of Toronto Scarborough. Her findings were born of personal experience: One day she forgot her debit card, so she paid for a latte with physical dollars — and felt her drink tasted better that day. Could her method of payment have been the reason?

She tested her theory two years ago, when she was a doctoral student at Duke University. She decided to sell discounted mugs with the Duke University logo on them to school staff and faculty in their offices. She asked one group to pay $2 for the mugs with cash. The other group had to pay with a card.

Then Professor Shah returned to each purchaser two hours later and said she needed to buy the mug back. To soften the blow, she asked the buyers to name their price. The people who had paid for the mug with a card asked for an average of $3.83 back, while those who had paid with cash asked, on average, for $6.71.

“Some of the cash folks literally blocked their hand over the mug and said, ‘You can’t take this back,’” Professor Shah said.

Professor Shah, who also teaches at the Rotman School of Management, published her study in The Journal of Consumer Research. Her co-authors are Noah Eisenkraft, James R. Bettman and Tanya L. Chartrand.

In another study, Professor Shah gave $5 to her research participants to donate to one of three causes. One group received the amount in cash, and the other in the form of a voucher. Then she gave the participants a ribbon that they could wear on their lapels to show that they had made a donation.

Later, about half the people who had made the donation with cash reported wearing the ribbon, whereas only 14 percent of the voucher group had done so. It suggested that the cash group — and it hadn’t even been their cash — felt more of an emotional connection to the cause.

Of all the payment methods, “Cash feels the most painful,” Professor Shah said. “Even a check feels quite painful.” Therefore the purchase is more meaningful. In a separate study involving charitable donations, she found that people who donated by check were more likely to make a repeat donation the next year compared with those who had donated by card.

Card and digital payments seem less real than cash, she said. It’s true that the unreality of these methods can cause people to make more purchases in the first place (to the detriment of their finances). But those same people tend to be less loyal to particular brands, Professor Shah said. “It’s an ‘out with the old, in with the new’ mentality.”

“I’m not saying we should revert back to cash,” she added. But there are ways to make the fact that people are parting with their money more vivid, she said — for example by introducing a buzzing noise into the process or sending an email reminder of the transaction.

If companies and organizations want to encourage repeat business, they may want to return a little more pain to the payment process, she said.

A version of this article appears in print on July 17, 2016, on page BU6 of the New York edition with the headline: The Sting and Salve of Paying With Cash. Order Reprints| Today's Paper|Subscribe

The Psychology Restaurants Use to Manipulate You: written by Tam Pham and originally Published in

The below is a fabulous article about how we all are being manipulated into spending more money when we eat out.  The more you know the harder it is for these tricks to work! - Talia


I sat down at a fancy Italian restaurant on a hot dinner date when the waiter asked,

“Would you like to hear our specials?”

Of course!

The waiter confidently recited the specials, using words that I had no idea existed, and gave us a few minutes to decide what to order.

What the hell did he just say?

I continued to stare at the menu but still had no clue what each entree consisted of.

Why couldn’t they just say ‘Three meatballs with sauce on a tiny plate’? And why did that plate cost me $25?

I didn’t want to look cheap so I ate the food without complaints.

After dinner, the waiter recommended the most expensive dessert on the menu. My date said that sounded good and, of course, I ordered it for the both of us.

Thanks a lot, Mr. Waiter.

My check came out to be over $100 and I wished I would have just gone to a taqueria instead.

Every day restaurants use basic psychology to manipulate customers (like myself) to spend and eat more than we need to. I never realized exactly how they did it until I found Neil Eisenberg’s answer on Quora.

I’ll let him take it away.

1. Words like “slow-cooked” and “handcrafted” are overused

Source: Branding & Buzzing

Restaurants use particularly imaginative language to make menu items more appealing. Descriptive labels will generally increase sales by as much as 27% compared to foods without, according to a Cornell University study.

Some recognizable descriptions are “handcrafted, triple-basted, slow-cooked, golden-brown, hand-selected, fresh from the oven”, all of which bring the diner closer to the sensory experience the restaurant wants to impart.

2. There’s a reason why taquerias have so many photos in their menu

Source: Chilangos NJ

Restaurants use photographs to entice diners to purchase specific menu items. An attractive picture alongside any food tends to increase sales of that item by as much as 30%.

3. The most successful restaurants limit your choices

Source: Fine Dining Lovers

Restaurants will limit your choices by featuring tapas or fixed menus. In essence, they remove the responsibility people feel when choosing what to eat.

It is psychologically more effective for restaurants to limit their selection to six menu items per category in fast-food restaurants, and seven to ten menu items per category in fine dining establishments.

4. Every successful restaurant uses the same menu layout

Source: Soft cafe

Restaurants design their menus with the same attention to detail as they prepare your food.

The upper right corner is prime real estate. It is where your eyes will go on a blank sheet of paper or in a magazine. That is exactly where the most lucrative items will be placed. From the top right your eyes will normally shift to the top left, which is where the appetizers will be. Just under the appetizers, you will find salads.

Another trick is to create blank space around high-profit items by placing them in boxes or separating them from the rest of the options. Placing “negative” space around any food calls attention to it and promotes sales.

5. Expensive dishes belong at the top of the menu


Restaurants scrutinize your reading patterns and consider scan-paths, which are a series of eye fixations that can be studied to see how people read certain things.

According to research conducted at Cornell University, a third of all diners are likely to order the first item their eye is drawn to. As a result, restaurants will put their more profitable items in the upper-right corner. This strategy is based on the primacy effect, which is that people remember the items at the beginning of a list best.

Another reason this works is that seeing a really expensive dish at first glance will make the rest of the menu seem reasonably priced by comparison.

