Common advice about controlling spending is to track all your purchases and add them up each week or month. I believe that this is effective, but have been fuzzy on why it seems to work so well. Why can’t people just spend less without the constant reminder of how well they are doing? I got some insight on this question from, of all places, poker. For poker players there is a certain thrill to dragging in a pot of chips. The thrill is there whether it is a $1 pot or a $10 pot. The $10 pot gives a bigger thrill, but not 10 times bigger. Similarly, losing a $10 pot feels worse than losing a $1 pot, but not 10 times worse. This leads to some players playing in such a way that they maximize happiness by taking in many small pots, but losing some big ones. As long as they don’t count their dwindling chips, they can actually be happy playing this way. Counting your chips is a lot like adding up your spending at the end of the month to see what happened. You may feel good about ...
Thanks for the mention, keep warm this cold fall weekend.
ReplyDeleteThanks for the mention. A good post or column would be on how stock tables and quotes can often be misleading on yields (because it's just not bond ETFs but also other securities). I wonder how many people have made investment decisions based on the flawed yield figures.
ReplyDeleteThanks for the mention!
ReplyDeleteThanks for the link - hope the weekend was kind!
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