Restaurants place their main focus on the entrees. According to research, most diners scan the entire menu like a book but focus most of their attention on the entrees.

6. There’s a reason why they sometimes have needlessly expensive items.

Source: Brooklyn Fare

Restaurants use expensive items to draw you to the cheaper items. The high-priced foods act as decoys. The rationale being, you probably won’t buy it, but you’ll find something cheaper since it will look more reasonable.

7. A fancy font makes your food feel more special

Source: VeryFirstTo

Restaurants will visually highlight foods in bold, colored, or fancier typeface, accompanied with photographs or singled out in a box, as they will appear more special. However, extremely high-end restaurants tend to avoid this strategy because it will make them look “tasteless”, no pun intended.

8. Restaurants know a single number gives a friendlier feel to your wallet


Restaurants are very tricky with their numbers. Menu designers (yes, there are people who actually make a living as menu designers) know that prices ending in 9, such as $9.99, tend to signify value, but not quality. As a result, more prices now end in .95 instead of .99 because they have a “friendlier” feel.

More and more restaurants are pricing menu items without any cents whatsoever because it makes the menu cleaner, simpler, and easier to read.

9. Restaurants try their best to make you not think about money

Source: Studiocasper

Restaurants don’t use dollar signs. A dollar sign is one of the top things restaurants now avoid because it immediately reminds diners that they are spending money.

According to Cornell University, guests who are issued a menu without dollar signs spend significantly more than those who receive a menu with dollar signs.

10. Eating Auntie Anne’s Pretzels makes people feel like they’re eating food from their family

Source: Auntie Anne’s

Restaurants connect food to family members. Diners are especially drawn to relational names, such as grandma, aunt and grandparents. As an example, people are more likely to buy Grandma’s Warm Homemade Cookies or Aunt Clara’s Famous Apple Pie. Names can also add a hint of nostalgia for diners.

11. The colors of the restaurant enhance the food people eat

Source: Tumblr

Yellow is an irritating color that makes people want to leave. Yellow is commonly used in fast food restaurants. Red is a stimulant and draws attention. Red stimulates the appetite and subliminally makes people eat more. McDonald’s, Burger King, In-N-Out Burger, and El Pollo Loco use yellow and red in their branding logos. Why? Because they want you to A) order a ton of food, and B) leave immediately to make room for more guests.

Green is a relaxing color. People associate green with nature and feel more comfortable. Painting an eatery green is a good idea for formal and expensive sit-down restaurants, as well as café’s like Starbucks, which encourage patrons to stay and purchase more.

12. Try your best to ignore everything nearby

Source: Charles Rex Arbogast/AP

The closer you are to something, the more likely you are to buy it. Areas close to fast food registers are filled with impulse items. Starbucks is the king of impulse items that cost you $1.00 or less.

13. “Would you like your fries supersized?”

Supersized fries in Japan Source: nlab itmedia

More choices create an impetus to spend more. Fast food restaurants used to offer one standard meal size a few years ago. Today these chains offer an array of sizes so people who tend to buy a “large” shifted to pricier “super” sizes. Paying $1.00 and more for a larger soda and fries seems like a no-brainer to most people.

14. Restaurants strategically offer their specials verbally

Source: Shutterstock

Daily restaurant specials are almost always offered verbally. Fine dining establishments know that people don’t want to appear cheap by asking for prices. They also know that statistically, men on a date are more likely to accept a server’s offer for expensive wine, dessert, or après dinner drinks.

15. The future of dining out is only getting more advanced.

People with attitude Source: Asia Town

What’s on the horizon? In the future, drive-through menu boards will be able to read your mind. Or at least predict your particular tastes. Digital menu boards will soon feature items based on the particular customer.

The tailored menu will be possible with the help of your mobile app, which can help companies keep track of what you order. Starbucks says email offers to their customers (with its app) are tailored based on past purchases, and Sonic’s new digital menu board is scheduled for sometime in 2015.

Read this post before you go out to eat and see how many psychological ploys you can spot. Thank you, Neil Eisenberg!

A note from The Hustle: We send a daily newsletter that summarizes important news topics relating to business, tech, and culture. Think of it as your Internet friend who reads the news all day and tells you what's up. Sign up here.

Swimming In The Real-World Financial Pool

This article is a page out of my own playbook, written by Shahir Ziv, a very talented and passionate advocate for Financial Literacy. It was originally published in the Huffington Post.

Summer always brings a certain excitement as a new crop of freshly minted college graduates descends upon Manhattan and other cities, ready to take on the world. But while these young adults come armed with diplomas, a new wardrobe, and endless ambition, most lack a solid grasp of what it means to be financially literate. Today’s graduates are diving into the real-world financial pool without even the basic strokes of personal finance. As the recent financial crisis has illuminated, not only is the water quite deep, but there are also plenty of sharks and, unfortunately, not as many lifeguards as we would have hoped.

A fundamental shift in risk, most notably in the transition from guaranteed pensions to individual retirement accounts such as 401(k)s, means that the economy that today’s graduates enter is structurally different from the one of previous generations. Simultaneously, most Americans, young and old, display a strikingly low level of financial literacy. A 2010 Financial Literacy Survey of adults, conducted on behalf of the National Foundation for Credit Counseling, Inc., revealed that 34 percent of U.S. adults (over 76 million people) gave themselves a grade of C, D, or F on their knowledge of personal finance. On questions dealing with compound interest, inflation, and risk diversification, studies by Professors Annamaria Lusardi and Olivia Mitchell show significantly low rates of understanding among the general population and specifically among certain demographics including women, African Americans, and Hispanics.

The lack of financial sophistication in the United States has severe consequences. Academic research has found that individuals who are not financially literate are less likely to plan for and accumulate retirement wealth, participate in the stock market, and refinance mortgages during periods of falling rates. Furthermore, individuals who are not financially literate are more likely to take on high-cost debt (e.g., mortgages) and select mutual funds with higher fees. As Lusardi notes, “Financial literacy impacts financial decision-making. Failure to plan for retirement, lack of participation in the stock market, and poor borrowing behavior can all be linked to ignorance of basic financial concepts.”

The outlook for college students is similarly scary. Today’s educational experience increasingly places a heavy burden of debt on students. Two-thirds of those who received a bachelor’s degree in 2008 graduated with debt, compared to less than one-half in 1993. Poor decisions made with respect to credit cards while in college serve to amplify students’ already significant debt levels. A 2009 study by Sallie Mae, the financial services company specializing in education, found that the average undergraduate carries over $3,000 in credit card debt and “more than three-quarters [of students] incurred finance charges by carrying a monthly balance”. Given the increased debt burden, it may not be surprising that a 2011 Scottrade survey found that 55 percent of “Gen Y’ers” have not started saving for retirement; however, this statistic should be disturbing given the shift in retirement risk and the importance financial experts place on saving early to take advantage of the time value of money.

What many students don’t realize is that the financial mistakes they make in college and soon after, such as not paying their bills on time, can have significant consequences, including negative effects on their employment prospects. Credit checks are still used by many employers as an input to the hiring process despite a lack of evidence linking poor credit with a propensity to perform poorly in the workplace (several states have actually passed laws limiting the use of credit checks in employment evaluations). As Robert Manning, the author of Credit Card Nation, sums up, “While freshman and their parents are likely thinking more about tests and academics during orientation, the fact is that after graduation a student’s credit rating is arguably far more important to his or her future than grade point averages.”

College is about getting an education, but this doesn’t just mean academics. Just as schools work diligently to help students transition from high school to college life, they should consider how to help facilitate the transition from college to the working world. It behooves schools to look beyond math, science, and history to ensure that students leave with basic, yet essential personal finance skills. Some schools have incorporated a for-credit personal financial management course into their curriculum; Mary Morrison’s class at Stanford is perpetually over-subscribed, proof that there is salient demand on campus. Other institutions, like Smith College and its Women & Financial Independence Center, have created permanent programs and integrated financial education into student life with resounding success.

Unfortunately, these schools are more the exception rather than the norm.

Earlier this year, I worked with the Harvard University Employees Credit Union to launch a program providing undergraduates with practical life skills surrounding personal money management. Eighty-five Harvard undergraduates voluntarily gave up a week of their winter vacation to return to campus early for the four-day seminar. Incorporating findings from academic research and feedback from other workshops we conducted, the course focused on moving beyond a pure lecture-based format to incorporate guest speakers, collaborative cases, and peer instruction to engage students and enhance the learning experience. While four days won’t turn a college student into Warren Buffet, the goal was to educate students on foundational elements — consumer credit, budgeting, taxes, insurance, and investing — as well as help them build a toolkit for practical-decision making in the future.

Feedback from students was overwhelmingly positive with over 90 percent saying they would be extremely likely to recommend the program to a friend. As one student remarked, it was “an essential program. Nobody talks about this crucial information, which is absolutely shocking if students hope to be responsible adults by graduation.” Another said it was “one of the most helpful parts of my college experience.” The Harvard program also highlights the substantial collaboration opportunities and resources available to a university, both within its own system and through its local community. More schools should take advantage of these opportunities and prepare their students to navigate the financial waters that await them.

Follow Shahar Ziv on Twitter:

Credit Cards Encourage Extra Spending as the Cash Habit Fades Away

This is a great article by Nelson D. Schwartz published in the New York Times on March 25th.  It's about how credit cards make it harder for people to really realize they are spending.


Nina Falcone has given up on cash.

Whenever and wherever possible, even at the vending machines in her building in Chicago, the 25-year-old marketer uses her Southwest Airlines Rapid Rewards card to collect points she says she uses for plane tickets to visit her family in California.

Ms. Falcone carefully follows the advice from consumer advocates and does not carry a balance from month to month or pay humongous interest charges.

But she admits there are probably some downsides to the ease of purchasing. Time magazines piled up around her apartment and gathered dust after she bought a subscription simply because it came with an offer for extra points. And she has increased the amount of time she spends shopping on the Internet because merchants offer incentives online for cardholders that are not available in stores.

“I haven’t paid for a trip on Southwest in years,” says Ms. Falcone, which may be technically true, but a host of economic and social science research suggests that consumers tend to spend more using plastic than they ever would with actual cash.

Incentives like frequent-flier miles or rewards points only amplify a temptation that banks and financial services companies have been profiting from for decades.

“When you vary the payment method, people are willing to pay more,” said Duncan Simester, a professor of marketing at M.I.T. who published a landmark paper on the subject in 2001. “You’re not forking over a dollar bill, so there is less sensation of loss.”

With M.B.A. students as the subjects, Mr. Simester and a colleague, Drazen Prelec, held an auction of tickets to basketball and baseball games featuring two local teams, the Boston Celtics and the Boston Red Sox.

Some participants were told they would have to pay by credit card, others were informed that only cash would be accepted.

When credit cards were an option, the M.B.A. students offered to pay roughly twice as much as they were willing to hand over in cash for the same tickets.

“The most surprising thing was the size of the effect,” said Mr. Simester, who titled the resulting paper ‘Always Leave Home Without It: A Further Investigation of the Credit-Card Effect on Willingness to Pay.’ ”

He added that while it was not unusual to see spending patterns shift by 5 or 10 percent in experiments, “you don’t see too many examples where people offer double what they would have otherwise.”

But the ease of buying with plastic, or what marketers call “friction-free spending,” is only half the story. Social scientists have also found that consumers have been conditioned by even the sight of credit card logos to want to spend more.

Unlike Mr. Simester, who created an experiment from scratch, Richard Feinberg of Purdue University persuaded restaurants near campus in West Lafayette, Ind., to let him study actual patrons’ spending habits.

Mr. Feinberg placed credit card logos and symbols on some tables and left others without them, as normal. The sight of images associated with credit cards prompted diners to spend more and leave bigger tips.

A similar exercise in a faculty member’s office produced larger donations to the United Way, Mr. Feinberg added, while credit card images bolstered sales at a Fannie May candy store.

“People spend more when these stimuli are present,” he said. “Just as Pavlov found that dogs would salivate when they heard tones that were associated with food, people have been conditioned to associate credit cards with spending.”

Although tools like Apple Pay and other mobile payment methods are too new to have generated much academic research, or allowed the kind of conditioning that half a century of credit card use has produced, Mr. Feinberg suggests a similar dynamic could be at work.

“The less friction there is, the easier it becomes to spend,” he said. “Just stand at Starbucks and watch how many people there use their smartphones to buy a latte.”

Speaking of lattes, credit cards also encourage people to pay more for everyday items than they might otherwise, according to Scott Bilker, founder of and the author of “Talk Your Way Out of Credit Card Debt.”

“Paying $5 for a coffee might seem like a lot if you only have $10 in your wallet,” he said. “But if your credit card has a $10,000 limit on it, it doesn’t seem like much.”

The key, said Greg McBride, chief financial analyst at, a personal finance website, is to try to exercise the same discipline with plastic that you would with cash, despite the urge to splurge.

If you can’t help yourself, or occasionally do have to carry a balance, avoid incentive cards at all costs. “They only work for consumers who pay their balances in full,” he said, as Ms. Falcone does scrupulously each month.

For the 60 percent of consumers who can’t pay off what they owe each month, a much smarter bet would be to seek out the card with the lowest possible interest rate.

Of course, even the best card rates are still high — the typical consumer today has $2,200 in credit card debt, with an average annual interest rate of nearly 16 percent, according to

Does that mean consumers should cut their cards up, stick to cash the way our great-grandparents had to and embrace the supposedly traditional value of thrift?

It’s not that simple today, nor was there really ever a golden age when Americans bought only what they could truly afford, said Lendol Calder, a professor of history at Augustana College in Rock Island, Ill.

“The river of red ink has run through American history from the beginning,” said Mr. Calder. “The Pilgrims took out loans from London investors and many of them died without ever having paid off their debts. As far back as you go, people were in over their heads.”

That said, Mr. Calder says he believes credit cards do offer advantages, despite the inevitable temptation to spend more.

“Credit cards are useful because people want to be thrifty with time,” Mr. Calder explained. “In the 20th century, time became scarce and credit cards and credit in general helps with that. It’s one thing to save and save and buy an engagement ring for someone you love, but not if you wait and she runs off with someone else.”

Nelson D. Schwartz is a reporter for The New York Times who covers the economy.

Mental depletion complicates financial decisions for the poor - article by Dan Ariely originally posted in Making $ense -

We wanted to repost this because this interview addresses a subject that is critical to understand in order to improve one's financial position - Decision Fatigue.

BY Dan Ariely  January 19, 2016 at 12:11 PM EST

Delores Leonard helps her daughter Erin with her homework at the breakfast table before heading to work at a McDonald’s Restaurant in Chicago. Leonard, a single mother raising two daughters, has been working at McDonald’s for seven years and has never made more than minimum wage. Below, behavioral economist Dan Ariely explains why making good financial decisions is even more difficult when you’re poor. Photo by Jim Young/Reuters

Editor’s Note: Last month, behavioral economist Dan Ariely and his team at the Center for Advanced Hindsight opened up the Common Cents Lab. Its goal is twofold: to examine how those living in poverty misspend their money and to help the poor make better financial decisions. I spoke with Ariely about the center, our not-so-rational spending and why making good financial decisions becomes even more difficult when you’re poor. For more on the topic, read the second half of Making Sen$e’s interview with Ariely here. The following conversation has been edited and condensed for clarity and length.

Kristen Doerer, Making Sen$e Editor

Kristen Doerer: How does being poor affect people’s financial decisions? What factors affect their decision making?

Dan Ariely: Well, none of us always make the best financial decisions. One of the big lessons from behavioral economics is that we make decisions as a function of the environment that we’re in. And what is the environment that you’re in, in terms of your money? They — as in everyone — want to take it away from you. Your immediate environment is comprised of coffee shops, supermarkets, websites, apps and all kinds of things — none of which have an interest in your long-term or short-term financial well-being.

So you can think about life as a battle between you and a doughnut shop. The doughnut shop wants you to eat another doughnut and pay the money, and you want to do it in the short term, but in the long term it’s not good for you either financially or from a health perspective. And so people need help, and it’s not just the poor.

Kristen Doerer: What kind of help?

Dan Ariely: Well, think about something like a 401(k). 401(k) savings are in some sense irrational, because why would you take money out of your paycheck at the beginning of the month when you don’t know how much money you’ll need? What you should do is wait until the end of each month, and then say, “OK, how much money do I have? How much do I need? Let me send the rest to retirement.”

The people who need to overcome temptation to the highest degree have the hardest time doing it.

But we all know if that was the case, we would never save. So what do we do? We implement something that takes money automatically from our checking account without us having to think about it. And at least this way we save. But if you think about it as a tool, it relies on you to make one decision one time when you join your employer, and that’s about it.

Not everything can be as automated as this, and for people who don’t have a regular salary, this is complex. The idea that you will make the right decision every time is very unlikely. So what we need to do is give you tools to help you make better decisions at the moment or to commit to something that would make it impossible to deviate from the status. So we think that it’s all about tools that help you remember in real time that you don’t really need this gadget, or that if you buy this lunch, it comes in at the expense of something else.

Kristen Doerer: So that kind of reminder in real time really helps people save money and not spend it.

Dan Ariely: Well, money is all about opportunity cost, right? Every time you spend on something, that’s something you can’t spend on something else. And the problem with opportunity cost is that opportunity cost is divided among many, many things. If you went ahead and bought a new watch today for $50, what is it coming from? What would you not be able to use the money on? It’s very unclear, because it would come from a lot of different things. And so not only is opportunity cost is hard to think about, but technologies make it harder to think about.

So if you had $50 every day, the opportunity cost would be clear. If you buy an expensive lunch, you would not have money for dinner. Or if you buy dinner, you won’t have money for medications. But if I gave you the money monthly and added to it credit card bills and student loans and car payments and the mortgage and the retirement fund, now all of a sudden, it’s not that clear what you’re giving up. OK, so that’s for all of us. For all of us, it’s very hard to  think about money, and because of that, we need help. In the same way that for all of us, it is hard to eat well, and we need some help. The poor have a particular challenge, which is that their life is actually much more complex — and they’re much more complex cognitively.

Kristen Doerer: What do you mean, they’re more complex cognitively?

Dan Ariely: There is this tremendous research on what is called “depletion.” Depletion is the idea that as we make difficult decisions, we just get tired of making difficult decisions, and as we get tired, we are much more likely to succumb to temptation.

Now imagine that you’re poor, and you have a decision in the morning about whether to take the bus or to have breakfast, and you have a decision to make in the day on whether to buy medications or put money aside for rent.

So imagine temptation: You’re tempted to eat a muffin in the morning, then you’re tempted to send your boss a nasty email during the day, and then there is Facebook while you’re at the office, etc. But now imagine that you’re poor, and you have a decision in the morning about whether to take the bus or to have breakfast, and you have a decision to make in the day on whether to buy medications or put money aside for rent. Those decisions are incredibly depleting. It’s just an exhausting way to live. And because of that, the poor who have many more of these difficult decisions actually live a much harder life.

It’s very sad, right? The people who need to overcome temptation to the highest degree have the hardest time doing it.

So if you live in a poor neighborhood, for example, what are the odds that there is a bank branch that is open by the time that you get off work and get the bus home? Very low. And if you do have a grocery store, what is the chance that they carry fresh fruits and vegetables or yogurt?

So what happens is that the poor is kind of starving for money, of course, but also for time and for cognitive capacity. And I don’t want to say that the poor are inherently cognitively diminished, but at the end of the day of making difficult, tough decisions, it’s very hard to have the energy to think about things with the right mindset. Imagine that you’re a parent, and you get home, and your kids say they want a pet or they want McDonald’s or something, how easy is it to resist this temptation after a day of depletion?

Kristen Doerer: Is there a difference between long-term and short-term decision making when you’re poor, because you’re thinking about, say, paying rent this month versus saving for the future?

When you’re in pain, tomorrow doesn’t exist — just the pain — and the only thing that you want in the world is for it to go away. So if you’re hungry, when you need medications for tonight, how likely are you to going to think long term?

Dan Ariely: Again, it’s the mindset. So I can give you an example. I was in the hospital for many years with a lot of pain. When people are in severe pain, there’s an expression, you’re a “pain person,” and what that means is that nothing else matters. When you’re in pain, tomorrow doesn’t exist — just the pain — and the only thing that you want in the world is for it to go away. That’s a very hard state to be in and think long-term thoughts. So if you’re hungry, when you need medications for tonight, how likely are you to going to think long term?

Here’s another question: Have you ever rented a vacation home?

Kristen Doerer: Yes.

Dan Ariely: Do you remember going to the grocery store for the first time and trying to equip the kitchen of the vacation home? So you start from scratch and you buy olive oil, and you buy salt, and you buy pepper, and the cost is just tremendous. And now if you have $500, you can invest in all the things that will make the cost of the meal reasonable later. But if you don’t have the starting $500, it’s really hard.

So we actually visited some poor homes, and there are people in the U.S. that the only cooking facility they have is the microwave. Think about getting into an empty apartment and let’s say you live on a budget of $20 or $30 a day. On what day are you going to buy a hot plate? On what day are you going to get salt, pepper, olive oil, utensils, pots and pans? It’s an investment that will pay off over a while, but it’s really hard to get into that mindset.

Kristen Doerer: So what are examples of bad financial decisions people make when they are dealing with depletion?

Dan Ariely: So a very simple bad decision is to get into debt. And that is very expensive. Not all debt is bad. From time to time we should get into debt when there’s a good reason for that.

The problem is people basically dangle debt in front of us. And the cost for the poor of course is much higher than for the wealthy.

But the problem is that people basically dangle debt in front of us. And the cost for the poor of course is much higher than for the wealthy. How do you resist temptation when it’s so easy to get? So how can we get people to think very differently about debt and to think about the true cost of debt and what they are giving up?

And by the way, the companies that provide debt, what do you think their goal is? Is their goal for you to fully understand the cost of your debt? No. So they’re basically creating these approaches to make you feel like it is incredibly cheap or just to think about the cost per day rather the cost per year or cost for a lifetime. So debt is very simple mistake.

We did a study looking at what debt people pay first. So imagine you owe on five credit cards, you owe five debts. So which debt should you pay first? And the answer is very simple: You should pay the one with the highest interest rate first. But that’s not what people do. What people do is they pay the small loans first. Why? Because they enjoy making the number of loans smaller. But of course it is a very ineffective way to pay debt down.

Another thing people don’t do is that they don’t have specific savings accounts for specific purposes. By the way, this is just shocking. We did another study on trying to get people to take their tax refund and save some of it. So at tax time, we said, “OK, you’re getting this refund, maybe you should save some of it.” It was shocking to realize how many low-income Americans don’t have savings accounts.

Kristen Doerer: Really? No savings accounts?

Dan Ariely: But think about it, when you get a checking account, you should have a savings account, and the number for the savings account should be one off of your checking account. Right? It just seems so simple, and we should do things that move money from one one to another. But in most places you open a checking account completely separate and people don’t have savings accounts.

So which debt should you pay first? And the answer is very simple: You should pay the one with the highest interest rate first. But that’s not what people do.

So how do those people save? It’s kind of shocking, but they basically prepay their rent for three months. So they took the money and made it a liquid by putting it to a different goal. If you think about it, it is a form of saving, but it’s not the ideal form of saving. Their logic is: “I don’t have a savings account, I don’t want the money to sit in my pocket, because I don’t want to spend it on other things, so I’ll prepay my rent.”

Kristen Doerer: You mentioned before that many low-income Americans don’t have specific savings accounts for specific purposes. I don’t think I have ever had a specific savings accounts for a specific purpose. Can you expand on that?

Dan Ariely: So there is an amazing study that shows when parents have college savings accounts for their kids, their kids show higher social and cognitive performance. And the reason is that the parents get a statement once a month that says this kid has a college savings account, and their parents think about them differently and treat them differently. This was a randomized control study — it was just opened for them randomly.

Think about how you would think about yourself if you had no assets versus how would you think about yourself if you have a college savings account for your kid? Or if you had an account called “my first apartment,” and you’re in your 20s. How would you think about your future, or how would you think about putting money there?

Kristen Doerer: So are you self-signaling to yourself that you are the type of person who will have their first apartment or that you will go to college?

Dan Ariely: It’s not only signaling, which is a crucial part of this, but the specific savings account also tells you something about the next step. So if you don’t have that account, and you just have a checking account, how exactly will you save? It’s very hard. But if you have an account with names and time frames, it really, really helps.

Dan Ariely

Dan Ariely is the James B. Duke Professor of Psychology and Behavioral Economics at Duke University's Fuqua School of Business. Dan’s bestselling books about behavioral economics include "Predictably Irrational," "The Upside of Irrationality" and most recently, "Irrationally Yours."

Money Matters: Financial Literacy for Small Businesses

This is a great article, the first I have re-posted for the benefit of my business clients. 

Posted on By Dan Blacharski

Smaller businesses in the SOHO (small office/home office) category are very dependent on the skills and knowledge of their owners.

Unlike larger companies, where founders can bring in experts from multiple disciplines, the SOHO operator needs to be a "Renaissance man" (or woman) and know about everything from marketing, to operations, product placement and design, and of course, finance.

SOHO operators with no financial background are still expected to be financially literate enough to budget, do accounting and taxes, calculate price points, and project revenues and success rates well into the future to ensure continued success.

Related Article: Will Work for Funding: 7 Ways to Finance Your First Small Business

With these smaller companies, the line between personal finance and business finance is a thin one, with owners often relying on their own personal credit and resources to make their businesses a success. What type of financial literacy do small business owners need to bring to the table? Does the ability to balance your personal checkbook make you financially literate enough to run a small business?

According to a recent infographic on financial literacy, only about a third of Americans are considered "financially literate," despite the proliferation of often very expensive seminars, courses, and books on the subject. 

This is not because we as small business people are incapable; on the contrary, most people have enough savvy to gain the literacy they need to effectively manage their small business finances without having to purchase the latest financial plan from some charismatic leader.

Intuit also recently published a study of small business owners with similar results, indicating that 40 percent of small business owners say they are financially illiterate – yet 81 percent handle their business' finances themselves. There is an obvious gap – but it is not insurmountable. Take the expensive courses if you must, but small business financial literacy can be achieved on your own with just a few simple, common-sense steps:

Perform Due Diligence Before Borrowing

If you need to borrow, don’t jump at the first lender willing to write you a check, no matter how tempting. Compare terms, interest and fees from multiple lenders, using an online portal such as Don’t assume you won’t qualify for the best rate – you never know unless you apply.

Understand Your Expenses Before Borrowing

Before applying for a loan, take time to truly understand your monthly expenses and make cutbacks wherever possible – you may find out you don’t need a loan, or that you need to borrow less than you expected!

Understand Your Debt

Debt doesn’t have to be a bad thing, if you understand it, control it, and use it for the right reasons. Are you still paying credit card bills for things you don’t even remember using? Understand the details of each bill. What was it for? How much of your credit card bill is interest, and how much actually goes towards paying off the principal? A little knowledge goes a long way towards debt reduction.


Even though less than a third of us actually do it, it goes without saying that budgeting is the first step towards financial literacy. It doesn’t have to be hard, and can be something as simple as a spreadsheet. At the end of every month, compare your actual spending to your written small business budget. Chances are, not everything aligns to the penny, but don’t beat yourself up. Just understand where your money went, and make adjustments as you go along.

Related Article: To Borrow or Beg: Small Business Funding in 2015

Understand Your Credit Rating

For most small business owners, business loans and credit is based on their personal credit rating. Financial literacy means understanding yourself, and that also means understanding what others know (or think they know) about you.

Simply understanding cash flow – how money moves in and out of your business – will go a long way towards financial literacy, and for the most part, this is simply a matter of tracking. It doesn't take a CPA, and a simple spreadsheet, Quickbooks account or other small business tool will do the job nicely. 

The built-in reports can help you get an overview of what's going where, what months are more likely to bring in more revenue, and what an "average" month looks like – that is, if you really have an "average" month. Many small businesses, especially early stage ones, can have dramatic swings in income and expense from month to month, making it difficult to pinpoint where you're at. Don't despair – part of financial literacy is being comfortable with the inevitable chaos of small business realities, and responding appropriately to unexpected circumstances.

5 Budgeting Blunders That Hurt Your Finances

This article by Geoff Williams was published in the US News and World Report - Money over a year ago, but the advice is timeless. 

"If you're planning to create a budget, avoid these classic mistakes.

Everyone knows that a budget is the linchpin holding together your financial empire, or if you prefer, financial shack. If you don't have a budget, whether or not you know it yet, you have money problems.

But to avoid money woes, it isn't enough to create a budget. You have to design one that works properly. That’s why you'd do well to steer clear of these five mistakes consumers often make when budgeting.

Creating the budget – then not tracking the budget. It's easy to say you're going to spend a certain amount on your mortgage, your cable bill and other fixed expenses. But as everyone knows, variable expenses like groceries and gas can really throw things off.

"I find many people don't track where they spend cash," says Jerry Love, who has a certified public accounting firm in Abilene, Texas.

Tracking your cash isn’t always easy to do, a sympathetic Love admits. "With so many supercenters like Walmart, I see some people get a distorted view of what they are spending on groceries because when they go to the supercenter, they're purchasing a variety of items beyond groceries," he says.

There are plenty of apps and software programs that will help you track your spending. They include,, and

Only budgeting monthly. While most of your bills and expenses occur on a monthly schedule, there are some that might not fall neatly into that cycle. Leonard Wright, a San Diego-based member of the National CPA Financial Literacy Commission, points out that most people have quarterly, semiannual or annual expenses.

"That property tax bill, car insurance, homeowners insurance, school shopping for the kids, the once every one or two year trips," Wright says. To account for all of that, "create a reserve line every month in your budget to set aside that expense on a monthly basis,” he says.

Not setting a realistic budget. If you're cash poor, it can seem irresponsible to budget for entertainment. So you don't. You plan for your mortgage or rent, your food, your utilities, gas and other essentials, and that's it. You will not budge from your budget.

Except, of course, you will budge.

Eliminating such expenses is a common mistake, according to Mauricio Rodriguez, professor and chair of finance at the Neeley School of Business at Texas Christian University in Fort Worth, Texas. "Making the budget so tight that it will be difficult to stick by it … It's important to set realistic goals," he says.

So even if you don't plan on eating out or catching a movie, budget for the possibility. The worst that happens is you have money left over at the end of the month. If you don't budget for some extras, you'll probably end up doing something extra anyway, and that's where the trouble comes in, Rodriguez says.

Trouble also occurs when you’re not honest with yourself about how much you make – or don't make. "This should go without saying, but I have seen some people who develop their budget based on their gross and not their net," Love says. "Working from gross is OK if you accurately reflect your tax liability," he adds. "I generally encourage people to budget based on their take-home pay."

Not planning for emergencies. Even if you account for everything going on in your life, you need to plan for what hasn't happened. Someday, you will need a plumber. Or your home will be infested with termites. Or your car will need new brakes. Emergencies crop up, especially when you're living an active life.

"Forgetting to budget for nonrecurring, involuntary expenses such as car repairs and medical costs [is a serious error]," Rodriguez says. "Such expenses will occur and can cause trouble if not accounted for."

If you're already living paycheck to paycheck, it may be impossible to put money aside every month for the possible flat tire or sudden operation. In fact, that may be what you use your credit card for. But if you have the money to put cash aside for life's bumps and bruises, that's an instant upgrade to your budget.

Not considering the true cost of a financial decision. Maybe you bought a house and knew you could handle the mortgage payments, but you didn't think about maintenance costs or the furniture you needed to purchase.

Of course, a house is an obvious example, but anything can harm your budget if you don't consider the true cost, Wright says. "People sometimes buy the car of their dreams only to find out every repair costs two to three times as much," Wright says, adding: "I've been guilty of this."

For instance, Wright says he got a great deal on a used Lexus but didn't think about the catalytic converter, a device California residents are required to purchase that helps cut down on pollution. It can be an expensive piece of equipment, depending on your car's make and what your mechanic charges to install it. For the used Lexus, the catalytic converter set him back $3,200 – $2,000 more than what he paid on his previous vehicle. "I was floored," Wright says.

There are plenty of one-off purchases, like books and furniture, where you'll pay money once and never again, but a lot of items require maintenance or ongoing costs. Think printer ink, pet food, a smartphone.

The bottom line: If you live your life without consulting your budget, you really don't have a budget. You only have money problems, whether you know it yet or not."

The Stanford Marshmallow Experiment

Great article I am re-posting here from the Wall Stree Journal Blog Archive....

The One Crucial Money Concept Children Need to Learn

ELEANOR BLAYNEY: You’ve probably heard about the Stanford marshmallow experiment.  Conducted in 1971, it involved approximately 600 four- to six-year-olds, who were individually brought into a room and seated in front of a single marshmallow.  Each child was then told by an adult that he or she had a choice:  Eat the marshmallow now, or wait until the adult returns and get two marshmallows. Whether or not you’re not familiar with this “delayed gratification” study, take two minutes to watch this clip.  It’s hilarious and adorable.

Financial experts often cite the marshmallow exercise as reinforcing the importance of saving for tomorrow rather than consuming today, as well as illustrating how compound interest works. It shows how one set-aside marshmallow begets even more marshmallows, a feat that according to Einstein deserves veneration as the 8th wonder of the world.  As such, it would seem to be a simple and tangible way to teach our children some of the basic principles of financial planning.

Except that I, as one such financial adviser, think that the lesson is slightly flawed by being too simplistic, even for a kindergartner.  I believe that the first money lessons for our children shouldn’t be of the “either/or” variety, but demonstrations of the power of “and.”

Children need to learn about the fungibility of money.  Fungibility–itself a delightfully squishy, marshmallowy term– is defined by Meriam-Webster as “being of such a nature that one part or quantity may be replaced by another equal part or quantity in the satisfaction of an obligation.” Hardly an easy concept for adults and preschoolers alike, so let’s go to its linguistic origins.  From the Latin word for “function,” the fungibility of money can be described as the multiple uses that money can serve.
In other words, money can be used simultaneously for more than one purpose: it can be spent, saved and given.  No one use has higher value than another. All are necessary, and each needs judicious management.  Children need to understand that money coming into the household, or given to them, should be allocated to meet the needs of today and tomorrow, as well the needs of those other than themselves.

A simple way to model this lesson for children is to have them divide money gifts or allowances into three jars.  These same three jars can be used to teach more sophisticated lessons as the child gets older: for example, budgeting certain percentages to each jar, depending on present needs, future goals and the priority placed on philanthropy.

As important as putting the money into the jars is taking it out. For example, making an occasion of taking the savings jar money to the bank, credit union or brokerage firm can teach important lessons about our financial system.  Having a child visit a chosen nonprofit with the contents of his giving jar makes the benefits of charitable giving immediate and memorable.

In today’s “paycheck-to-paycheck” lifestyle, it could be argued that the marshmallow lesson will have more impact on impressionable, media-manipulated children than the three jars.  But go back to YouTube and observe the palpable pain of those children as they resist the marshmallow.  I am not convinced that financial lessons need to be so agonizing.  Instead, I rather like watching the little girl who nibbles a bit of the marshmallow, and seems to make an important discovery about the benefits of balancing now and later.

Eleanor Blayney (@EleanorBlayney) is consumer advocate of the Certified Financial Planner Board of Standards.

Read the latest Wealth Management Report.


By being frugal financially, Ryan Broyles believes he has set up future - from

Michael Rothstein, ESPN Staff Writer -

ALLEN PARK, Mich. -- Ryan Broyles grabs his cell phone every morning over breakfast and pores over the latest transactions. What the Detroit Lions wide receiver is looking at, though, has nothing to do with football.

In the past three-plus years, Broyles has become immersed in the financial world. His planning throughout his career allowed him to make a lot of investments. So when he laments the S&P 500 has "been sideways" most of the year, he has good reason.

It all started after a meeting with a financial adviser soon after being drafted in 2012. The adviser gave Broyles some advice he used to shape his life: Spend as you would like over the next few months. Figure out your means. Then set a budget, live within it and invest the rest.

Broyles signed a contract worth more than $3.6 million after being taken in the second round. More than $1.422 million was guaranteed. But Broyles knew the other statistics -- ones reinforced when he went to the rookie symposium.

He knew NFL players, and athletes in general, go bankrupt. He saw athletes blow through millions. He was determined not to have that happen to him.

He came up with a budget. Broyles said he and his wife, Mary Beth, have lived on $60,000 a year, "give or take," throughout his career. Everything else has gone to investments, retirement savings and securing Broyles' post-football monetary future.

Broyles wanted to make sure his NFL career, however long it lasts, really did set him up for life.

"Then you know how much you can invest, how risky you can be," Broyles said, as he enters the last year of his rookie contract with no guarantee he'll make the Lions' roster. "Then, when I was hitting the same budget over three, four, five months, it was all right, this is what your budget is and I had some spending money.

"I didn't hold myself back at all on those terms. That's what I tell people when they want to start to invest, I tell them to live your life and see where you stand and then pull back. Don't pull back without even knowing."

He has no problem driving a red Ford Focus rental car during training camp this year. It's why he and his wife drive Mazdas -- he recently bought a new one -- and he still has his 2005 Chevrolet Trailblazer from college.

Broyles wouldn't go into specifics about his investments -- just smiling wide when asked. Despite some big changes in his life this offseason -- the couple bought their first home in Texas and had their first child, Sebastian -- he doesn't feel any more pressure to succeed on the field because he has an extra mouth to feed.

"The pressure I put on myself is just being the best player I am," Broyles said. "I would never play [just] for money, you know what I mean, that's not my intentions whatsoever.

"Whatever comes, it's just a blessing. But I got the mindset of a businessman off the field, I'll tell you that."

Broyles immersed himself in the financial world. In March, he went to Washington, D.C., with New Orleans running back Mark Ingram to speak to students about financial planning. Broyles worked with VISA and the NFL on promoting a Financial Football video game in classrooms to help teach financial security and planning in both D.C. and his home state of Oklahoma.

"I studied as much as I could," Broyles said. "Talked to people wealthier than me, smarter than me. So that definitely helps."

He checks his investments daily on that cell phone app and has taken advantage of every possibility to increase his savings and earnings, including the NFL's matching 401K plan.

He's doing all of this to make sure that whatever happens in football, he can be secure in his own future and focus only on how to improve himself on the field.

"When I come to work, I don't think about the money, man," Broyles said. "I can tell you that, without a doubt. There might be some guys that do but I put myself in a position where I come out here and have fun.

"I don't have that pressure, you know what I mean. My wife has no worries. My child has no worries. For the most part, I can help my family, you know."